Planning an Incubator · 2020. 7. 3. · 5 03 PLANNING AN INCUBATOR TRAINEE MANUAL PART 2 Suite 2 Business Incubator Operations INTRODUCTION TO THE TRAINING PROGRAM This is the trainee

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Trainee Manual Part 2

Planning an Incubator

Suite 2

Business Incubator Operations

infoDevc/o the World Bank Group1818 H StreetWashington DC 20433USA

www.idisc.netwww.infodev.org/businessincubation

[email protected]

Introduction to the Training Program

www.infodev.orgwww.idisc.net

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Suite 2Business Incubator Operations

INTRODUCTION TO THE TRAINING PROGRAM

This is the trainee manual for Module 3 Part 2 – out of 11 modules in total - of infoDev’s State-of-the-

Art Business Incubation Training Program for Business Incubator Managers in Developing Countries.

infoDev (www.infodev.org) is a research, capacity building and advisory services program, coordinated

and served by an expert Secretariat hosted by the World Bank Group. It helps developing countries

and their international partners use innovation and information and communication technologies

(ICT) effectively as tools for poverty reduction and sustainable social and economic development.

infoDev is a leader in business incubation of technology-enabled enterprises. infoDev’s global business

incubation network reaches close to 300 business incubators, more than 20,000 small and medium

enterprises, and has helped create over 200,000 jobs across 87 developing countries1.

infoDev has found that high quality leadership is a key factor determining the probability of success

for an incubator. infoDev therefore seeks to increase the capacity of business incubation managers

– and their stakeholders – through one-on-one technical assistance, regional and topical peer-to-

peer networks, the bi-annual Global Forum on Innovation and Entrepreneurship, and its web-based

networking and knowledge-sharing tool www.idisc.net. This training program was designed in direct

response to repeated requests from infoDev’s technology entrepreneurship community for an in-

depth business incubation training program relevant to the developing country context.

This training program is the first-of-its-kind, drawing from the lessons, models, and examples in business

incubation from across Africa, East Asia and the Pacific, Europe and Central Asia, Latin America & the

Caribbean, Middle East & North Africa, and South Asia. More than 30 experts contributed directly to

the writing of the training modules, and the materials were tested with more than 300 professionals

in developing countries all of whom provided inputs to the final design.

This training program is designed for business incubation managers and other business incubation

stakeholders wishing to increase their understanding and know-how of the business incubation

process. It consists of 11 training modules ranging from basic introductory topics designed for

professionals new to business incubation, to specialized topics such as Technology Commercialization

and Virtual Business Incubation Services.

_____________________________________________________________

1 Source: infoDev activities from 2002 to 2009 - http://www.infodev.org/en/Article.473.html

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2Suite 2Business Incubator Operations

The modules include:

SuITE 1 – BuSINESS INCuBATIoN BASICS

Module 1 – Business Incubation Definitions and Principles

This module provides an introduction to business incubation. It introduces key definitions and

presents the main principles and good practices of business incubation. It aims to equip current and

future incubator managers and policy makers with the knowledge, skills and understanding of the

fundamentals of business incubation in order to effectively foster and encourage businesses.

Module 2 – Business Incubator Models, Including Success Factors

This module aims to illustrate various business incubator models based on practical examples of

incubators from all over the world. The ultimate goal of this module is to empower current and future

incubator managers with a thorough understanding of the various business incubator models and their

critical success factors as well as to help them identify the best model to adopt for their own incubator

to be successful.

SuITE 2 – BuSINESS INCuBATor oPErATIoNS

Module 3 – Planning an Incubator

This module, which divided in two parts, covers assessing the feasibility and designing the business

model for an incubator. The first part is aimed at providing a thorough understanding of developing

a feasibility study. This includes the steps to undertake a pre-feasibility study, the components that it

should address, as well as how to gauge the market need and decide whether an incubator is the most

appropriate solution. The second part of the module focuses on business planning to establish the

incubator business model.

Module 4 – Marketing and Stakeholder Management

This module is designed to support efficient and effective communication of the incubator with

key customers and other stakeholders based on a good understanding of the market place. This is

important since it will help the incubator to establish and increase its reputation as a sustainable

organization that fulfils its mission.

The first part of the module focuses on identifying, assessing, and reaching customers/ stakeholders, as

well as potential ally organizations providing business support services to enterprises; while the second

part is dedicated to defining the incubator’s value proposition and engaging marketing channels.

Module 5 – Financing an Incubator

The first part of this module aims to guide current and future business incubator managers through

mastering the incubator’s financial data (such as costs and revenues) in order to enable them to

identify the financing needs of the organization as well as to explore potential sources of financing.

Building on the first part, the second part of the module is dedicated to demonstrating, to current

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and future business incubator managers, how to develop a fundraising strategy and to monitor the

financial performance of an incubator.

Module 6 – Managing the Incubator

This module provides current and future business incubator managers with an overview of sound

management practices for a successful incubator.

The first part addresses the topics of incubator policies and governance and the second part is

dedicated to operations and human resources management.

Module 7 – Monitoring, Evaluation and Benchmarking

This module aims to provide incubator managers with the required information, skills and insights to

develop their own monitoring and evaluation system and to carry out benchmarking activities.

The first part of the module is dedicated to helping the incubator manager understand the added

value of monitoring and evaluating the performances of his/her incubator; defining relevant and

adequate performance indicators; and exploring how to monitor and evaluate, notably by studying

existing tools and methodologies.

The second part focuses on empowering the business incubator manager to use the data collected

through monitoring and evaluation activities to compare the business incubator’s performance with

those of similar organizations.

SuITE 3 – ADVANCED INCuBATor MANAGEMENT

Module 8 – Implementing a Mentoring Program

This module provides, in its first part, a conceptual framework for gaining a thorough understanding

of the mentoring process and its purposes from three perspectives: that of the business incubator, the

mentor, and the mentee.

The second part of the module focuses on how to implement a mentoring program.

Module 9 – Deals and Financing for Incubator Clients

This module aims to provide a thorough understanding of the alternative sources of financing for

incubator clients by notably describing programs and processes that will enable the incubator manager

to assist his/her clients in accessing financing.

The first part focuses on preparing incubatees to engage in the process of accessing financing while

developing the capacity of the incubator to assist incubatees in accessing financing. The second part of

the training module explores financing from the perspective of both the incubatees and the incubator.

Module 10 – Technology Commercialization through Incubation

This module describes technology commercialization divided in two parts. The first relating to

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challenges and lessons learned associated with this process as well as how to manage expectations

regarding the results of technology commercialization. This part also concerns the role of the incubator

in facilitating technology commercialization in the pre-incubation phase.

The second part of this module focuses on the role of the incubator in technology commercialization

in both the incubation and the growth phases.

Module 11 – Setting Up Virtual Services

The first part of this module provides a conceptual framework for understanding virtual services. It is

designed for current and future business incubator managers who are considering virtual incubation

either as a stand-alone business model or as part of their overall incubator service portfolio to extend

their current service offering.

In its second part, the module aims to guide current and future business incubator managers and help

them to decide if virtual incubation is the right solution for their incubator. The module then explores

the most common challenges and how to address them.

Figure 1 groups the modules by preferred level of experience and suggested module sequence.

