Why You Need An Incubator Feasibility Study!
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This document discusses the importance of conducting a feasibility study prior to establishing a business incubator, highlighting its role in identifying community readiness, necessary resources, and market demand. It outlines the steps to determine feasibility, such as stakeholder commitment, resource evaluation, expertise assessment, and market analysis. Additionally, it recommends consulting experienced professionals and following best practices to ensure the success of the incubator initiative.
Why You Need An Incubator Feasibility Study!
- 1. Mark S. LongMark S. Long Long Performance AdvisorsLong Performance Advisors Ellettsville, INEllettsville, IN Why you really need a feasibility study – first!
- 2. What’s a Business Incubator? If you're thinking about building one – why you need to do a “business incubator feasibility study” up front – and who’s qualified to do them, and what they should do/cover when they’re being done. What makes a community “ready” for a business incubator?
- 3. a program designed to accelerate the successful development of entrepreneurial companies through an array of business support resources and services, developed or orchestrated by incubator management, and offered both in the incubator and through its network of contacts.
- 4. Cheap rent Subsidized housing A way to use an old building Urban renewal “Build it and they will come” What Business IncubatorWhat Business Incubator Isn’tIsn’t
- 5. The Incubation DifferenceThe Incubation Difference Help with business basics Mentoring Networking Marketing assistance Access to capital Links to University/Corporate partners Business training programs Help with operations
- 6. Do WeDo We NeedNeed an Incubator?an Incubator? Determination of need Find your “deal flow” Where/who are your customers? How many? Feasibility studies Business plan Funding plan Sustainability plan
- 7. When is a Business Incubator Feasible?When is a Business Incubator Feasible? 11stst Step - CommitmentStep - Commitment The stakeholders have developed a mission statement andThe stakeholders have developed a mission statement and established measures by which the project will beestablished measures by which the project will be evaluated.evaluated. The stakeholders understand the kinds of investmentsThe stakeholders understand the kinds of investments (land, money, time, other resources) they will be required to(land, money, time, other resources) they will be required to make over time and the respective magnitudes.make over time and the respective magnitudes. A single project champion or group of advocates has beenA single project champion or group of advocates has been identified to marshal resources in the early stages of theidentified to marshal resources in the early stages of the project.project.
- 8. When is a Business Incubator Feasible?When is a Business Incubator Feasible? 22ndnd Step - ResourcesStep - Resources Adequate cash flow analyses have been performed andAdequate cash flow analyses have been performed and threshold levels of financing have been secured.threshold levels of financing have been secured. A building can be secured (if necessary – some programsA building can be secured (if necessary – some programs are virtual!) which lends itself to the needs of early-stageare virtual!) which lends itself to the needs of early-stage companies (easily modularized, flexible, core infrastructure,companies (easily modularized, flexible, core infrastructure, multi-use).multi-use). Specialized equipment and/or office furniture is available atSpecialized equipment and/or office furniture is available at minimal costminimal cost A “market niche” or specialized areas of focus are identifiedA “market niche” or specialized areas of focus are identified which can be served by the incubator through surveys,which can be served by the incubator through surveys, focus groups, interviewsfocus groups, interviews
- 9. When is a Business Incubator Feasible?When is a Business Incubator Feasible? 33rdrd Step - ExpertiseStep - Expertise The project manager/director understands the role of theThe project manager/director understands the role of the incubator within the context of other local and regionalincubator within the context of other local and regional economic development projects.economic development projects. A team experienced with incubation will lead or coach theA team experienced with incubation will lead or coach the formulation of the business plan.formulation of the business plan. People with experience in construction/rehab will be part ofPeople with experience in construction/rehab will be part of the business plan development effort.the business plan development effort. An expert puts the entire context together for the incubatorAn expert puts the entire context together for the incubator to function – educational environment, support groupsto function – educational environment, support groups (mentors, advisors), finances, space, equipment, etc.(mentors, advisors), finances, space, equipment, etc.
