While most people recognize the dotcom era as the birth of business incubation, startups have received support from service organizations, large corporations, universities, and government agencies for decades. All have had a similar mission of helping the fledgling startup survive and become company with a viable business model, more or less.
For the record, a business incubator is an organization designed to accelerate the growth and success of entrepreneurial firms through an array of business support resources and services that could include physical space, capital, coaching, common services, and networking connections (source: Entrepreneur.com). Be advised that many incubators specialize by industry, technology, startup maturity, or location. Some charge rent and offer administrative services, while others take equity for their support. All offer the hope of a success transition from a company wannabe to successful entity with a viable business model.
Making that happen is no easy task since startup success statistics are pretty grim. Bloomberg recently reported that 8 out of 10 entrepreneurs who start businesses fail within the first 18 months. What causes startup failure? There are many factors, but the list includes things such as ill-conceived business concepts without customers, lack of capital, bad management, poor market timing, lack of experience and, oddly enough, unexpected growth.
So why should an early stage startup consider getting help from a business incubator? While incubator expertise can vary greatly, here are a few reasons for considering the help of an incubator:
- Mentors – Most incubators offer the assistance of cagey veterans who have started and successfully managed companies. While some advice may be technical, much is wisdom earned from making tough decisions and living them.
- Access to Funding – Savvy investors prowl incubators with the hope of finding the next big thing. This early stage seed funding is expensive money but may be the difference between success and failure.
- Like Minded People – Incubators provide a watering hole for innovative startups that have similar visions of business success. Often the incubator environment is stimulating and fun. The camaraderie can be contagious.
- Mistake Repellent – OK, I invented that term. Look at this way, an incubator can provide a road map of how to start up a startup. This includes what to do and what pitfalls to avoid. This counsel can save time and money. Big time.
- Introductions to Professional Services – This can include intellectual property attorneys, CPAs and bookkeepers, insurance agents, and sources for manufacturing prototypes. Once again this can save time and money.
- Accountability – Some incubators are run like boot camps with daily intellectual aerobics; others softly coach and prod the founders forward, but all hold the startups to well defined goals and milestones. This may be the most important factor to consider.
Starting up a business is unbelievably exhilarating and perilous. While you can go at it alone, business incubation can provide a safer and quicker path to success.
John Bradley Jackson
Director of the CSUF Center for Entrepreneurship and Founder of the CSUF Startup Incubator