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Suggested to be done

sequentially

Suggested to be done

sequentially

These modules are for incubation practitioners who are “beginners”

or incubator stakeholders

Module 1 - Business Incubation Definitions and Principles

Module 2 - Business Incubator Models, Including Success Factors

Module 3 - Planning an Incubator

Don’t need to be done sequentially

Module 4 - Marketing and Stakeholder Management

Module 6 - Managing the Incubator

Module 7 - Monitoring, Evaluation and Benchmarking

Module 8 - Implementing a Mentoring Program

Module 5 - Financing an Incubator

Module 9 - Deals and Financing for Incubator Clients

These modules are for incubator managers and

their staff

MoreExperienced

Don’t need to be done sequentially

These modules are for incubation

managers dealing with high tech or looking at

extending their service offering

Module 10 - Technology Commercialization through Incubation

Module 11 - Setting Up Virtual Services

Stand Alone Modules

LessExperienced

Figure 1 – Module Selection and Sequence


Acknowledgements

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ACkNOWLEDGEMENTS

The training curriculum was developed by the following consortium under the direction of infoDev:

European Business & Innovation Centre Network

• robert Sanders, Head of International Projects

• Julia Brethenoux, Project Manager

Babson College

• Mark P. Rice, Frederic C. Hamilton Professor for Free Enterprise

Sociedade Portuguesa de Inovação, S.A.

• Augusto Medina, President

• Mark Spinoglio, Senior Consultant

• Douglas Thompson, Senior Consultant

• Nuno Gonçalves, Consultant

infoDev wishes to thank its innovation and entrepreneurship community, including those who provided

material for and whose names appear in the case studies. In particular, infoDev wishes to thank the

following individuals for their contributions to developing this training curriculum:

• Seth Ayers ICT – Policy Specialist, infoDev

• Michel Botzung – Business Edge Manager, International Finance Corporation

• Alistair Brett – Cottingham Associates LLC, Consultant Member of the Science Technology

Innovation Global Expert Team, The World Bank

• raimund Broechler – Senior Delivery Manager, Intrasoft

• Valerie D’Costa – Program Manager, infoDev

• Heinz Fiedler – infoDev regional Facilitator for the Middle East and North Africa

• Han Fraeters – Manager, The World Bank

• Steve Giddings – infoDev Regional Facilitator for the Africa region

• Stephen Hampson – Managing Partner, Powerhouse-Ventures

• Jane Hill – Venture Partner, Powerhouse-Ventures

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• Gideon Maas – Co-Director of the Institute of Applied Entrepreneurship at Coventry university,

United kingdom

• Kiragu Maina – Senior operations officer, International Finance Corporation

• Siobhan McQuaid – Project Director, ABÚ International Project Management

• Mustapha Mezghani – infoDev Regional Facilitator for Africa

• Mark Nielsen – Senior Advisor, Business Edge Management Training, SME Management

Solutions, International Finance Corporation

• Ellen olafsen – operations officer, infoDev

• Edward rubesch – Director, Technology Licensing office National Science and Technology

Development Agency, Thailand

• Tania Saba Mazraani – Director, Technology & Health, Berytech, Lebanon

• Jill Sawers – infoDev Innovation and Business Incubation Consultant

• Stefan Schandera – infoDev Regional Facilitator the East European and Central Asian region

• Julian Webb – infoDev Regional Facilitator for Asia

• Cesar Yammal – infoDev regional Facilitator for Latin America and the Caribbean

• Krzysztof Zasiadly – infoDev Innovation and Business Incubation Consultant

• Sylvia Zulu – SME Toolkit Program Manager, International Finance Corporation

• Sheila Jagannathan – Senior Education Specialist (E-Learning), The World Bank Institute

• Natasha kapil – Private Sector Development Specialist, The World Bank

• Anthony Lambkin – Task Manager, Low-Carbon Innovation Program, infoDev

Module Index


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INTRODUCTION TO THE TRAINING PROGRAM 3

ACKNOWLEDGEMENTS 11

MODULE INDEX 15

TABLES AND FIGURES 18

MODULE OBJECTIVES 19

INTRODUCTION TO THIS MODULE 23

COMPONENT 2 (PART 2 TRAINING): BUSINESS PLANNING 27

CoMPoNENT INDEX 29

CoMPoNENT oBJECTIVES 29

SECTIoN 2.1: VISIoN & MISSIoN STATEMENTS, STrATEGIES For AN INCuBATor 30

SECTION 2.2: DESIGNING A SUSTAINABLE BUSINESS MODEL 42

SECTION 2.3: COMPONENTS OF THE INCUBATOR BUSINESS PLAN 48

SECTION 2.4: THE IMPORTANCE OF THE INCUBATOR MARkETING PLAN 52

SECTION 2.5: MANAGEMENT AND OPERATIONAL PLANNING 56

COMPONENT CONCLUSIONS 62

CASE STUDIES 63

PLANNING AN INCUBATOR AS THE LOCAL SOLUTION TO FOSTER LOCAL ECONOMICAL DEVELOPMENT 65

THE IMPorTANCE oF HAVING A VISIoN For THE INCuBATor 69

LE kEF ESSOR TECHNOLOGIQUE 73

BIBLIOGRAPHY 77

ANNEX: MAPUTO BUSINESS INCUBATOR FEASIBILITY STUDY SUMMARY 83

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TABLES AND FIGURES

TABLE 3 - BUSINESS INCUBATORS’ POTENTIAL STRATEGIC OBJECTIVES 35

TABLE 4 - MISSION STATEMENT OBJECTIVES TRANSLATED INTO STRATEGIES AND GOALS 38

TABLE 5 - DEAL FLOW STATISTICS BIC INCUBATORS (EUROPE) 44

TABLE 6 - BUSINESS PLAN CONTENTS INDEX 51

TABLE 7 - AVERAGE NUMBER OF CLIENTS SUPPORTED BY A FULL-TIME EMPLOYEE OF AN INCUBATOR (MEMBER

OF EBN) 60

FIGurE 1 - MoDuLE SELECTIoN AND SEQuENCE 9

FIGURE 7 - DEAL FLOW PROCESS 43

FIGURE 8 - THE ‘FUNNEL’ LEADING TO BUSINESS INCUBATION 45

Module Objectives


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The overall objectives of this module are to (1) provide a thorough understanding of planning and

implementing a feasibility study for an incubator and (2) to show how business planning can be used

to establish the incubator business model.

TRAINEE TRAINING OBJECTIVES

The training module is structured in two parts:

Part 1 is aimed primarily at individuals or stakeholder working groups who will investigate the potential

for establishing a business incubator. It will examine the steps involved in determining the viability of

establishing an incubator by means of a feasibility study. By the end of Part 1 of the training module,

the trainees will be able to:

• undertake a feasibility study for an incubator focusing, in particular, on market analysis and

stakeholder support;

• Ask the essential questions to ensure the sustainability of the planned incubator, notably

whether an incubator is the right solution;

• use the feasibility study results to select the right target market and strategic direction for their

incubator;

• Explore the physical layout options for the incubator, by taking into consideration the important

issues when planning aspects such as the physical location and the size of their incubator;

• Design the services to be offered, determining which are most appropriate and understanding

how to set prices; and

• Describe the skills set required for managing and running an incubator.