- 10. When is a Business Incubator Feasible?When is a Business Incubator Feasible? 44thth Step - MarketStep - Market The incubator offers specialized business and technicalThe incubator offers specialized business and technical assistance services in order to meet the needs of targetedassistance services in order to meet the needs of targeted entrepreneurs who have been identified (during the study)entrepreneurs who have been identified (during the study) The people testing the feasibility complete a marketThe people testing the feasibility complete a market assessment that identifies a significantassessment that identifies a significant quantityquantity of potentialof potential client candidates (2X more than the # expected).client candidates (2X more than the # expected). The feasibility study team can identify a sufficient numberThe feasibility study team can identify a sufficient number ofof qualityquality candidates to enter the incubator (candidatescandidates to enter the incubator (candidates qualified against set criteria)qualified against set criteria)
- 11. Integration into larger communityIntegration into larger community ◦ Part of overall community economic development planPart of overall community economic development plan ◦ Community/sponsor support for mission and operationsCommunity/sponsor support for mission and operations ◦ Enlists support of entire communityEnlists support of entire community An effective teamAn effective team ◦ Professional management & support staffProfessional management & support staff ◦ Network of business advisors, mentors and consultantsNetwork of business advisors, mentors and consultants ProfessionalismProfessionalism ◦ Emphasizes client assistanceEmphasizes client assistance ◦ Holds clients accountableHolds clients accountable ◦ Models good business practicesModels good business practices ◦ Strives for financial sustainabilityStrives for financial sustainability ◦ Measures effectiveness and impact regularlyMeasures effectiveness and impact regularly ◦ Reports to shareholders on regular basisReports to shareholders on regular basis Now You’ve Got It! BestNow You’ve Got It! Best Practices?Practices?
- 12. It pays to “bring in an expert” – someone who has experience in feasibility studies, who has completed several of these and can compare your community to other communities of a similar size and nature Ask for references – what about projects similar to yours? Do they have experience in the key areas you are considering (Agriculture, Mixed use, Technology, Biomedical/health, Alternative Energy, etc.)? So Who Can Do This?So Who Can Do This?
- 13. Check with trade groups – the National Business Incubation Association (www.nbia.org) has a list of consultants who do feasibility studies around the world Don’t let just anyone do it – check references Don’t “skip it” – and then wonder what happened to the details Many grants and public agencies require a feasibility study to be completed before a grant can be awarded Look for ProfessionalsLook for Professionals
- 14. Put It in Writing II: A Guide to Incubator Policies, Procedures, and Agreements; Author: Mark Long Best Practices in Action; C. Colbert, D. Adkins, C. Wolfe, K. Lapan Developing a Business Incubation Program – K. Boyd Available at the NBIA bookstore (www.nbia.org) Recommended TitlesRecommended Titles
- 15. Mark S. Long mlong@longperformanceadvisors.com http://www.longperformanceadvisors.com A trusted name in Incubator Feasibility Studies since 2007
Editor's Notes
- #2: This seminar will cover the “basics” of developing an Incubation Program. It is intended for individual “just starting out” or anticipating starting out and anticipating what they will need to “get started” in putting an incubation program together.
- #5: It’s not “cheap rent” or subsidized housing for the long haul or short haul; it’s not a way to “re-purpose an old building downtown”. It’s not an urban renewal effort related to repurposing that old building, either! It’s also not a “build it and they will come” proposition – far from it.
- #6: What incubation does is provide SERVICES – in particular, assistance with “business basics” – writing a business plan, forming a business, legal aspects of business formation, understanding what’s “best” for your business; mentoring and counseling; networking – most companies say “the network was the most valuable asset of the incubator”; marketing assistance – learning about markets, where to market, how to market; access to capital – EVERYONE will come to you saying “I need money”! Links to university and corporate partners – access to IP, to equipment, services, partners; business training programs – the “how to” of business; and help with operations – general legal, process, manufacturing, and operations advisement.
- #7: Do you really NEED a business incubator? That’s the “first step” – making the real determination. And what makes that determination for you is DEAL FLOW – where/who are your customers. How many can you anticipate – truly anticipate? The key is often doing an actual “feasibility study” – is it FEASIBLE for us to open a business incubator? Where should we open it? How should we do it? What will it take? What will the business plan look like? How will we fund it? How will it become sustainable?
- #12: The incubator needs to apply “best practices” to flourish in your community; these include integrating into the larger community’s economic development plan, and understanding the other entities in the community that are involved in economic development. The incubator must enlist the support of the ENTIRE COMMUNITY – banking, real estate, legal, accounting, anyone who comes into contact with small business, who might “refer a client” to the incubator. The incubator must have an “effective team” of management, support staff, and a solid network of professional advisors, mentors and consultants who will assist the companies involved with the incubator with a variety of tasks/items necessary to make small businesses grow and prosper, which helps the entire community as well. The incubator MUST emphasize professionalism at the highest degree – they must hold clients accountable at all times and model the best of business practices, to be a “model to the community of the best of what the community has to offer” in small business – and, over time, the goal is to be financially self-sustainable, to report to the community on activities, on companies, and on progress.