For a start up, the first few years of life are most critical. It’s a pivotal time that only a fraction of ventures have the capital, resources, and stamina to survive. Stepping in to help entrepreneurs are business incubators, which provide coaching, networking opportunities, and even affordable office space to newly minted entrepreneurs.
Robert Jackson, who operates a business incubator as CEO of the African-American Chamber of Commerce of Central Pennsylvania in Harrisburg, Pennsylvania, says incubators play the role of mentor to fledgling start ups. Some of these centers specialize in specific industries, while others focus on assisting minority- or women-owned enterprises.
Sheila Mixon, a senior business coach for the Economic Empowerment Center with the Urban League of Greater Cincinnati, helps small businesses locate and apply for business incubator services. Each incubator has its own rules for participation, she says, but in general, successful applicants submit detailed business plans and can pay for incubator office space (which is often subsidized). As an example, the AACCP “charges anywhere from $150 to $500 per month,â€ says Jackson. A lease generally covers individual office space and shared conference rooms.
Incubators often operate in partnership with colleges, chambers of commerce, and other resource organizations. To find a local incubator, Mixon suggests contactingÂ your local chamber of commerce, Urban League Small Business Administration office, or the . Of course, businesses that apply for an incubator program must prove they’re legitimate. “They should have the basics, such as a business checking account, registration with the state, and a tax ID number,â€ says Mixon.Â For admission to the program, entrepreneurs must sell their vision to the incubator’s selection committee. They should describe how their company can be profitable, create jobs, and complement the incubator’s goals (such as job creation or advancing technology).
Also, some incubators require entrepreneurs to attend management seminars.Â Ashtae Products Inc., a haircare company in Greensboro, North Carolina, partners with North Carolina A&T University to operate the Business & Entrepreneurship Skills Training Center incubator. BEST Center members must take a nine-month course in business ownership, says Michael Woods, Ashtae’s CEO. He explains that “participants have to spend the time in the classroom to understand the financials,â€ such as profit margin and return on investment (ROI). Many start ups go out of business because their principals don’t understand those numbers, Woods asserts. Entrepreneurs may even find customers within the halls of their own incubator, says Jackson.
After a few years with an incubator, start ups should be ready to graduate. “The typical length of time is about five years,â€ says Mixon. “Entrepreneurs have to make sure they’re constantly planning, so they’ll be ready to move on when their time is up.â€
How to Benefit From a Business Incubator
This article originally appeared in the January 2010 issue of Black Enterprise magazine.