Part 2 is aimed at incubator stakeholder working groups or future incubation managers who have

completed the feasibility study for an incubator and/or have taken the decision to go ahead with the

establishment of an incubator. The aim is, building on the results of the feasibility study, to develop a

business plan for the incubator.

By the end of Part 2 of the training module, the trainees will be able to:

• Develop powerful vision and mission statements for the incubator and all its stakeholders; and

• Prepare an effective business plan for an incubator based on the vision and mission statements.


Introduction to this Module

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Establishing an incubator is a significant, long-term investment. Effective planning is a key factor

in ensuring the future success of such an initiative and the return on investment for the principle

stakeholders. The incubator should focus on areas in which there is a market need and an opportunity

for growth. To this end, this training module will provide the stakeholder working group responsible

with a systematic approach to planning an incubator, from the development of a feasibility study to a

full business plan and the establishment of optimal operational strategies.

The module is designed to be practical in nature providing future incubation managers with the tools

required to complete each stage of the planning process. Relevant case study examples are included in

order to provide stakeholder working groups with a variety of insights and perspectives from different

incubators that have been through the planning process and have resulted in the establishment

of successful incubators. Additional information regarding starting an incubator may be found by

consulting the infoDev Incubator Support Center (iDisc)2.

_____________________________________________________________

2 http://www.idisc.net/en/Topic.1.html and http://www.idisc.net/en/Article.38686.html and

http://www.idisc.net/en/Article.86.html

Component 2 (Part 2 Training):

Business Planning

www.infodev.orgwww.idisc.netwww.infodev.orgwww.idisc.net

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COMPONENT INDEX

Section 2.1: Vision & Mission Statements, Strategies for an Incubator

Section 2.2: Designing a Sustainable Business Model

Section 2.3: Components of the Incubator Business Plan

Section 2.4: The Importance of the Incubator Marketing Plan

Section 2.5: Management and operations Planning

COMPONENT OBJECTIVES

Following the introduction to the feasibility study in Component 1, Component 2 provides an

introduction to the next logical step in the establishment of an incubator – identifying the optimal

business model and putting together a business plan starting with the development of a strong vision

and mission statement and strategic objectives. Insight is given into important considerations when

deciding on whether or not to offer physical incubation space and the factors which should be taken

into account when planning for such a development.

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Section 2.1: Vision & Mission Statements, Strategies for an Incubator23

The strategic plan sets out the mission, vision and key strategic objectives of the incubator. The business

plan addresses how to achieve these objectives and includes detailed financial aspects.

These two documents which form an overall plan are essential to direct and motivate the operations

of the incubator at both a strategic and operational level. The original documents should be developed

with the board and key stakeholders, but once the incubator is up and running they should be ‘owned’

by the management team. A good policy would be to organize a strategic planning workshop once

a year (usually prior to the Annual General Meeting) at which the board, incubator manager and

key stakeholders are present. Ideally such a workshop should be held off-site and facilitated by an

independent expert in both strategic planning and incubation. The management team should prepare

the updated strategic and business plan for review and eventual ratification by the board prior to the

workshop.

In summary, the main elements of the strategic framework of an incubator are as follows:

• A vision for your future;

• A mission that defines what you are doing;

• Values that shape your actions;

• Strategies that define the approach to achieving the mission and vision;

• Strategic objectives to guide your daily, weekly and monthly actions;

• A risk evaluation; and

• Impact, monitoring and evaluation measures.

_____________________________________________________________

23 Adapted from infoDev Incubator Manager Training: Suite 3, Washington

Section 2.1.1: Vision and mission statements

A vision statement summarizes the image that the incubator would like to convey regarding its future.

For example, a manager may seek a “highly competitive area with vital enterprises creating jobs.” The

vision should resonate with all members of the organization and help them feel proud, excited, and

part of something much bigger than themselves. A vision should stretch the organization’s capabilities

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and image of itself. It should give shape and direction to the organization’s future. Visions range in

length from a couple of words to several pages. A short, catchy statement that encompasses the vision

of the incubator is recommended. This vision should be at the forefront of the minds of the employees

and client companies.

A mission or purpose statement explores the role of the incubator in achieving the vision. It is a precise

description of what an organization does. It should describe the business the organization is in. It is a

definition of “why” the organization exists currently. Each member of an organization should be able

to verbally express this mission. The following are a few examples:

The vision of the Bulungula Incubator in South Africa is “to be a catalyst for the creation of

vibrant and sustainable rural communities.” They aim to achieve this vision through their mission

“by partnering with our community, government, Non Government Organization’s and other

innovative thinkers to find synergies between the traditional rural African lifestyle and culture,

and external technologies and innovations. These synergies must always seek to enhance the

positive aspects of traditional rural life and/or mitigate the problematic aspects. They must be

in accordance with our values must recognize the fundamental human rights enshrined in our

constitution. The Bulungula Incubator further aims to be an agent for change by influencing

government and corporate policy in an effort to spread our vision more widely.”24

The mission of ‘Inkubator’ in Slovenia is “to be an operating local innovation instrument for

economic development of the Primorska operating area” with the vision “to become a recognized

and respectable full member of EBN Network”. Their mission includes their Unique Selling Point

or Proposition (uSP) which is “our strong point is our location on the border with Italy and

closeness of important science and technology institutions.”

The vision of the TREC-STEP incubator in India is “Partnership for mutual benefit across the

public and private sectors” focusing on:

• Knowledge based industrial clusters;

• Academia and entrepreneurs partnership in cutting edge achievements;

• Entrepreneurship spirit at all levels of the society;

• Intellectual asset and diffusion of wealth in the society; and

• Quality of life, environment and growth.

To this end, TREC STEP’s mission is to:

• Promote knowledge based industries;

• Develop and transfer technologies;

• Train technology and business skills; and

• Develop new project initiatives.

_____________________________________________________________

24 Source : Greater Good, South Africa - http://www.myggsa.co.za/connect/receivers/bulungula_incubator/

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The mission of Ankara Cyberpark in Turkey is “to create new resources and to improve the

utilization of existing resources of its stakeholders (shareholders, tenants, academicians,

students, government, Ankara Municipality, etc.) by providing its tenants with an atmosphere

that creates synergy, the best quality and most cost-effective techno park services.” This

responds to Ankara Cyberpark’s vision to contribute to the economical and scientific

development of the country by converting the scientific researches into technological

products as well as preventing the brain migration by offering attractive job opportunities to

highly qualified graduates and researchers.

Who develops the mission and vision statements?

• The vision and mission statement for an incubator cannot be delegated to external

parties to prepare.

• It must be owned from the outset by the key stakeholders involved in the long-term

planning and support of the incubator.

• Very often a local champion emerges with their own very clear vision about what the

incubator should set out to achieve.

• It is important, however, to get ‘buy-in’ to this vision from the outset.

• For this reason the first version of the mission and vision statements should be

developed or at least discussed and agreed by the first board of directors and key

stakeholders.

• Thereafter, although the mission and vision statements should not change frequently,

they should be reviewed for continued relevance as part of a strategic planning review

which should take place periodically at least once per year.

