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Using a business incubator

Business incubators are programs designed to accelerate the successful development of entrepreneurial companies. This is done through an array of business support resources and services. The resources and services are developed and orchestrated by incubator management and offered both in the incubator and through its network of contacts. Incubators vary in the way they deliver their services, in their organizational structure, and in the types of clients they serve. Successful completion of a business incubation program increases the likelihood that a start-up company will stay in business for the long term: Historical data shows that more than 80% of incubator graduates stay in business

Incubators also differ from the U.S. Small Business Administration's Small Business Development Centers in that they serve only selected clients. SBDCs are required by law to offer general business assistance to any company that contacts them for help. In addition, SBDCs do not target start-up and early-stage companies; they work with any small business at any stage of development. Many business incubation programs partner with their local SBDC to create a "one-stop shop" for entrepreneurial support.

Using a business incubator gives startup entrepreneurs the support they need to make sure they have a better chance of surviving, growing and thriving. By using a business incubator, new ventures can tap into resources that would otherwise require significant time and investment to acquire. Business incubators offer built-in business networking opportunities, allowing entrepreneurs to meet people who can increase the entrepreneur's potential to start a successful venture. Working within a business incubator allows new businesses the opportunity to focus their efforts on the most important aspects of their business.

Business incubators are designed specifically to help start-up firms. They usually provide:

  • flexible space and leases, many times at very low rates
  • fee-based business support services, such as telephone answering, bookkeeping, secretarial, fax and copy machine access, libraries and meeting rooms
  • group rates for health, life and other insurance plans
  • business and technical assistance either on site or through a community referral system
  • assistance in obtaining funding
  • networking with other entrepreneurs

Many entrepreneurs don't have the space or desire to start a business out of their home, yet find renting space and setting up essential support functions is overwhelming financially and energy draining just at a time when their financial resources and energy are most needed for development of the business itself. A business incubator can be the perfect solution for such a person.

The primary goal of a business incubator is to produce successful businesses that are able to operate independently and financially viable. Business incubation is on the rise on a global scale.

The United Nations Industrial Development Organization (UNIDO) actively monitors and promotes the development of business incubators worldwide. They estimate that there are at least 500 incubators in developing and transition countries with an annual growth rate for new incubators being about 20 percent annually. The most common types of firms using business incubators are light manufacturing, technology and service firms and those developing new products or engaged in research and development.

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