When you plant a flower, you need a few key ingredients. First, you need rich soil and fertilizer to nurture the seed. Water helps make the roots grow, and expert cultivation pushes the plant to thrive. This is much like the role of business incubators for entrepreneurs and communities.
Business incubation helps a startup company take a business idea or concept and make the dream a reality. The International Business Innovation Association (IBIA) defined business incubation as the process of transforming early-stage companies through key development phases until becoming self-sufficient. In other words, business incubators provide the tools and resources for the entrepreneur to succeed.
Types of Business Incubators
That being said, not all entrepreneurs are the same, and neither are business incubators. Plus, the concept of business incubation isn’t new by any means. Traditional business incubators have been around since the 1960s and paved the way for virtually every type of incubator you can think of worldwide. The kinds of incubation include the following:
- startup studio
- startup accelerators
- kitchen incubator
- virtual business incubators
- seed accelerators
- corporate incubators
- academic incubators
- private investors incubators
There’s also a difference between an incubator and an accelerator. Incubators usually work with a startup in the early stages of the process and cater more to their unique needs.
Accelerators typically take on startups early but have a faster timeline and set goals that may not cater to the individual company. They might also offer seed money in exchange for a stake in the startup’s equity. Regardless of the type of incubator or accelerator, each one offers benefits for entrepreneurs and local communities.
Role of Business Incubators for Communities
The importance of business incubators for local communities and international business is one reason the business model has persevered and continues to change. Incubation programs offer everything from job creation to important innovation.
Creates Employment Opportunities
Business incubation programs result in job growth. For this reason, many higher education organizations offer a business incubation program for their students.
Or governments invest heavily in business incubation to spur employment opportunities in specific industries. Each stage of business incubation has the end goal of success for the startup and ultimately providing job opportunities.
Pushes Economic Development
Along with job creation, incubators spur economic development in different industries and boost the economy. Without access to valuable resources, mentorship, and education, small businesses may not be able to get off the ground. Local economic development incubators are the catalyst for growth.
Fuels Innovation and Growth Mindset
Incubators provide the environment for groundbreaking research and technology to fuel innovation. Chefs can experiment with new dishes or try out new ghost kitchen concepts under the tutelage of experts at Shift Pixy Labs.
Entrepreneurs and restaurateurs need the space to grow and, through incubators, gain access to different technologies that benefit their growth and surrounding communities.
Role of Business Incubators for Startups
The National Business Incubation Association describes the role of business incubators as networking facilities supercharged to help startup companies succeed. Along with this developmental mindset usually comes a set of benefits.
Offers Financial Perks
Business incubators can help new companies save on operating costs. This can come in the way of providing a shared physical facility or kitchen.
Entrepreneurs don’t have to worry as much about financials while in the incubator. In some cases, startups may even receive help with marketing or receive seed money to get started. This way, management teams only have to focus on developing their business idea.
Provide Access to Funding
Let’s be honest, the lack of funds is what keeps new businesses from taking off. Securing capital and loans may not be easy for someone without the backing of a business incubator.
Business incubators give startups accountability and trustworthiness that may not be there without their support. Incubators may also help businesses meet angel investors and connect with investment banks. The incubation process can include financial management and financing options.
Gives Valuable Guidance and Advice
One of the biggest roles offered by business incubators is mentorship and management training. Mentors can help develop the viability of the product or service.
It shows new businesses or restaurants how to compete, develop marketing strategies, and utilize technology. The guidance and advice given by business incubators are priceless.
Connects People Together
Business incubators provide networking opportunities and access to experts in the field. These types of connections are difficult to build for other startups, not in the incubator.
Some incubators consist of cohorts in similar fields as well. This way, entrepreneurs can pool resources and grow together. There’s something magical about everyone working towards the same goal in an intensive but transformative atmosphere.
Access to Higher Education Resources
A business incubator focuses on providing educational training for management and staff. Like the one at Shift Pixy Labs, incubators have a set curriculum for each stage of the incubation process.
The management team takes kitchen entrepreneurs through a series of challenges. Once they make it through these tasks successfully, the startup graduates from the incubator. The education, training, and skills learned while in an incubator help set up the management team for success.
You may have a good idea and passion for launching it, but you may not have the knowledge or skill set needed to launch the product, restaurant, or service successfully. The most significant role of business incubators is to provide the fertile ground required for longevity and independence.
Offers a Safe Place to Experiment
At the beginning of any business, it’s an experiment to see what works and what doesn’t. But this “experimentation” can come at a cost. You can waste valuable time and resources. By the time you realize your mistakes, you’re out of money.
But business incubators are the place to try new things. So, if you have this crazy idea and you’re not sure it’ll work, incubators are the place to bounce ideas off experts, take a risk, and see if that whacky notion can pay off. Somebody may just love what you’re cooking!
The importance of business incubation can’t be underestimated. It offers the tools and resources for taking the what-if and turning it into what’s next. Business incubation is the extra nudge that counts.