Section 2.1.2: How to build a powerful vision statement

Although the vision and mission statement have to be created by local stakeholders, if resources

permit it is often useful to bring in an external consultant specialized in incubation to help with

the strategic planning process. Vision and mission statements should be agreed by all stakeholders

interested in establishing and supporting an incubator in their area in the long-term. As an incubator

provides services to several clients, such as public administrators, entrepreneurs, existing SMEs etc., it

can be challenging to overcome local rivalries and differing points of view to reach a common position

which satisfies all parties. When it comes to developing the vision and mission statement, an external

consultant can help to reach a consensus by encouraging stakeholders to brainstorm and think more

creatively, to thing long-term and to aim high.

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The essence of a vision statement:

It should be a powerful motivational tool which brings all stakeholders together to work

towards a common inspirational goal.

To kick start discussions about a vision statement, the following questions could be

considered:

• What were the stakeholders’ primary motivations for setting up the incubator?

• related to these motivations and thinking more broadly, how would each stakeholder

define success for the incubator?

• From a client perspective, how would you like clients to experience and benefit from

the incubator services?

• Setting aside the question of funding, how would each stakeholder envision the

incubator in 10 years time?

Through brainstorming these points, a common vision should eventually emerge. This

vision may vary from a short sentence, such as “To be the unquestioned leader in technology

incubation within the X area” to several pages in length. Once the long-term vision for the

incubator has been created, it defines the context in which all other decisions are made.

The mission statement describes:

• Why the incubator has been established; and

• What the organization aims to achieve.

If resources do not permit an independent consultant to be used, then a neutral stakeholder from

a local university or management consultancy should be approached to chair the initial strategic

workshop.

Section 2.1.3: How to build a powerful mission statement

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A typical mission statement contains three components:

1. The overall purpose of your incubator – What are you trying to achieve right now? Why

are you in business?

2. What your incubator does – What are the core products and services it provides?

3. What is important to your business? What are the values your business holds and aims to

convey to clients and other stakeholders; for example accountability, objectivity, creativity,

and ingenuity?

To construct a good mission statement several steps are recommended:

• A brainstorming meeting should be organized amongst the stakeholders that support

the launch of the incubator. This can be combined as part of the strategic workshop in

which the vision statement and other key strategies are developed.

• This workshop will identify the needs the incubator will satisfy. It is useful at this

stage to refer to the market research completed as part of the feasibility study which

should include aspects such as the needs expressed by potential entrepreneurs and

existing SMEs and the size of the market included in

the catchment area, among others.

• A SWoT (Strengths, Weaknesses, opportunities,

and Threats) analysis is often used by organizations

as part of the strategic planning process. It can help

to clarify the positioning of the incubator in the

marketplace looking at its strengths and weaknesses

in relation to market conditions and competitors

as well as looking at emerging opportunities and

threats.

• In some cases, the mission statement may refer to

the way the incubator will be financed. This is a way

of clarifying to the users if the infrastructure in place

is financed by public funding or private income or a

combination of the two.

• Last but not least, incubator missions should always

include business creation as their main objective

either by helping to create or consolidate new high

potential growth companies or introduce innovation

in already existing ones.

Note: It is important to reiterate that although the initial mission statement is developed by stakeholders and board members, once an operational team is established it is essential they fully understand and support the mission statement. It can be an ‘elevator pitch’ or ‘mantra’ for the incubator. All team members should have this mantra embedded in their minds and be able to communicate the mission of the organization clearly and unambiguously to third parties. Mission statements should strive to be concise so that they can be easily and clearly communicated, such as “To accelerate the formation, growth and success rates of scalable, technology-based businesses and retain them in the X area.”

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There are several key points to strategies and action plans:

• The core values of a company or organization are usually defined in their guiding

principles.

• The overall objective is to align all activities within the organization toward the

common theme(s) that support a winning business strategy.

• Different strategic objectives result in different types of incubator.

• Strategic goals go beyond the mission and vision to better define how the organization

aims to relate to its business environment.

• Strategies usually consist of four or five well defined key approaches that an

organization will employ to accomplish its mission and drive itself toward the vision.

• Goals and action plans usually flow from each key approach and form the individual

elements of the strategy.

• A business model is also the means by which an organization achieves its strategy.

• operational plans concern the implementation of the strategy by identifying and

organizing the all key activities.

POSSIBLE OBJECTIVE POSSIBLE BUSINESS INCUBATOR VARIANT

TECHNOLOGY COMMERCIALIZATION

OR TECHNOLOGY TRANSFER

Technology business incubator – linked to an r&D

organization (such as a research university) e.g. Timisoara

Software Business incubator in romania:

http://www.idisc.net/en/Incubator.159.html

Section 2.1.4: Translating mission statements into strategy and action plans

Table 3 illustrates how different types of incubator are best suited to meet the strategic objectives that

are defined by the key stakeholders/ shareholders of the incubator.

36

03 P

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FOREIGN INVESTMENT ATTRACTION

Business incubator focused on the sectors being targeted. For

example:

• A technology business incubator in the ICT Industry

being used to help attract foreign companies or stimulate

joint ventures;

• Manufacturing business incubator for sub-contractors

to MNC manufacturing companies;

• International business incubators exist for

companies wanting to enter a specific market.

In Europe such incubators are known as ‘soft

landing centres’. The Euroffice incubator network

in Europe provides such soft landing facilities for

companies (for example, Indian companies) wanting to

explore or set up in Europe. To access the list of members

of the Euroffice network: http://www.cicom.fr/euro-

office/Parcipants%20List.pdf

• For Example: Polar Star: Bilateral Norwegian-Russian

Business incubator Project in Murmansk, the first

Norwegian-Russian business incubator, which contributes

to the economic development between Norway and

Russia: http://www.idisc.net/en/Incubator.273.html

EMPLOYMENT CREATION

A mixed, service industry or manufacturing business incubator

may be the most appropriate, such as Rural Technology and

Business incubator (RTBI) in India:


WEALTH CREATION

A technology business incubator and a high growth focus,

such as Maxum Incubator South Africa:


DEVELOPMENT OF A PARTICULAR

INDUSTRY

Industry focused business incubator.

There are many variants, some of which require special

facilities, such as food processing business incubators, bio-

technology business incubators, and high end ICT business

incubators, e.g. micro scale food processing at Village Business

incubator, Syrian Arab Republic: http://www.infodev.org/en/

Article.359.html

ECONOMIC DIVERSIFICATION Mixed or technology

37

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HELPING STUDENTS BECOME

ENTREPRENEURS

Pre-incubation associated with participating universities,

such as Youth to Innovation (Y2i) Contest organized by Eastern

European and Central Asian business incubators network

(www.ecabit.org).


ENTREPRENEURSHIP DEVELOPMENT

Any type of business incubator will generate important role

models and stimulate interest, but a mixed use business

incubator will be able to service a wider range of clients than

a more specialized variant.

TO ADDRESS MARGINALIZED

GROUPS, SUCH AS WOMEN, ETHNIC

MINORITIES, YOUTH, DISABLED,

REFUGEES OR RURAL INCUBATORS

When there is systemic disadvantage to overcome and

where for one reason or another these clients cannot

be accommodated in other business incubators, such as

Georgian Business incubator/Georgian Association “Women

in Business”: http://www.idisc.net/en/Incubator.214.html

Table 3 – Business incubators’ potential strategic objectives

Table 4, presents comprehensive examples of how the different strategic objectives, of different types

of incubators, laid down in a mission statement could be translated into strategies and goals.

