Business Incubators

Business incubators provide start-up and fledgling companies with business and management assistance, affordable space, and shared support services. They are an alternative to the office at home or the long-term lease.

A business incubator's services usually include:

• A network of relationships with other business owners who provide support for each other and who may become customers or suppliers;
  
• Financing assistance, such as help in obtaining a bank loan or assistance in gaining access to federal and state R&D funds;
  
• Business and technical assistance through a combination of in-house expertise and a network of community support;
  
• Shared business services such as telephone answering, bookkeeping, word processing and other secretarial help, receptionist services, and access to fax and copy machines, computers, and business libraries;
  
• Flexible space and flexible leases, often at below market rates.

Business incubators are generally operated by universities, colleges and community colleges, for-profit businesses and economic development agencies, local governments, or consortia of all of these organizations. They are often targeted to serve the needs of light manufacturing and service firms and those developing new products or engaged in research and development. Incubator tenants may also include construction-related, sales and marketing, or wholesale and distribution firms.

Incubators vary in the services they offer and in the charges to their tenants. Some guidelines to consider when looking at a business incubator are:

• Does the facility appear to be managed well? Does it have support from sponsoring organizations? Who are these sponsors and what are their goals and reasons for supporting the incubator?
  
• What are the policies and procedures of the incubator? How long can a business remain a tenant? Is there a graduated structure as the business matures, or does the incubator take royalties or ownership right in its tenants in return for reduced charges? How simple is it to leave if the business fails?
  
• What is the experience of "incubator graduates," firms who have made use of the incubator for one to three years and then moved to their own space in the community? How about current tenants of the facility?
  
• What services does the incubator provide? Can the management offer on-site assistance and access to contacts and community business services? Does it provide seminar or training programs? Are some services provided free of charge?
  
• What are the charges for space and services? How do they compare to market rates in the area? What are the lease requirements? Is there room for business growth?

For more information on business incubators, contact these offices:

National Business Incubation Association
20 E. Circle Drive, Suite 190
Athens, OH 45701
(614) 593-4331
Small Business Administration
Business Initiative, Education, and Training
409 Third Street, SW, Sixth Floor
Washington, DC 20416
(202) 205-6665

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