Business incubators have exploded in popularity in the last few couple of years, though they have already existed for several decades. In fact, the first American business incubator, the Batavia Industrial Center, was established in 1959. Incubators generally serve to help new businesses get established during their start-up period, often providing a space to work in and a collaborative business environment.
Traditionally, most traditional incubators cover simple overhead costs and assist with office management. New businesses are often turned off by the long-term leases needed to establish an office or working space. Traditional incubators help with this process by allowing potential tenants to sign significantly shorter leases (with some contracts even going on a month to month basis). These are not insignificant benefits, but they fail to factor in the importance of personal connections that can be found through a more events-focused approach. For example, pairing organizations with similar developmental phases (planning, start-up, scale, etc.) is one way to encourage connections between new and potential start-ups that would allow for an increased diffusion of innovations.
Incubators provide invaluable benefits that helps draw in potential investors and start-ups. However, there needs to be a greater focus on the entire organizational model of how a start-up functions, and more importantly, how it will begin to transition away from the support. This recent influx of new incubators has led to an equal influx of new start-ups. However, without transitional support, these businesses are doomed to fail once they decide to strike it out on their own. In fact, one study by Alejandro Amezcua from Syracuse University indicates that incubated businesses do not have increased business lifespans, though they may experience increased growth or sales.
So how can traditional incubators help with this transitional process?
Many incubators are often paired with local universities or colleges that provide a wealth of academic resources. More research needs to be done on measuring the impact of traditional incubator systems to determine if it is a viable solution. Professor Amezcua’s research is only a single study and more research needs to be conducted to corroborate his findings.
Continue providing overhead and management assistance, but focus on creating an entrepreneurial network that fosters social interaction. This can be done by having similar start-ups share a working space and by pairing up multiple start-ups with professional mentors. This entrepreneur-focused approach strays from the usual top-down approach with its funneling of resources by emphasizing personal connections rather than resource management.
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