3803 | PLANNING AN INCUBATOR TRAINEE MANUAL PART 2Su

ite 2

Busin

ess

Incu

bato

r Ope

ratio

ns

03 | PLANNING AN INCUBATOR

POSS

IBLE

OBJ

ECTI

VE

POSS

IBLE

BU

SIN

ESS

INCU

BATO

R VA

RIA

NT

EXA

MPL

ES O

F RE

LEVA

NT

STRA

TEG

YEX

AM

PLES

OF

RELE

VAN

T G

OA

LS (N

OTE

TH

ESE

GO

ALS

SH

OU

LD B

E

FURT

HER

QU

AN

TIFI

ED IN

ACT

ION

PLA

NS)

TECH

NO

LOG

Y

COM

MER

CIA

LIZA

TIO

N

Tech

nolo

gy b

usin

ess

incu

bato

r –

linke

d to

an r

&D

org

aniz

ation

(suc

h as

a r

esea

rch

Uni

vers

ity)

Build

rela

tions

hips

with

loca

l uni

vers

ities

and

rTD

(res

earc

h &

Tec

hnol

ogy

Dev

elop

men

t) in

stitu

tes

lead

ing

to th

e id

entifi

catio

n of

new

tech

nolo

gy

idea

s re

ady

for

com

mer

cial

izati

on a

nd p

rovi

sion

of a

prog

ram

of i

ncub

ation

sup

port

ser

vice

s, w

hich

will

ultim

atel

y re

sult

in th

e cr

eatio

n of

new

tech

nolo

gy

base

d bu

sine

sses

.

• Si

gn a

mem

oran

dum

of u

nder

stan

ding

(MO

U) o

r pa

rtne

rshi

p

agre

emen

t with

loca

l uni

vers

ities

and

rTD

cen

ters

.

• o

rgan

ize

a nu

mbe

r of

ent

repr

eneu

rshi

p tr

aini

ng c

ours

es p

er y

ear

in

each

RTD

cen

tre

/uni

vers

ity.

• Co

mpi

le a

dat

abas

e of

new

tech

nolo

gy id

eas

read

y fo

r

com

mer

cial

izati

on in

eac

h rT

D c

entr

e /u

nive

rsity

.

• Pr

ovid

e cu

stom

ized

ass

ista

nce

from

pre

-fea

sibi

lity

stud

y pl

anni

ng to

IPr

supp

ort r

esul

ting

in th

e es

tabl

ishm

ent o

f new

tech

nolo

gy b

ased

busi

ness

es fr

om e

ach

RTD

cen

tre

/uni

vers

ity p

er y

ear.

TECH

NO

LOG

Y

TRA

NSF

ER

Tech

nolo

gy b

usin

ess

incu

bato

r –

linke

d to

appl

ied

an r

&D

org

aniz

ation

or

tech

nica

l

univ

ersi

ty

Build

rela

tions

hips

with

loca

l uni

vers

ities

lead

ing

to th

e id

entifi

catio

n of

new

tech

nolo

gies

and

the

tran

sfer

of t

hese

tech

nolo

gies

to lo

cal b

usin

ess.

• Si

gn

a m

emor

andu

m

of

unde

rsta

ndin

g (M

OU

) or

pa

rtne

rshi

p

agre

emen

t with

loca

l uni

vers

ities

and

rTD

cen

ters

.

• Co

ntra

ct t

echn

olog

y an

d IP

r sp

ecia

lists

to

iden

tify

tech

nolo

gy id

eas

read

y fo

r te

chno

logy

tran

sfer

i.e.

pro

of o

f con

cept

exi

sts.

• Bu

ild a

dat

abas

e of

tech

nolo

gy re

quire

men

ts o

f loc

al b

usin

esse

s.

• M

atch

bus

ines

s te

chno

logy

requ

irem

ents

with

new

tech

nolo

gies

.

• Pr

ovid

e as

sist

ance

in s

ucce

ssfu

l tec

hnol

ogy

tran

sfer

per

yea

r.


ite 2

Busin

ess

Incu

bato

r Ope

ratio

ns

POSS

IBLE

OBJ

ECTI

VE

POSS

IBLE

BU

SIN

ESS

INCU

BATO

R VA

RIA

NT

EXA

MPL

ES O

F RE

LEVA

NT

STRA

TEG

YEX

AM

PLES

OF

RELE

VAN

T G

OA

LS (N

OTE

TH

ESE

GO

ALS

SH

OU

LD B

E

FURT

HER

QU

AN

TIFI

ED IN

ACT

ION

PLA

NS)

FORE

IGN

INV

ESTM

ENT

ATTR

ACT

ION

Busi

ness

incu

bato

r fo

cuse

d on

the

sect

ors

bein

g ta

rget

ed. F

or e

xam

ple:

• A

tech

nolo

gy b

usin

ess

incu

bato

r in

the

ICT

Indu

stry

bei

ng u

sed

to h

elp

attra

ct

fore

ign

com

pani

es o

r sti

mul

ate

join

t

vent

ures

;

• M

anuf

actu

ring

bus

ines

s in

cuba

tor

for

sub-

cont

ract

ors

to m

ulti-

natio

nal

corp

orati

on (M

NC)

man

ufac

turi

ng

com

pani

es; a

nd

•Int

erna

tiona

l bus

ines

s in

cuba

tors

for

com

pani

es w

antin

g to

ent

er th

e lo

cal

mar

ket.

• Id

entif

y th

e in

tere

sts

and

com

pete

ncie

s of

loca

l

busi

ness

es

open

to

in

tern

ation

al

coop

erati

on/

coop

erati

on w

ith M

NCs

in a

spe

cific

sec

tor,

such

as IC

T.

• Id

entif

y rel

evan

t for

ums f

or m

eetin

g in

tern

ation

al

com

pani

es in

tere

sted

in c

oope

ratio

n.

• M

atch

the

inte

rest

s of

inte

rnati

onal

com

pani

es

with

loca

l com

pete

ncie

s.

• Bu

ild a

dat

abas

e co

llecti

ng d

etai

ls o

f int

eres

ts a

nd c

ompe

tenc

ies

of

loca

l bus

ines

ses

open

to in

tern

ation

al c

oope

ratio

n/co

oper

ation

with

MN

Cs.

• Att

end

rele

vant

inte

rnati

onal

eve

nts

to id

entif

y re

leva

nt a

nd

inte

rest

ed in

tern

ation

al c

ompa

nies

. Mee

t with

MN

Cs to

exp

lore

requ

irem

ents

for

coop

erati

on.

• Pr

ovid

e ha

nds-

on a

ssis

tanc

e in

mat

chin

g th

e in

tere

sts

of

inte

rnati

onal

com

pani

es w

ith lo

cal i

nter

ests

lead

ing

to:

o Th

e es

tabl

ishm

ent o

f a s

peci

fic n

umbe

r of

join

t ven

ture

s pe

r ye

ar

loca

ted

in th

e bu

sine

ss in

cuba

tor;

o A

spe

cific

num

ber

of o

vers

eas

com

pani

es lo

cate

d in

the

incu

bato

r; a

nd

o A

spe

cific

am

ount

of n

ew c

ontr

acts

bet

wee

n M

NCs

and

busi

ness

es lo

cate

d in

the

incu

bato

r.

