Startup companies are similar to infants–the first few years of life are the most fragile. For many entrepreneurs, business incubators are crucial to helping them survive this delicate period of meeting new customers while managing new expenses.
Incubators are mentoring centers that provide coaching, networking opportunities, and even affordable office space, says Robert Jackson, CEO of the African American Chamber of Commerce of Central Pennsylvania (AACCCP) in Harrisburg, Pennsylvania. Incubators often operate in partnership with colleges, chambers of commerce, and other resource organizations to offer their services to startups. Some specialize in minority and women-owned businesses.
Jackson and other experts say to make the most of the time spent in a business incubator, entrepreneurs should adhere to the rules, network with other companies consistently and manage their time well.
Know the requirements. Sheila Mixon, a senior business coach with the Urban League of Greater Cincinnati, helps small businesses locate and apply for business incubator services. “Entrepreneurs can find an incubator by doing a simple Internet search,†she says.
Once a business owner has found a potential match, they usually submit an application and must then be selected before they can join the incubator, Mixon says. Owners should have a business plan and be able to prove that their business is a legitimate up-and-coming company. “They should have the basics, such as a business checking account, registration with the state, and a tax ID number,†she says.
apper amp_ad_1 ampforwp-incontent-custom-banner ampforwp-incontent-ad2">Participating companies should also be prepared to pay the lease for any offices or conference rooms they use, though rates may be below-market. “Our incubator charges anywhere from $150 to $500 per month for office space,†Jackson says.
Some incubators require owners to attend regular business management seminars. Ashtae Products Inc., a haircare company in Greensboro, North Carolina, partners with North Carolina A&T University to operate the Business & Entrepreneurship Skills Training (BEST) Center, a local business incubator. Entrepreneurs affiliated with the BEST Center must take a nine-month course on business ownership, says Michael Woods, Ashtae CEO. “Participants have to spend the time in the classroom to understand the financials.â€
Network, network, network. Once accepted into a business incubator, entrepreneurs should take advantage of the networking opportunities they bring, including attending any sponsored seminars or lectures.
There are also informal ways to network. Jackson says that the AACCCP’s incubator houses companies in diverse industries–from legal representation to event planning to trash hauling–and owners often meet with each other to discuss their business needs. “Entrepreneurs can find new customers within the halls of their own incubator,†he says.
Leave the nest. If there is one disadvantage to incubators, it’s that their guidance doesn’t last forever, Mixon says. “The typical length of time for services is about five years,†she says. At the five year mark, start-ups should have had time to establish a solid sales history and a healthy balance sheet, and be ready to function without start-up assistance, says Mixon. “Entrepreneurs have to make sure they’re constantly planning, so they’ll be ready to move on when the time is up.â€
Resources
Entrepreneurial Development Center – African American Chamber of Commerce of Central Pennsylvania
North Carolina A&T Business and Entrepreneurship Skills Training Center