Business Incubation

Business incubation provide growth SMEs and start-ups with the ideal location to develop and grow their businesses, offering everything from virtual support, rent-a-desk through to state of the art laboratories and everything in between. They provide direct access to hands-on intensive business support, access to finance and expertise and to other entrepreneurs and suppliers to really help businesses and entrepreneurs to grow - faster.

Starting any business is fraught with uncertainty, financial burdens and resource issues, but more so with innovative and entrepreneurial businesses due to the complexity of the products and services being developed and, often, the length of time it takes to fully develop the product. Incubators (or "business incubation environments") are ideally placed to help innovators and entrepreneurs to overcome some of the hurdles and to negotiate a path to the all important finance and mentoring all entrepreneurs need.

Business incubation provides a nurturing, instructive and supportive environment for entrepreneurs during the critical stages of starting up and growing a new business. The goal of business incubators is to increase the chance that a start-up will succeed and achieve growth and shorten the time and reduce the cost of establishing and growing its business. If successful, business incubators can help to nurture the companies that will form the true creators of a region’s or nation’s future wealth and employment.

Currently, there are approximately business 300 incubators in the UK, directly supporting in excess of 12,000 dynamic, creative and innovative businesses. They support all sectors, including ICT, science, technology, creative industries, social enterprises and all manner of entrepreneur – there is no age limit, gender or physical discrimination – ultimately, if you have a world class idea or innovation, business incubation is there to support you. It is important to put incubators into perspective. According to NESTA, many thousands of additional businesses gain indirectly benefit from a quality local business incubation environment.

Rather than being the last hope for failing companies, business incubators serve as a launch pad and sustainable growth path for young and small businesses as well as those more established SMEs who aspire to grow further and faster . Start-ups and other more established SMEs, which are innately dynamic entities, need access to support, and business incubators as 'growth hubs' are a means of providing this. Whether located in urban or rural areas, most business incubators are distinguished by the specialist services that they offer in addition to a physical home for a growing company.

Does Business Incubation work?

Business Incubators have been used to achieve a wide range of impacts, benefits and objectives, primarily those that small businesses are good at creating jobs, developing innovative ideas, diversifying the local economy and broadly generating activity and wealth by creating a vibrant small business sector focussed on growth.

Business Incubators have an important role to play in supporting local and regional businesses, but entrepreneurs may ask whether they actually work. Over the last 12 years, UKBI (the international membership and best practice body) has measured the impact that incubators have on the local economy and workforce. The research proves that an incubator's client businesses provided an average of 167 jobs (full time equivalents) per incubator and are home to an average of 30 client businesses at any one time. Most (60%) incubators also operate "outreach" services, helping and advising companies outside the business incubator. Those operating outreach activities support an average of 150 additional businesses.

Examples of the results speak for a university business incubation environment, "over £120m of early stage funding were raised recently and 1,000 jobs created” a business incubation environment located in a traditionally challenged part of the UK, “85% survival and success...the cumulative gross revenue of our businesses now exceeds £100 million". Most importantly, business incubators have an average success rate of 98% of businesses succeeding whilst in the business incubator (compared to a national average of less than 30% of all small and medium sized companies registered) and 87% surviving after 5 years.

Where are these business incubators and how do they operate?

They can be stand alone business incubators, or based on a science, technology or business park, within a University campus, a laboratory or a private sector large corporate - basically anywhere where there is a demand for intensive business growth support. Business incubators can be found in all regions and locations; essentially, they are located where the market needs them. This is based upon the needs of the entrepreneur and the sector focus of the business incubator; close proximity to research, technical support and equipment or a dynamic business cluster. For example, where a University has a strong bioscience offering, it is usual to find a business incubator dedicated to commercialising bio businesses or innovations. Similarly, business incubators can be used to drive forward the development of a strong cluster of businesses; such as IT, creative industries and environmental/'clean' technologies, which then act as a 'magnet' to other innovative start-ups or entrepreneurs.

A business incubator is established to support and nurture the next generations of growth SMEs and in order to do that, they need to respond to the needs of the entrepreneur or business. As such, flexibility is key. Business Incubators come with or without 'walls'. Most business incubators provide property on a flexible basis offering 'easy-in' and 'easy-out' terms and will offer common facilities and, most importantly, added-value services. The level of provision depends on the individual business incubator and the types of business it targets, but frequently it will include a central reception area, communal areas (e.g. meeting rooms, cafe/restaurant, kitchens), access to telecommunications and in most cases will offer shared secretarial services. These and other added value services help them to grow faster and alleviate the administrative burden from the tenant companies, thus reducing the need for equipment and personnel. However, there are also 'virtual incubators that deliver a similar package of business support and development services, but without the physical property element.

Whilst any business starting out and growing needs the right accommodation; a building has never grown a business. Most clients of business incubators are attracted by the 'easy-in' and 'easy out' terms, but once through the doors, it’s the access to business growth support that keeps them there.

Imagine the scenario – you have developed a truly innovative product or service and know that there is a market for it, but how do you protect the innovation, market it, make early sales, whilst also building a business around it? This is where business incubation really adds value! It will have access to IP specialists that you probably couldn’t afford, access to expertise in the field who can help to market the product or service, overseas partners to help you establish in international markets and even linkages into major corporates who can either help you to develop it further or who may want to license it from you. And all within a trusting environment built on strong relationships that really add value.

Alongside this, the business incubator will help to grow you as an entrepreneur through tailored workshops and training, support in book-keeping and finance, assisting with the tax returns and legislation and also to offer you a 'shoulder to cry on' if times are hard or will celebrate with you when you get that much needed order. On average, clients tend to stay within the business incubation environment for up to 3 years, but there are business incubators that specialize in accelerating the growth of your business which operate on 6 month terms. It really depends on the nature of the business, the sector its operating in and the demands of the product or service that have been developed.

Added to that is the advantage of flexible unit sizes so that they can fit to the needs of your business as it grows; you can start by renting a hot-desk (often by the hour) whilst you test your idea or take a small workshop or office unit for yourself to start growing in. As the demand for space for staff, equipment and stock grows, a business incubator can 'flex' with you, offering a range of unit sizes to meet the needs of innovative start-ups. Really innovative business incubators have removable walls that can be taken down or extended to create the space you need.

Business incubation is truly flexible to add value and meet the needs of the entrepreneur or innovation and with success rates of 98%; they hold the key to your success in growing businesses and entrepreneurs...thereby creating wealth and benefits for all