White Paper on Incubators
Purpose
Business incubation is a business support process that accelerates the successful
development of start-up and fledgling companies by providing entrepreneurs with an
array of targeted resources and services. A business incubator’s main goal is to
produce successful firms that will leave the program financially viable and freestanding.
While highly adaptable, the most common goals of incubation programs are:
• Creating jobs in a community;
• Enhancing a community’s entrepreneurial climate;
• Commercializing intellectual property and new technologies;
• Retaining businesses in a community; building or accelerating growth in a local
industry; and
• Diversifying and strengthen local economies
Critical to the definition of an incubator is the provision of management guidance,
technical assistance and consulting tailored to young growing companies. Incubators
usually also provide clients access to appropriate rental space and flexible leases,
shared basic business services and equipment, technology support services and
assistance in obtaining the financing necessary for company growth. These services are
usually developed or orchestrated by incubator management and offered both in the
business incubator and through its network of contacts.
History
The first incubator was established in New York in 1959. In 1980, there were 12
incubators in North America, and in 2006 there were more than 1400. The earliest
incubation programs focused on a
variety of technology companies or on
a combination of light industrial,
technology and service firms – today
referred to as mixed-use incubators.
However, in more recent years, new
incubators have emerged targeting
industries such as food processing,
medical technologies, space and
ceramics technologies, arts and crafts,
and software development. Incubator sponsors have also targeted programs to support
microenterprise creation, the needs of women and minorities, environmental endeavors
and telecommunications.
Economic Impact of an Incubator
According to the National Business Incubator Association (NBIA), the business
incubation is an economic development best value:
• For every $1 of estimated annual public operating subsidy provided the
incubator, incubators generate approximately $30 in local tax revenue alone.
• NBIA members report that 84 percent of incubator graduates stay in their
communities and continue to provide a return to their investors.
• Publicly supported incubators create jobs at a cost of about $1,100 each,
whereas other publicly supported job creation mechanisms commonly cost more
than $10,000 per job created.
• NBIA estimates that North American incubator clients and graduates have
created approximately half a million jobs since 1980. That is enough jobs to
employ every person living in Denver, Colo.
• Every 50 jobs created by an incubator client generate another 25 jobs in the
community.
How to Start an Incubator
Research indicates, and the National Business Incubator Association (NBIA), as well as
the Michigan Business Incubator Association (MBIA), outline the following steps in
starting an incubator:
• Conduct an industry market analysis to determine incubator focus and demand;
• Conduct a feasibility study to determine if there is available funding and an ability
to meet the demand;
• Establish a business plan which establishes the incubator and starts operations;
• Develop a long-term operating plan in terms of financials, ownership,
governance, management and operation; and
• Identify a support network of services support for new ventures and the
professional service providers.
The Incubator Summit
On March 12, Jackson Community College, Baker College, and Spring Arbor University
are sponsoring and co-hosting an Incubator Summit to gain best practice knowledge
about how incubators/accelerators are typically structured; to identify ideal
incubator/accelerator characteristics essential for Jackson County growth, and identify
subcommittee members to address the gap. The day will start with speaker Chuck
Stein, a member of NBIA, who will help describe the critical components of a successful
incubator. Facilitated break-out sessions will follow where groups of approximately 10
will begin to brainstorm incubator ideas for Jackson County. Larry Molnar, president of
MBIA, will close up the session by addressing the facilitated ideas and how they relate
to the steps in starting an incubator in Michigan’s economy (agenda attached).
PLEASE JOIN US!
To gain best practice knowledge about how incubators/accelerators are typically
structured; to identify ideal incubator/accelerator characteristics essential for
Jackson County growth and identify subcommittee members to address the gap.
Sponsored and hosted by: Baker College, Jackson Community College, Spring Arbor University
Location: Jackson Community College• George E. Potter Center • Baughman Theatre
Date: March 12, 2008 • 7:30 AM to 1:00 PM
7:30 am Registration and Breakfast
8:00 am Welcome
8:15 am Keynote Address
Chuck Stein, Strategic Development Services,
member National Business Incubator Association
What are accelerators/what are they not?
Key formula factors
9:45 am Break
10:00 am Breakout Sessions (Federer Rooms)
11:00 am Closing Address
Larry Molnar
Michigan Business Incubator Association
11:30 am Lunch, Report Out, and Discussion
1:00 pm Dismiss
There is limited seating for this FREE event.
Please RSVP by March 6 by calling JCC 517.796.8443
SPONSORED IN PART BY: