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EDA Study Confirms Value of Best Practices

A new study by the U.S. Department of Commerce Economic Development Administration confirms that business incubation contributes to entrepreneurial success, demonstrates that the most successful incubators employ best practices and shows that incubator programming and management have the greatest impact on client success.

The report, Incubating Success: Incubation Best Practices That Lead to Successful New Ventures, explores the relationship between incubator operations and client company success. The results indicate that a combination of multiple incubator practices, policies and services lead to optimal outcomes. These include “having a written mission statement, selecting clients based on cultural fit, selecting clients based on potential for success, reviewing client needs at entry, showcasing clients to community and potential funders, and having a robust payment plan for rents and service fees.”

“The project started in 2008,” says Linda Knopp, NBIA’s director of policy analysis and research, who edited the report. “It represents a lot of work. It shows that some ‘best practices’ are especially effective.”

More than 110 U.S. incubation programs participated in the study. Eligible organizations needed to be operating at least five years, targeting start-up companies and providing specific incubation services.

While the effectiveness of best-practice incubation programs comes as no surprise to those who follow the industry, some of the details in the EDA study are likely to draw special attention, especially of business leaders and political decision makers for whom business incubation has been off the radar. For instance, the researchers found that client outcomes depend more on the quality of the incubation program than on the economic conditions of the region in which the company is operating. This could come as good news to economically depressed areas that are thinking about establishing new incubation programs or expanding existing incubators.

The report was authored by David A. Lewis of the University at Albany, SUNY, Lawrence A. Molnar of the University of Michigan and Elsie Harper-Anderson of Virginia Commonwealth University, with assistance from NBIA.

Using the study’s results, the research team, which also includes NBIA Partner Cybergroup, created a Web-based tool for incubation practitioners that measures their program’s performance compared with industry best practices and provides feedback about how they can improve their performance.

By building on existing knowledge about business incubation, identifying best practices in a range of incubation activities, and providing an evaluation tool for incubation practitioners, this study provides valuable information and recommendations for policymakers at the federal, state, and regional levels. To learn more about the project or to download a copy of the report, visit http://edaincubatortool.org.

The National Business Incubation Association (NBIA) is the world’s leading organization advancing business incubation and entrepreneurship. Each year, it provides thousands of professionals with information, education, advocacy and networking resources to bring excellence to the process of assisting early-stage companies. An elected, voting board of directors representing the world's leading incubators governs the association.

The New Jersey Business Incubation Network (NJBIN) is a collaborative statewide community of business experts, resources and facilities dedicated to enhancing the commercial success of early-stage entrepreneurial companies, growing higher paying jobs in New Jersey and supporting the Economic Growth Strategy for the State.

Copyright © 2012 NBIA