[UgaBYTES] How to Start a Business incubator for entrepreneurship

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How to Start a Business incubator

Business incubators have proven to be an effective way for fostering sustainable business growth and stimulating entrepreneurship.  But establishing a business incubator is a challenging task.  This section helps readers decide whether or not an incubator is the most appropriate business development tool for their circumstances, and sets out the feasibility and planning issues that underpin the establishment of a new incubator.

What is a Business incubator program?  It's a program that is designed to accelerate the successful development of entrepreneurs through an array of business support resources and services. Incubating a business means providing new start-up businesses that qualify with a set of facilities -- physical space, shared services, business and legal advice, and sometimes financial inputs to cushion them during their early days of formation and assist them until "graduation", when they have the capacity to "survive" in the outside competitive environment

Feasibility Study and Planning

A feasibility study is an important and necessary step, to design the business incubator and assess whether or not and how an incubator might be feasible. Upon developing an understanding of your target client’s needs, and concluding that starting an incubator is the right response to the market conditions in your environment, many decisions are still ahead of you.

You will need to decide on what type of business incaubtor, what services to offer, how to finance your start-up, how to set up your governance structure, what human resources to have in-house vs. contract out, etc. Incubators around the world have many different types of legal structures; they can be stand-alone or connected to another institution like schools, government/private enterprise non-government organizations. Before embarking on design, stakeholders need to have objectives in mind and an idea as to what sort of business incubator is appropriate. This may emerge from consideration of readiness, or be the reason why a business incubator is being considered in the first place.

Why incubate?

Incubation fast-tracks the growth of early stage businesses, improving the survival rate of start-up companies by helping them become financially viable, usually within two to three years. Incubation also creates a synergistic environment where entrepreneurs can learn, network, create business partnerships and it helps to open doors to markets and resources.


Successful incubation is not easy and requires a long term commitment from
stakeholders, who will inevitably have to overcome many challenges along the
way. Here are some ideas you can use to get the business incubator running effectively.


1. Produce results that not only have an impact on the business
incubator’s regional location but which are also relevant to that
region - Business incubator programs that do not act as change agents in
their nominated regions will not survive. Business Incubators must be
attend to development in their regions and, more importantly, they must
be seen as agents of innovation/change and incentive for regional development.

2. Create a clear, successful competitive strategy within a specific
technological and market segment - business incubators must be
FOCUSED, with well-defined markets, areas of activity and technology
segments. The proliferation of business incubation programs, in some
regions and countries, has been criticized because there is no clear focus,
procedures overlap and interference makes business more difficult by
causing inefficient use of resources. In order to reflect changing markets
over time, that focus may need to change.

3. Create an environment favorable to business incubation - the
business incubator must be ‘wanted’. At the same time, it must generate competitive
companies that contribute to the region’s development. Services such as
credit, market access and technological development must be available.

4. Contribute to public policies attend to the reality and perspectives
of an increasingly globalized world - a challenge, faced by business
incubators, is to serve as ‘laboratories’ which identify and test public policy
solutions to increase business survival and success. The business
incubator acts as a “microenvironment” that can simulate the essentials
that have an impact on business development in a globalized world.

5. Structure competent, innovative, sustainable management for the
business incubator – Business incubators must in their own right be
examples of innovation, entrepreneurship and business, because their job
is to contribute to the development of other companies and society. The full range of
competent management skills are needed, ranging from marketing to
client services and finance.

6. Create mechanisms and instruments that advance technological
innovation, particularly with universities/colleges and research centers – A
progressively more important function of business incubators, especially in
the developing world, is that of supporting universities/colleges and research
centers in the design of new business undertakings.

7. Structure services that support the development
of  new business ventures – Business Incubators need a portfolio
of services that satisfies business expectations/Investors. This is not a trivial point
because business incubation programs must quickly provide innovative
and consistent services. Business Incubators must be “laboratories for
new management and business strategy practices” so that they can
effectively make a difference for incubated companies.

8. Use Information Communication Technology that contribute significantly
to the business incubation process and development of companies – ICTs have provided exceptional opportunities for improving the business incubation processes. They make it possible to apply selection, monitoring and support in a much more inclusive, rapid and precise manner. Similarly, the incubated company’s progress can be accelerated
since ICTs offer appropriate solutions for planning and control. Can also assist development and implementation of  marketing, research and development strategies. ICT can generate revenue as clients use your services.

9. Provide the business incubator with an infrastructure suited to
meeting company needs – Although costly for the business incubator’s
implementation budget, communications are an essential item for the
success of a program. Infrastructure includes everything such as suitable
office space, Internet and telecommunications support. It may even
comprise sophisticated resources such as website hosting, cybercafe,
video-conferencing and copy center which will add great value to the success of the business incubator.

10.Establish relationships and alliances that strengthen the business
incubator and services rendered to businesses – A strong, inclusive
network for the business incubator will lead to stronger, more inclusive
networks for the incubated companies. Therefore, the business incubator
must plan and implement a network of partners and allies that can
contribute to both the business incubation program and the incubated
companies, thereby enhancing the conditions for growth and competitiveness.