EMPL

OYM

ENT

CREA

TIO

N

A m

ixed

, ser

vice

indu

stry

or

man

ufac

turi

ng

busi

ness

incu

bato

r m

ay b

e th

e m

ost

appr

opri

ate

‘Cla

ssic

al’ i

ncub

ator

str

ateg

ies

such

as:

• Pr

omoti

on a

nd d

etec

tion

of n

ew id

eas

in

sect

ors

with

hig

hest

pot

entia

l for

em

ploy

men

t

crea

tion

and

grow

th;

• Fe

asib

ility

stu

dy a

nd b

usin

ess

plan

ning

sup

port

;

• Ph

ysic

al in

cuba

tion;

• So

urci

ng fu

ndin

g; a

nd

• O

ngoi

ng s

uppo

rt to

war

ds g

row

th a

nd

empl

oym

ent.

• o

rgan

izati

on o

f a

spec

ific

num

ber

of e

ntre

pren

eurs

hip

awar

enes

s

even

ts p

er y

ear.

• Id

entifi

catio

n of

a s

peci

fic n

umbe

r of

idea

s.

• Co

mpl

etion

of a

spe

cific

num

ber

of fe

asib

ility

stu

dies

.

• Co

mpl

etion

of a

spe

cific

num

ber

of b

usin

ess

plan

s.

• Fu

ndin

g se

cure

d fo

r a

spec

ific

num

ber

of c

ompa

nies

.

• Tu

rnov

er

and

empl

oym

ent

grow

th

duri

ng

incu

batio

n an

d po

st

incu

batio

n.

• Co

ntri

butio

n to

war

ds t

he c

reati

on o

f a

spec

ific

num

ber

of j

obs

per

year

.

WEA

LTH

CRE

ATIO

NA

tech

nolo

gy b

usin

ess

incu

bato

r an

d a

high

grow

th fo

cus

• A

s pr

evio

us, b

ut w

ith v

ery

stri

ngen

t sel

ectio

n cr

iteri

a, fo

cusi

ng o

n gr

owth

pot

entia

l as

mea

sure

d by

turn

over

. Man

y IC

T

busi

ness

es a

re c

apab

le o

f gen

erati

ng h

igh

reve

nues

, but

with

out n

eces

sari

ly c

reati

ng m

any

jobs

. Con

vers

ely

mor

e la

bor

inte

nsiv

e tr

aditi

onal

indu

stri

es m

ay b

e ca

pabl

e of

gen

erati

ng m

ore

jobs

than

wea

lth. T

here

fore

it m

ay b

e ap

prop

riat

e to

com

bine

thes

e st

rate

gies

with

sec

tor-

spec

ific

appr

oach

es a

s de

taile

d in

the

next

poi

nt.


ite 2

Busin

ess

Incu

bato

r Ope

ratio

ns

03 | PLANNING AN INCUBATOR

POSS

IBLE

OBJ

ECTI

VE

POSS

IBLE

BU

SIN

ESS

INCU

BATO

R VA

RIA

NT

EXA

MPL

ES O

F RE

LEVA

NT

STRA

TEG

YEX

AM

PLES

OF

RELE

VAN

T G

OA

LS (N

OTE

TH

ESE

GO

ALS

SH

OU

LD B

E

FURT

HER

QU

AN

TIFI

ED IN

ACT

ION

PLA

NS)

DEV

ELO

PMEN

T

OF

A P

ART

ICU

LAR

IND

UST

RY

Indu

stry

focu

sed

busi

ness

incu

bato

r. Th

ere

are

man

y va

rian

ts, s

ome

of w

hich

requ

ire

spec

ial f

acili

ties,

suc

h as

food

pro

cess

ing

busi

ness

incu

bato

rs, b

io-t

echn

olog

y

busi

ness

incu

bato

rs, a

nd h

igh

end

ICT

busi

ness

incu

bato

rs.

Putti

ng in

pla

ce th

e ne

cess

ary

tech

nica

l, bu

sine

ss

supp

ort t

ools

and

net

wor

k re

sour

ces

to s

uppo

rt th

e

crea

tion

and

grow

th o

f sec

tor

base

d bu

sine

ss.

• D

evel

opm

ent o

f a te

sting

labo

rato

ry fo

r ne

w fo

ods.

rai

se a

war

enes

s

and

prom

otion

of t

his

faci

lity

to e

ncou

rage

usa

ge. M

easu

rem

ent o

f

usag

e ag

ains

t tar

gets

.

• Cr

eatio

n of

a lo

cal c

lust

er o

f com

pani

es, r

TD p

laye

rs, i

ndus

try

play

ers

and

othe

r st

akeh

olde

rs in

a g

iven

sec

tor

and

deve

lopm

ent o

f a lo

cal

deve

lopm

ent s

trat

egy.

• Co

nnec

ting

the

natio

nal c

lust

er w

ith re

leva

nt in

tern

ation

al c

lust

ers

to

supp

ort i

nter

natio

nal B

2B c

oope

ratio

n.

ECO

NO

MIC

DIV

ERSI

FICA

TIO

NM

ixed

or

tech

nolo

gy

• D

evel

opm

ent

of n

ew m

arke

t op

port

uniti

es f

or

exis

ting

busi

ness

es

in

a pr

edom

inan

t in

dust

ry

sect

or in

the

area

, suc

h as

inte

rnati

onal

izati

on.

• Id

entifi

catio

n of

new

eco

nom

ic d

evel

opm

ent

oppo

rtun

ities

for a

n ar

ea w

hich

util

ize

som

e of

the

com

pete

ncie

s fr

om tr

aditi

onal

indu

stry

sec

tors

.

• Se

lecti

on o

f a

polic

y or

ient

ed e

ntire

ly t

owar

ds

the

supp

ort

of n

ew in

nova

tive

busi

ness

ven

ture

s

that

are

unr

elat

ed to

trad

ition

al in

dust

ry s

ecto

rs.

• o

rgan

izati

on o

f com

pany

vis

its to

ove

rsea

s tr

ade

fairs

and

exhi

bitio

ns.

• Co

mpl

etion

of t

echn

olog

y ro

ad-m

appi

ng b

y re

leva

nt e

xper

ts

to id

entif

y sp

in-o

ff d

iver

sific

ation

opp

ortu

nitie

s fr

om tr

aditi

onal

busi

ness

es.

• Pr

oacti

ve s

timul

ation

of n

ew b

usin

ess

idea

s in

non

-tra

ditio

nal a

reas

thro

ugh

wid

espr

ead

prom

otion

and

ent

repr

eneu

rshi

p aw

aren

ess

activ

ities

and

trai

ning

in u

nive

rsiti

es a

nd la

rge

popu

latio

n ce

nter

s.

HEL

PIN

G

STU

DEN

TS B

ECO

ME

ENTR

EPRE

NEU

RS

Pre-

busi

ness

incu

batio

n as

soci

ated

with

parti

cipa

ting

univ

ersi

ties

Build

rela

tions

hips

with

loca

l uni

vers

ities

or

rTD

cent

ers

lead

ing

to th

e id

entifi

catio

n of

new

bus

ines

s

idea

s an

d th

e de

velo

pmen

t of p

re-b

usin

ess

virt

ual

incu

batio

n se

rvic

es.

• Si

gn a

mem

oran

dum

of u

nder

stan

ding

(MO

U) o

r pa

rtne

rshi

p

agre

emen

t with

loca

l rTD

cen

ters

/un

iver

sitie

s.

