by Dinah Adkins
In a speech that kicked off the Canadian Association of Business Incubators' recent conference in Toronto, NBIA President and CEO Dinah Adkins offered a list of 10 keys to effective business incubation. Afterward, several people asked Adkins if she could make the list available to them, so NBIA decided to provide it to all our members via NBIA Review. The following points are adapted from Adkins' May 1 speech.
1. Effective business incubation programs are based on legitimate feasibility studies and business plans. These essential documents must identify the market an incubator will serve and prove its financial viability. As June Lavelle, former NBIA board chairwoman and an incubation industry pioneer, used to say, "Some of these things were so poorly put together that God himself couldn't manage them."
2. Business incubators are service programs, not buildings. No building can grow companies, provide mentoring and hand-holding, and assist an emerging company in meeting benchmarks necessary to growth. It has been many years since any knowledgeable person thought a building was the key innovation in business incubation. If your stakeholders aren't aware that they need to invest in people and knowledge more than in bricks and mortar, you need to work with them to open their eyes.
3. Top incubators are well managed, which means they provide appropriate salaries and benefits to individuals who have the skills to help companies grow and to transform their communities. If local authorities pay for a concierge, they will get a multitenant building with a receptionist, not a vibrant business incubator that can grow the local economy.
4. Flexibility and commitment to service are key to effective incubation. Incubator staffs themselves must be entrepreneurial and nonbureaucratic and recognize that they're in a service industry. Not only do they have to help companies develop management teams, they also have to get the mail out on time. They must hold a special relationship with their clients – both leader and servant – and only those types of personalities are appropriate for incubator staff.
5. Effective business incubation managers are proactive in the provision of services. They screen clients, analyze their strengths and weaknesses, help set benchmarks for growth, and bring in mentors and business service providers to provide customized assistance. Effective incubator managers monitor these activities, garnering enough feedback from the entrepreneurs and the mentors to determine what is and isn't working. Effective incubator managers don't make a referral and walk away, confident that they've done their job.
6. A top-of-class program knows its mission, and management, board and staff clearly understand and work to support that mission. Regular evaluation of all aspects of the program ensures that the incubator meets its goals, evolves with the market, and incorporates new tools and technologies to better serve its clients.
7. The best business incubation programs are well integrated into their community networks, resources, and economic development plans and strategies. Gone are the days of stand-alone programs lacking support from economic developers, academics and the business community. More and more, we see incubation programs at the nexus of significant angel equity investing networks, publicly sponsored seed funds, technology infrastructure development and commercialization programs, entrepreneurial campuses, or youth entrepreneurship programs.
While these programs recognize that their core competency is helping entrepreneurs succeed and supporting the growth of profitable new companies, they also recognize that they must catalyze – if not actually create – new mechanisms and networks that can address every gap in the chain from technology or business concept through company creation, incubation, and funding, to post-graduation relocation and support.
8. Top incubators adhere to the two principles and 10 best practices of business incubation published by NBIA (see Principles and Best Practices of Successful Business Incubation). These best practices include ensuring that management time is focused primarily on serving companies, rather than managing buildings, raising money or holding politicians' hands. In fact, NBIA research has shown that incubators that adhere to best-practice standards have better outcomes and are more self-sufficient and sustainable. Public investors in these incubators get more return for their investment.
9. Top incubator managers engage in continual learning. After all, this field is not like accounting, which has been around for more than 1,000 years. Business incubation is only about 20 years old, and not a day passes when someone doesn't develop a new tool or technique or uncover a key piece of information that can help us grow companies. Top incubator managers engage in professional development activities, ongoing learning and networking to improve their skills.
10. Effective incubator managers are committed, idealistic and hard-headedly realistic at the same time. They take a hard and honest look at their communities, roll up their sleeves and get to work. They recognize that our successes are primarily limited by the size of our dreams.
Keywords: best practices
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