Somewhere in the process of starting your business, you may have wondered if you should join an incubator.
An incubator is a place where startup and early stage companies can live.
If your business is accepted into an incubator, you will receive resources to help you build your company. These may include office space and equipment, utilities, internet service, mentors, perhaps a receptionist to take your calls or access to discounted or free accounting services, attorneys or other professional service.
Another valuable benefit is that some incubators arrange pitch meetings, in which you can discuss your company with angel investors. Also, there are networking opportunities; even if you don't find an investor, you'll likely meet numerous community business leaders who can help advance your company's goals.
In other words, you do the work of planning, building and growing your business, and the right incubator can make it easier for you do your work.
If you're interested in joining an incubator, consider the following:
First, not all incubators are alike.
No two incubators are alike; some could be a perfect fit for your business whereas others won't. Hopefully, whether a company is a good fit will be determined during the application process and in your due diligence of talking with company founders who have been through the program.
There are many types of incubators including for-profit and those operated by your state, county or local university. Some incubators, especially in urban areas are more interested in helping your business grow, to improve the local economy, so they may not ask you for equity. While others, typically the for-profit incubators, are motivated to find potentially successful businesses with the eventual goal of monetizing the equity they take in your company.
You also may want an accelerator, which is not an incubator, although it's close and often used interchangeably in conversation. Accelerators generally take in a business with a lot of potential and help it go from surviving to thriving. Accelerators often give startups investment funding (in exchange for equity) and ample access to a network of experienced professionals. These programs often last a few months and are designed to get your business up and running as quickly as possible.
You might stay in an incubator for a couple of years, and if you change your business plan a few times during that period, that's okay. Incubators don't want business people who are wafflers and daydreamers, but they recognize that many startups take some time to get it right. Still, one day, just as with the accelerator, your business will be deemed successful enough to “graduate”—the goal for both the company founder and the incubator.
How to find an incubator.
Incubators are easy to find, but it might be a challenge to get accepted since there is often much competition. Start with an Internet search on “incubator in XX location.” Then, try the National Business Incubation Association or your state/county Economic Development department. Also, find newspaper articles covering the best incubators in the state, and look for ones that seem to be a good fit for your business.
Obviously, if you find an incubator that specializes in nurturing tech businesses, and you have a cookie shop, that isn't going to be a good fit for you – and, yes, there are incubators that offer commercial kitchens for entrepreneurs who want to get their food business up and running.
When you find an incubator you like and is conveniently located, read its website, learn its application process, know its track record of having successful graduates and its fees. Then, you can determine if it is a good fit and if the economics are acceptable. You will need a solid business plan to be accepted.
It comes down to your business plan.
While incubators have a reputation for being more interested in the entrepreneur's character than the actual business (because, as noted, maybe your company's focus will change), the reality is – you need a strong business plan. With competition being stiff, you can't just apply and hope everyone will notice how driven and intelligent you are. You need to write a formidable business plan that can successfully compete.
And then when accepted, if your business plan needs work, your mentors can help you refine it. But you'll never get in if your business plan doesn't show much potential and promise.
- Do your research. Not all incubators are alike.
- Finding an incubator isn't hard; getting into one, is.
- Your key to getting in is a solid business plan.
- Start looking for incubators to apply to. You can find plenty by searching the Internet.
- Continue tinkering with your business plan and look for any weak spots that might come up during the application process.