Five “Musts” for Business Incubator Success

by Dinah Adkins, President & CEO, National Business Incubation Association

University incubators help take new technologies from the lab to the market. AlphaMicron applies liquid crystal technologies to curved plastic surfaces such as sunglasses. Founded by researchers in Kent State University’s Liquid Crystal Institute, the company got its start in the Kent Business Incubator in Kent, Ohio. Today, it’s a Fortune 500 company with clients in the military and corporate America.

It is little short of astonishing how much has changed in the world of entrepreneurship support in the last 30 years, and this field will certainly continue to evolve rapidly. Unbelievably, few people even considered the importance of emerging companies to our local and national economies in the late 1970s. Now, there are more than 1,100 business incubation programs in the United States – and as many as 5,000 around the globe – and colleges and universities everywhere are initiating or expanding programs to teach entrepreneurship and support local start-up businesses.

More and better programs will come into being aimed at helping entrepreneurial firms to succeed – in every community, urban and rural. If you’ve any doubt of this, reflect on the changes that have occurred in just 30 years in the technology arena – personal computers, GPS technology, cell phones, PDAs, digital cameras, and even fax machines all were invented over the past three decades.

The same is true in entrepreneurship support. In 1977, economic development was virtually all about “smokestack chasing,” attempting to attract big plants to Ohio from Michigan, for example. Few individuals were giving much attention to start-up companies. University business schools taught how to succeed in corporate America, and a great deal of technology developed in companies and university or government labs sat on the shelf, uncommercialized. Only a few, elite start-up companies had access to angel investors or venture capital, and few organized groups of investors existed outside the largest cities. Fledgling firms, which didn’t have access to these sources of capital, also tended to be rejected when they looked to traditional banks for credit.

While it was obvious that virtually all large corporations had started as small companies, it was impossible to get an education in starting a business outside of the school of hard knocks. It was as though we expected entrepreneurs to be born with that experience – even as we recognized that, to grow up to be successful citizens, our children needed education, mentoring and networks of support.

But by 1980, there were 10 to 15 fledgling incubators operating in the United States, and this movement shortly became a global one. A few of these early programs have now celebrated more than a quarter century in operation.

What a learning time it’s been! Yet some of the lessons have been tough. Communities have invested in incubation programs that either failed or didn’t live up to expectations. Taking this into consideration, I ask you to consider several key “musts” for business incubation success. Even if you already operate a business incubation program, these ideas may help you improve your operations and service to entrepreneurs. If you are thinking about developing a business incubator, these should be considered vital to your effort.

1. A successful incubator must be grounded in the real world of business and have deep support from the local business community.

It is interesting that many business incubators are sponsored by colleges and universities, local economic development groups, and local governments. These are not, inherently, business-like organizations. In fact, they may be, to a greater or lesser extent, too bureaucratic and/or academic to successfully operate a business incubation program.

It is almost axiomatic that governments cannot set up successful incubators as governmental departments and hire a bureaucrat to take charge. This situation is equally hard for many universities, particularly if they put a professor in charge.While government or academic support can contribute significantly to the resources available to develop and operate a successful incubator, it’s frequently best for the sponsor to be at arm’s length, and it is absolutely necessary to have strong input from the business community.

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