Is your startup ready for a business incubator? Does it need one?
If your business idea has evolved into a workable plan but you need some guidance and funding to get it off the ground, the answer to both of those questions is a resounding yes. We have some tips to help you find the right business incubator. But first, a little history lesson.
What is a Business Incubator?
The story goes that in 1959, Joseph Mancuso had a brilliant idea. After having a tough time finding a tenant for a vacant warehouse complex that his family bought in the wake of a massive plant closure, he decided to divide up the space, rent to several businesses and offer shared business services and assistance programs.
Success followed and the business incubator was born.
Today, thousands of business incubators blend office or co-working spaces with mentoring programs, funding assistance, business services and ample opportunities to network with experts and fellow entrepreneurs.
Now, let’s go find the right one for your business.
Check for Local Business Incubators
If you like your area and want to support your neighborhood, look for nearby programs. In an effort to grow their local economies, some local nonprofits or business associations have established incubators.
If you’re fortunate, there might be one in your county or town. Point your browser to the National Business Incubation Association’s (NBIA) website, select your location, and start hunting.
Know Your Niche
Some business incubators will help most any type of business get up and running. But that might not be the best solution for your business. Why not take advantage of the expertise and networking opportunities of a specialized incubator?
Business incubators exist for software, retail, media, biotech and on and on. Just about every industry imaginable has a business incubator that focuses on helping startups succeed in their respective fields.
It’s a competitive world out there. Don’t risk being underserved by a one-size-fits-all incubator.
Make Sure an Incubator Can Deliver
Like schools, you can judge the quality of a business incubator by its “graduates” and by how long its doors have remained open.
When evaluating an incubator, ask about success stories and how long those entrepreneurs remained successful after graduation. You can make sure that they are not outliers or special cases by speaking with other graduates and soliciting their feedback. Why did the failed startups, well, fail?
Finally, what does it take to graduate? How many years and what milestones do you have to reach before becoming a graduate. Seek out clear, specific answers to your questions. When it comes to the success of your business, there’s no room for fuzzy or half-baked explanations.
How Much Are You Willing to Give Up?
Think long and hard about signing up with a business incubator. For-profit business incubators or accelerators operate as businesses in and of themselves. That means a startup may have to give up a minority stake for use of an incubator’s services and real estate. Giving up a piece of your company is a daunting prospect, especially so early in the game.
The NBIA suggests thinking long and hard about trading equity for an early push. If you’re a particularly good bootstrapper or you can find funding on your terms, consider an incubator with a fee structure. If you’re OK with giving up a chunk of your business, then by all means, get started.
Be a People Person
Research and get to know the professionals, trade groups and experts that you’ll be interacting with. If an incubator can attract top talent or business leaders that you admire and respect, it’s a good sign that you’re on the right track.
You’ll also want to get ready to shake a lot of hands. Networking is vital part of participating in a business incubator. Sure the skills, funding and services are valuable, but a lot of your future success hinges on the connections that you make — and the strength of those connections — at this critical stage.
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