• o

rgan

ize

entr

epre

neur

ship

aw

aren

ess

activ

ities

and

trai

ning

cou

rses

in e

ach

rTD

cen

tre

/uni

vers

ities

.

• Es

tabl

ish

a pr

ogra

m fo

r pr

e-bu

sine

ss in

cuba

tion,

pre

fera

bly

one

that

can

be d

eliv

ered

vir

tual

ly. I

nvol

ve u

nive

rsity

teac

hing

and

rese

arch

sta

ff

in m

ento

ring

new

bus

ines

s id

eas

as p

art o

f the

ove

rall

pre-

incu

batio

n

prog

ram

.


ite 2

Busin

ess

Incu

bato

r Ope

ratio

ns

POSS

IBLE

OBJ

ECTI

VE

POSS

IBLE

BU

SIN

ESS

INCU

BATO

R VA

RIA

NT

EXA

MPL

ES O

F RE

LEVA

NT

STRA

TEG

YEX

AM

PLES

OF

RELE

VAN

T G

OA

LS (N

OTE

TH

ESE

GO

ALS

SH

OU

LD B

E

FURT

HER

QU

AN

TIFI

ED IN

ACT

ION

PLA

NS)

ENTR

EPRE

NEU

RSH

IP

DEV

ELO

PMEN

T

Any

type

of b

usin

ess

incu

bato

r w

ill g

ener

ate

impo

rtan

t rol

e m

odel

s an

d sti

mul

ate

inte

rest

, but

a m

ixed

use

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(SU

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’s c

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ome

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rtua

l inc

ubati

on s

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may

be

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e 4

- Mis

sion

sta

tem

ent o

bjec

tive

s tr

ansl

ated

into

str

ateg

ies

and

goal

s

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Section 2.2: Designing a Sustainable Business Model25

An incubator is a business-like entity. In order to survive in the long-term all businesses need to

be profitable. Even in the case of not-for-profit businesses, profits are still generated, but they are

reinvested in the business instead of being distributed to owners.

Where do incubators fit in? This depends on the business model decided at the stage of planning and

establishing an incubator and is typically guided by the objectives for the incubator, such as economic

development, for-profit, not-for-profit, or others.

As mentioned in Module 2 on “Business Incubator Models, Including Success Factors” of the training

program, an incubator must adopt a business model that is geared toward sustainable success, the

unique characteristics of the incubator’s surroundings, and its objectives. A feasibility study may

suggest that certain sector specific incubators are more appropriate for the area, or whether virtual

services are /or are not needed for local growth. In essence, the study will supply a path forward for the

incubator, provided there is sufficient market, political, and civic support. To ensure that the chosen

incubator model is successful, an incubator must also identify, acquire, and secure all the necessary

and available financial resources. Doing so allows the incubator to meet its costs, attract and support

talented staff and foster business growth. A sound financial plan, which identifies a variety of funding

sources and predicts incubator expenses, is also important to an incubator’s long-term success.

Although there is much talk about ‘triple bottom line’ sustainability meaning achieving sustainability at

economic, social and environmental levels, from an incubator perspective, the three aforementioned

perspectives are paramount in any discussion on sustainability.

“A business model (also called a business design) is the mechanism by which a business intends

to generate revenue and profits.”

The issue of self-sustainability in business incubators is a perennial issue for business

incubators across the globe, one that should be considered from three principal

perspectives:

1. ‘Deal flow” i.e. the need for an ongoing critical mass of quality clients;

2. on-going support from innovation and entrepreneurship stakeholders such as the

government, industry, academia, and banks; and

3. Financial self-sustainability.

_____________________________________________________________

25 Adapted from infoDev Incubator Manager Training: Suite 3, Washington

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Incubator stakeholder working groups should take into account from the outset that for the planned

business incubator to have a significant impact on its catchment area, it needs to be financially self-

sustainable and may need to rely upon on-going financial subsidies, particularly in smaller states, and/

or integrating business incubation with other related activities. Across the globe, self-sustainability,

whilst a major aspiration, is a big challenge. As pointed out by Mark P. rice and Jana B. Matthews in

their book Growing New Ventures, Creating New Jobs, Principles & Practices of Successful Business

Incubation:

Good practice dictates that the issue should be addressed from the outset at the feasibility study and/

or business planning stage and not once the business incubator has been established when initial

(often public) funding is running out.

Section 2.2.1: Ongoing quality ‘deal flow’ – demand from quality clients

Business incubation relies upon a critical mass of clients at any one time, commonly 20 to 30, and

ongoing demand from quality clients, with something like 6 to 10 new companies entering the program

each year, as others graduate at the other end of business incubation. A critical mass of quality deal

flow may be difficult to achieve in smaller economies, calling for flexibility and creativity in the design

and management competency, marketing the services and nurturing future and sustainable demand.

Figure 7 – Deal flow process

“Experience suggests that sponsors often get the numbers wrong, either by being overly optimistic

or by making unrealistic assumptions. For example, they often underestimate the length of

time and the amount of effort required to grow a new generation of successful companies. To

achieve its objectives, the incubator needs to have the resources to grow companies – after the

high energy enthusiasm of the incubator launch and before the community is re-energized by

incubator companies’ successes. (…) If the incubator is going to be around long enough to have

an impact, it needs to be self-sustainable.”26

_____________________________________________________________

26 Source: Mark P. rice and Jana B. Matthews. “Growing New Ventures. Creating New Jobs. Principles & Practices of Successful

Business Incubation.” Quorum.p. 21.

3

100

Business Incubation Intensive

Virtual and outreach incubation

Pre-incubation

Entrepreneurship awareness

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Figure 7 shows a typical deal flow process. The figures are taken from an example in India and show

that out of 100 students attending entrepreneurship awareness events, a smaller number go ahead

with pre-incubation and virtual or outreach services before eventually three of them ending up in full

on-site incubation. Although deal flow statistics will vary from area to area, the same filtering process

applies with only a small number of the original interested parties becoming full incubation clients.

Table 5 shows average deal flow statistics for the European BIC incubator network.

Table 5 – Deal flow statistics BIC incubators (Europe)27

Table 5 illustrates that the final number of new start-ups is about two or three percent of the total

number of participants in awareness raising events.

PERFORMANCE INDICATOR AVERAGE RESULT PER BIC INCUBATOR

Number of training events organized for new entrepreneurs or

existing SMEs40

Number of people that attended events to promote

entrepreneurship1509

Number of start-up or other enterprise projects identified prior

to feasibility study210

Number of business plans produced during the year 105

Number of start-ups created during the year 39

Deal flow issues may include:

• Incubator design: The incubator should be designed in terms of both size and services

to meet target market demand. Normally the feasibility study will identify the target

market and indicate the most suitable size and service portfolio of an incubator to

optimize the potential deal flow.

• Critical mass: Is there a sufficient ongoing critical demand mass from start-ups to

sustain the incubator in the short to medium-term or does the incubator need to take

actions to ‘pull’ or create the market, for example through establishing entrepreneurship

training programs?

• Networks: Where does the deal flow come from? What are the best ‘feeder’ channels

and mechanisms? Figure 8 illustrates the ‘funnel’ leading to deal flow for the business

incubation process.

