What is the Purpose of a Business Incubator?
Business incubators are organizations that nurture the development and growth of businesses in the early phases to help them persevere in their most vulnerable stages. Incubators provide numerous resources and support services to aid in the development of businesses. The general purpose of incubators is job creation, business retention, enhancing entrepreneurial climate, growing local industries and economies. Approximately 93% of North American incubators are nonprofits focused on economic development. About 7% are typically set up to receive returns from shareholders investments. (Business Incubation FAQs)
What to Expect
It is important to conduct research on the incubator(s) and consider the advantages and disadvantages before embarking upon the application process and working with an incubator.
- Conduct Ample Research: It is important to understand that incubators will have their own set of unique offerings for their entrepreneurs. The package offered should help meet the needs and goals of the company. The location of the incubator should allow for a flourishing business, with a market that can sustain the business for the duration of the term of stay. The mentors and specialists available should also have experiences and networks beneficial to your business.
- Related costs: Some incubators will charge monthly fees, like a typical leasing agreement. However, other incubators may accept in exchange for equity. It is beneficial to consult with an attorney to review the terms and contract.
- Speak to alumni: If the incubator has a list of previous tenants, speak to them about their personal experiences. This first hand testimony will give you further insight and help you determine if the incubator is right for your business.
- Prepare your proposal: If you decide to apply, be sure to prepare and rehearse your pitch and distinguish yourself from other businesses and business owners. Incubators want businesses that are sustainable. In your proposal, be sure to discuss how your business will succeed with accompanying financial projections.
What are the main business models?
As mentioned previously, each incubator will have a unique set of offerings. The list of business models below should give you an idea of what to expect as you conduct your research.