If you think a business incubator is the right next step for your business, it’s time to ask yourself some questions. Do you want to grow exponentially? Are you looking for a marketing funnel? Are your expenses growing too fast, and do you need a little help paying them off? Do your business values change as an operation grows bigger and bigger, making it more difficult for this one-person show to continue what it does best? Finally, do you need a partner?
If you answered any of the above questions with a resounding yes, then it’s time to start looking for an incubator. Think about what needs to be worked out before handing over your business to someone else. How will you get paid? What type of contracts will be involved? What will unspoken obligations be associated with the business, like A commitment to share risk and profits? Some authority and responsibility dilution (consulting and decisions override)?
Do not make any changes; do not let anyone make decisions for you; do not give up your company. Do not give up control. But if you answered yes, then there is no better path than an incubator. These things are out there. You have to know how to find them.
If you answered yes, then the next important question is: How will you find one? Well, many businesses have sprung up in your city that is designed to help small businesses with feasibility studies. They are not called business incubators, but they probably offer similar services at a similar cost. This is why it’s so crucial for you to ask questions. Shop around, network, read documents carefully and make sure you know what’s involved before starting down the path with someone who may not be looking out for your best interests anyway.
If you answered yes, then it’s time to start looking for an incubator. There are many names for this kind of business, some of which are real, and some label themselves that way because it sounds cool. Here is a list of names that will be helpful if you end up looking into them:
• Business Incubator
• Technology Incubator
• Technology Accelerator (This is the name used by the Federal Government)
• Technology Acceleration Center (Now called Lean Startup. Used in Austin, Texas)
• Hardware Accelerator (Now called FactoryXchange.) (This is now called TechStars. Used in Boulder, Colorado)
• Service Accelerator (Used in New York City)
• Business Accelerators (Used by business incubation centers across the United States.)
• Business Incubation Center (Business center used by many university-based centers )
Getting Started with Business Incubators
Business incubators are kind of like dating. Not the dating part, but the “getting to know each other” part. You have many questions, and the person you’re going out with does too, but you don’t know what to ask. Sometimes things go well, and sometimes they don’t. If you’re going in blind, going in alone, or going in not being prepared, it’s probably not going to work out very well even if you do get along with your potential match. Yes, this is true even if you think the other person is gorgeous from across a crowded room where they met your gaze and smiled at you from across a sea of people who were only interested in themselves. The truth is if you don’t know what you want and why, even if your potential match happens to be gorgeous, it still won’t work out.
The Internet makes it possible to connect with hundreds of business incubators or accelerators across the country and worldwide. This helps you find a business incubator that’s not only looking to work with you but also helping other startup entrepreneurs like yourself. The next step is “testing the waters” by talking to them about what they can offer. They need to be completely transparent about what they offer and how much they charge for their services. Then ask for references from other entrepreneurs who have recently worked with them. Remember, they need to trust you too, so if you’re not ready to talk about yourself just yet, then bring a list of detailed questions that will help them help you.
Now that you’ve got a good sense of what’s out there and how it works, it’s time to find one and at least sit-down and start talking. They may be able to offer the kind of support and resources for your business that will put it on the path to success. For example, perhaps your business will play a critical role in their expanding growth plan, and they want your help with funding. Ask them if they can match you up with several other entrepreneurs that you’ll be able to work with as well as learn from. You may also ask them how much it costs for their services. If the prices are too high, it may be because they don’t care about your business and your best interests as much as you do.
If you decide to sign up with a business incubator or accelerator, make sure you know upfront what’s involved and what costs (if any) will be associated with keeping your business there. Many accelerators and incubators offer a “first-year cycle” for companies to help pay off smaller debts incurred during the startup phase. The first-year cycle can be as long as nine months, but some business incubators offer this for free. Others charge $500-$3000, usually for all startup expenses during the first year. The costs of each business incubation program vary greatly based on the number of hours you’ll be working with them, the total amount of money they’ll invest in your company, and how much you pay them (if any).
You’ll want to make sure that it’s okay with you if they want to request certain types of information from you. Information like financial records, technical drawings, and any other information will help them assess what expertise is needed at your company to help it succeed. Like any new relationship, these are things you should get comfortable with before you jump in. Your incubator or accelerator will get to know your business better over time and will likely have good ideas for growing the company.