_____________________________________________________________

27 Source: BIC Observatory 2007 - http://quality.ebn.be

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PhysicalBusiness

Incubation

Outreach and/or Virtual Incubation

The widerBusinessIncubation Environment

Formal and informal gatewayse.g. universities, chambers of commerce...

Feeder channels

Figure 8 - The ‘Funnel’ leading to business incubation

Section 2.2.2: Ongoing government and policy support

It is important to raise awareness about the business incubation process in the wider business

environment. Feeder channels can come through channels, such as university or research institutes

liaison officers, or through referrals from Chambers of Commerce, industry leaders, investors, or other

clients. Tiered incubation should be considered as a way of developing the market.

ongoing policy and government support is always important for business incubation, which relies

upon public policy and tangible support to address failures in the market for early stage business

development. The important role of start- ups/ small businesses is recognized by governments in

most countries and policy makers realize that an understanding of why firms fail (or are successful)

is crucial to the stability and health of the economy. An understanding of such factors enables public

policymakers and small business organizational plans to better serve the small business sector.

In many cases incubators are managed through public-private partnerships. Although they may have a

public goal, they should be managed like private sector businesses (either for-profit or not-for-profit).

It is often difficult to marry the two perspectives, but nonetheless essential in order to secure long-

term sustainability. If an incubator is fully financed by the state for a short-term period (three to five

years) and then funding is withdrawn, it is often very difficult for the incubator to be self-financed.

In the circumstances when state authorities own a considerable stake in the business incubator,

appointing a politically suitable manager and team may be favored by certain parties. Instead the

importance of selecting the most competent staff that has the skills, knowledge and experience to

drive the incubator towards long-term sustainability should be stressed. The topic of PPP, including its

risks is covered in more detail in Module 2 “Business Incubator Models, Including Success Factors” of

the training program.

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Section 2.2.3: Financial self-sustainability

Business incubators should be run with an entrepreneurial mindset, and it is advisable that a

significant portion of the business incubator’s income is derived from earned revenue. Even if the

business incubator relies upon ongoing funding from government, it still needs to operate as a

business-like organization. Many long-term business

incubation practitioners are wary of ongoing funding;

as governments change so do their priorities and

funding might suddenly cease. Cash and/or in-

kind donations can be used to supplement earned

income, particularly at the start-up stage of the

business incubator. These are generally less used as

the incubator reaches maturity.

The extent to which business incubation can be financially self-sufficient, the strategies to be used and

the time it will take, need to be addressed carefully in the design and planning phases of development.

Taking a global perspective, not all business incubation environments are expected to be financially

Note: This element is explored in more depth in Modules 2 “Business Incubator Models, Including Success Factors” and 5 “Financing an Incubator.”

_____________________________________________________________

28 Source : EBN Vademecum, Brussels

How to secure on-going public support – aspects to watch out for:

• Adapt to trends: To maintain public support and relevance over time the business

incubator needs to continually adapt to changing circumstances and public policy

priorities. It is necessary to understand the changing environment, emerging market

failures and recognize the social process of incubation. To survive incubators must

constantly review their fundamentals – their target market, service portfolio and social

objectives.

• Accountability to stakeholders: Incubators should be aware they do not operate in

isolation. They are always accountable to their shareholders and also if the board of

directors includes public representatives and the incubator receives subsidies from

public money, from the outset a clear policy should be put in place to demonstrate

accountability and value for money to the general public as well as the direct

shareholding organizations. This could take the form of an annual performance report

and/or a client survey for example. Success stories should be highlighted through PR

or appropriate media. According to EBN incubator experience in Europe “The trick is

to enable the maximum number of people and bodies to claim part of the merit if the

project is a success.”28

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self-sufficient. For instance, in Europe 37.3% of costs are met by subsidies, for the sample of business

incubation environments used for the CSES 2002 ‘benchmarking’ exercise on behalf of the Eu.29

However, business incubation environments in some countries (uSA and Australia for example) are

expected to be financially self-sufficient after initial seed funding for the first two to three years,

often taking the form of the provision of buildings for which they do not pay the capital costs, nor

commercial rent.

If achieving self-sufficiency means management needs to spend substantial time on non-business

incubation activities, possibly fundraising or developing and managing other revenue earning

businesses, then problems can arise. Management will have less time to spend helping develop the

clients’ businesses and over time the value of the services provided can deteriorate, diminishing the

business incubator’s brand and image in the community. ongoing operational funding can relieve

this pressure, allowing management to spend more time working with clients. Another outcome of a

strong focus on financial sustainability is to concentrate on lower risk enterprises that are more mature

and thus act more as an accelerator for existing businesses rather than an incubator for nascent firms.

The former can also constitute a valuable contribution to the economy and may be a better solution if

the push towards early financial self-sustainability is strong.

_____________________________________________________________

29 Source: Benchmarking of Business Incubation Environments, CSES, 2002 Table 23, Page 50.

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Section 2.3: Components of the Incubator Business Plan30

Preparing a business plan is an essential stage for incubators. It is particularly important during the

early start-up phase of an incubator and will be useful for seeking funds, and also for systematizing

ideas, processes and techniques.

The business plan provides answers to questions about the incubator before it is established, but

needs to be updated regularly.

The feasibility study will have identified the need for

the incubator, established the extent of the market

for new businesses, verified the size of the incubator,

and assessed the financial and other resources.

The business plan needs to address the following:

• It should start with a set of business goals;

• Then also indicate the reasons why the goals are attainable and continue with a

thorough and well thought out proposal for reaching them within a specific period of

time;

• The plan should conclude with an indication of the resources required for the

incubator and the means by which they will be attained;

• Business plans for incubators will also:

o Confirm the feasibility study results and assumptions;

o Identify and resolve any remaining problem areas;

o Set performance monitoring, and evaluation benchmarks;

o Indicate how the strategy will be communicated to stakeholders, including

incubator tenants, to secure their continuous support and involvement in the

incubator’s operations; and

o Provide a template for the management and operational procedures.

_____________________________________________________________

30 Source: Business Innovation and Incubation Australia - http://www.businessincubation.com.au/incubation/business-plans

Note: Finance-related information is not explored here, but in detail in Module 5 related to “Financing an Incubator”.

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BIIA31 recommends that the Incubator business

plan be developed by the incubator’s Board and

management team for the following reasons:

• To facilitate understanding of the feasibility

study;

• To ensure the plan is within scope of the interests

and capacity of those required to implement it;

• To give a sense of ownership; and

• To enable easier updating.

The feasibility study, in consultation with local stakeholders, will have determined the most appropriate

type, size and management structure for the incubator given its particular economic and other

circumstances.

The business plan should guide the set up and detailed operation of the incubator over a three to five

year period. It needs to be reviewed regularly and adjusted to meet changing external factors (flexible

planning).

The main sections of the business plan typically include the following:32

• Executive summary. This is a very important section of the plan and should be the last part to

be drafted; its contents will depend on the contents of the whole of the rest of the plan, since this

section will offer an overview of the enterprise, abbreviating the business plan content to its main

points.

• Vision and mission. The desire

Documents

Planning an Incubator · 2020. 7. 3. · 5 03 PLANNING AN INCUBATOR TRAINEE MANUAL PART 2 Suite 2 Business Incubator Operations INTRODUCTION TO THE TRAINING PROGRAM This is the trainee