A fundamental aspect for your business, financing is usually the most frequent obstacle in starting a business. You have the option of resorting to a business incubator on condition that your business idea seems promising and viable. A business incubator is a system offering support for start-up businesses or recently founded ones. The selection they perform works like a measurement unit for the viability of the applicant business and gives entrepreneurs a chance to re-think their business strategy. The success rate of businesses created by incubators is of around 85%.
A fundamental aspect for your business, financing is usually the most frequent obstacle in starting a business. You have the option of resorting to a business incubator on condition that your business idea seems promising and viable.
What are business incubators? How many types are there?
A business incubator is a system offering support for start-up businesses or recently founded ones. The selection they perform works like a measurement unit for the viability of the applicant business and gives entrepreneurs a chance to re-think their business strategy.
There are two categories of incubator sponsors: profit and non-profit.
Such incubators have been used to achieve economic and social objectives as decreasing the unemployment rate, increasing the enterprise formation rate, social assistance for disadvantaged groups – youth, minorities, enhancing regional economy etc
. Applying for a program of such incubators should be highly questionable and a matter for thorough analysis, as it may involve long-term hindering agreements, or sharing a percentage of 20 to 80 of the company ownership and it just may not be worth it.
Who may apply and what are the conditions?
Any entrepreneur may apply for entering an incubator program on condition that his business project is viable or his business has great potential. A necessary condition is that the applicant must have a business plan containing relevant information.
There are also specific conditions and requirements for admission into such programs that vary from case to case, usually referring to the business industry, business location, the for-profit/non-profit strategy of businesses or financing means.
Programs usually last up to three years.
Advantages and disadvantages of resorting to a business incubator
On one hand, business incubators provide:
financing, without requiring
customized professional assistance
entrepreneurial training
economical access to facilities
inexpensive business services
opportunities for entrepreneurs to connect with people who can promote business growth and profits
a forum for exchange of ideas among entrepreneurs
On the other hand, there may be some inconveniences too with business incubators. With incubators that have the goal of gaining a profit, the necessary agreement to be reached upon can be most of the times a very cumbersome one for most firms.
With non-profit incubators sponsored by governments there is the tendency to favor high-tech startups that planning for rapid growth (as thus they will create more jobs) rather than more traditional businesses.
Business incubators may be a very helpful opportunity to start your business; they can constitute a real boost for a beginner business.