Cisco Systems Networking Academy-http://www.cisco.com/web/learning/netacad/index.html

Close the Gap- is an international non-profit organization with its head office in Brussels. The organization aims to contribute towards bridging the digital divide in the world by giving computers a new lease of life in a developing country. CTG also wants to offer companies a concrete opportunity to participate in reaching the Millennium Development Goals
www.close-the-gap.org

The International Institute for Communication and Development  is a non-profit foundation that specializes in information and communication technology as a tool for development.
www.iicd.org

11.Train innovative, entrepreneurial and committed teams to conduct
the business incubation process – Business Incubator teams must
become more professional and competent. No longer can business
incubation programs be considered just an assistance activity or
development test. Today, business incubators must be “companies that
generate companies”, with well-trained teams that can provide effective
and differentiated support.
(Free online Business course for entrepreneurs:
My Own Business is a nonprofit organization dedicated to providing free training and resources to aspiring entrepreneurs. Their website includes a free, complete and in-depth online course on starting up a business. Excellent site. Although the course is free, you have to pay if you would like a textbook version or a completion certificate
www.myownbusiness.org)

12.Adjust business incubation models to the economic, cultural, social
and political realities of each region/country – Aside from focusing
on the market and technology segment, each business incubator must
also identify a vocation and model the other characteristics
of the region. This will ensure that the business incubator and the
incubated companies will have a competitive differential that aids
maximization of the business incubation program’s results.

13.Identify sources of funding and business models that ensure
business incubator sustainability – The business incubation program
must look for a sustainable model of operations. Create a sponsorship package which details the benefits that Investors will get if they invest in your project/business incubator. Mange your revenue wisely. (Invest money/save) Look for partners/ research other funding if possible micro credit loans/private loans)

14.Develop strategies to obtain financial leverage for the incubated
businesses – Strategies are needed to obtain resources for both the
incubated companies as well as to sustain the business incubation
program. Investment and financing are among the top three reasons for
company failures in the first two years of existence. It is the business
incubator’s task to prepare companies for these difficulties, while also
providing them with support in getting financial resources.

15.Develop strategies that will make it possible for the incubated
companies to develop their capacity to sell and generate revenue
A basic cause of bankruptcies for new companies is a lack of marketing
and sales ability. The basic mission of any business is to develop and sell
products and services that respond to market demand and the business
incubator must contribute to this mission by training companies and
providing them with strategic and operational support. (come up with effective marketing plan, create community involvement)

16.Create mechanisms and instruments for developing business
incubators at the level of the local community, strategic entities and
institutions – The marketing of the business incubator as an organization
is strongly correlated to the marketing of the incubated companies. The
best way to market the business incubator itself is to generate successful
companies. Acceptance of the business incubator by key community
bodies is one way of contributing to the development of these companies.

17.Structure collaboration/partnership with the overall aim of strengthening
 the business incubators-
Public-Private Product Development Partnership (PDP) -bridge public- and private-sector interest

Public private partnership- describes a government service and private business. Ownership of the project is shared. This venture  is funded and operated through a partnership of government and private sector companies/investors. Collaboration will also assist political and institutional strengthening of the business incubator.
(networking is the key  its not always what you know but who you know, build effective partnership)

18.Keep the businesses and business incubators up-to-to date on major
international technological and market trends – Business incubation
programs must be planned, developed and operated in a globalized
framework, to major international technological and market
tendencies. This will result in business incubation programs that generate
outcomes that have important and lasting impacts.

19.Insert business incubators and companies into productive chains
and strategic clusters – An effective way of ensuring that a business
incubation program will produce results is to plan the business incubator
so it stimulates and generates new companies in existing productive
chains and industry clusters. These will then be able to carve out a niche
within already structured clusters and strategic chains, thus overcoming
barriers to the development of a new company such as market access,
sales/distribution channels and technological development.

20.Transform the business incubator into a symbol of entrepreneurship
and innovation – Entrepreneurship and innovation are two of the great
challenges to modern society.  The economy is dependent on Small and Medium size enterprise. They create jobs and are innovative. Business Incubators can and must position themselves as “symbols” of entrepreneurship and innovation, transforming them into references for local/national programs and generating strong companies that inspire
future generations.

21. Develop a SWOT Analysis
A SWOT Analysis is a strategic method that you can use to evaluate the Strengths, Weaknesses, Opportunities, and Threats for your Business Incubator.
Ask yourself these questions:

        * How can we Use each others Strength?(or gifts or talents or creative ideas)
        * How can we Improve each other Weakness?
        * How can we Exploit each Opportunity?
        * How can we Mitigate each Threat?

A) Set objectives for your Business Incubator– by clearly defining what the organization is going to do.

B) Strategic Issues must be defined – key factors in the development of planning which needs to be addressed by the Executive board of your firm/ CEO (develop a strategic operational plan which will help mange your objectives and goals)

C) Develop new/revised strategies- means you need clear objective goals for Preparation of operational resources, plan ideas for strategy implementation

D)Monitoring results – making sure what you say you will do is actually done. Holding yourself accountable by being transparent, taking corrective action which may mean amending objectives/strategies.





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