Business incubation is a term describing a business development process that is used to grow successful, sustainable entrepreneurial ventures that will contribute to the health and wealth of local, regional and national economies. Incubators provide a place for businesses to build their foundations.
Business incubators use a combination of physical space, resources and services to help developing businesses progress, thereby breaking down the barriers to success, reducing risk and increasing the chances of survival and success of early stage ventures. They connect enterprises with vital support.
How is this achieved?
All incubators are united in their provision of:
- A beneficial environment that contributes to the development of entrepreneurial ventures as well as fostering networking between incubator clients and creating business opportunities;
- Ready access to mentors, advisors and potential sources of capital (government assistance and potential investors)
- Visibility and profile in the marketplace.
Incubation environments are usually located in areas with good communications and desirable address. They offer flexible space, short term leases, favourable rates and shared resources and equipment.
Does that mean that incubators are basically serviced offices?
No. Incubators are different from serviced offices and accountancy firms (which offer financial and company incorporation services) by the breadth of support they offer using a defined progress path for enterprise development and specific business incubation processes. The role of the incubator in the community means that diverse support and expertise can be offered through a network of contacts. Support is impartial, rather than tied to a particular supplier (private incubators may be different). Most incubators will have an entrance and exit policy for clients and define key milestones for the business to track, monitor and expedite progress.
Incubators often have a specific remit, usually reflected by the goals of the primary sponsor. This may be to help the development of emerging sectors or focus on high-value or knowledge based businesses. Business incubators exist for all sectors and can even include kitchen incubators (for rural or food industry) and creative incubators (for arts, music and film).
Incubators are often linked with academic institutions assisting graduate start-ups and university spin-outs seeking to licence intellectual property or commercialise technology.
Possible Outcomes of Business Incubation:
- Job Creation
- Technology Commercialisation
- New Business formation
- Wealth creation
- Tax Revenue Generation
- Neighbourhood revitalisation & regeneration
- Economic diversification
- Community Development
- Empowering women, minorities and low-income individuals
- Encouraging an entrepreneurial culture in communities that have long relied on large corporations for employment.
What is the benefit to the local and business community?
Incubators are part of a larger value chain. Most incubators connect their clients to local services providers (such as lawyers, corporate service providers or accountants) establishing relationships that will last after the company leaves the incubator.
Once an enterprise is ready to leave the incubator environment, they will need space to move into, giving a boost to property developers and landlords. Business incubation provides credibility through process so landlords can be more confident that a stable, growing business can be a reliable tenant.
In this way, it is in the interests of local service providers, government and incubators to work together to give growing enterprises the best start possible to make them sustainable and successful to generate more business for the area. For this reason, many service providers will provide free or reduced services for incubator clients. Similarly, experienced business people work with incubators to act as mentors or advocates for the incubator as most entrepreneurs are happy to share their experience with a new or aspiring entrepreneur.
Why do governments support incubators?
Small and growing businesses are the backbone of the economy. Enabling their success is a sure-fire way to enhance the economic development of a region, creating wealth, economic growth and jobs.
This is why, in response to the global economic challenges of recent years, the US, UK and other countries have stepped up their support for incubators and highlighted the importance of supporting new business and entrepreneurs to stimulate economic growth. President Obama this year proclaimed National Entrepreneurs' Day in the US to honour entrepreneurs and their role as catalysts for creating new industries, businesses and jobs. During Global Entrepreneurship Week, UK Prime Minister David Cameron urged “more people to make a job rather than take a job".
Entrepreneurship and therefore incubation, is higher on the agenda than ever before as communities look towards small business and entrepreneurs to grow and perhaps save economies as we go into the next decade.
Additionally, incubator subsidies have a high pay-back value, creating longer lasting impact and more jobs that capital projects. Furthermore, companies receiving incubator support are more likely to remain in the local community.
Incubation and broader economic development strategies: inward investment
As well as starting and retaining businesses in the local community, incubators commonly have a role to attract new business to a region.
To this end, some incubators offer “soft landings” programmes to attract and support non-national companies and operations to a region (inward investment).
The Isle of Man Business Incubator (BIC) offers this facilitated support to companies considering and in the process of locating to Isle of Man. BIC’s present Soft Landings programme is free and assists potential Isle of Man locators by helping them learn about the Isle of Man, planning facilitated visits tailored to their needs, providing the introductions and knowledge they need (connecting with both government and private sector) and giving them space and support once they get to the Isle of Man. This makes business relocation much easier and less expensive, helping businesses get the full advantage of setting up offshore.
Going the extra mile (or more)
BIC also has contacts in key markets across the globe to help client businesses expand from their Isle of Man base.
I work at a private sector firm offering financial and company services - how do we get involved with the incubator?
Great! BIC wants to work with you and hear about any particular benefits you can offer fledgling businesses or companies relocating to the Isle of Man.
We can help add value to your clients / services and convert your prospects if you let them know about BIC or pass enquiries to us. Since we are not competing, we can work together and the incubator can help with very early stage ventures that will hopefully become long lasting relationships for you.
The Isle of Man and Business Incubation
The Isle of Man’s independence, resilience, diverse economy, infrastructure and offshore status makes it an attractive home for growing businesses, offering a range of financial incentives for businesses locating here. BIC’s support helps unlock that, offering people the chance to get a greater return and reward for their activities.
It’s not all about tax, finance or inward investment however. Business incubation on the Isle of Man will help people wishing to take charge of their own destiny and lifestyle, helping them create ventures in a supportive environment, reducing the risk as they take the leap into running their own business. As the world shifts in focus and priorities, the outlook for incubation and entrepreneurs on the Isle of Man as we go into the next decade will be more support, more freedom, sustainable enterprises and a valuable point of difference for a small but important offshore jurisdiction supporting entrepreneurship.
For more info about BIC’s services visit www.iombic.im