Why do startups need business incubators?

Business incubators are safe havens for emerging companies, because they provide a variety of services that serve all fields and needs, as they work to increase the chances of survival of startups and support the entrepreneurship process.

In this report, published by Startup Talky , author Avantika Bhardwaj discussed the concept, types, and role of business incubators.

What is a business incubator?

The purpose of forming business incubators is to help emerging companies, as they provide services such as management training, co-working space, etc., and are the mainstay of economic development programs.

It also creates value by combining the entrepreneurial drive of start-ups with generally available resources for new ventures. The primary objectives of business incubators are to create jobs in the local economy, commercialize technologies, and meet the needs of new businesses.

What is business incubation?

Business incubation is the process that supports the growth of startups, and the goal is to increase the success rate of startups.

Types of business incubators

There are 4 main types of incubators prevalent in the market today, and they include:

Corporate Incubators

The goals of business incubators are to enhance entrepreneurial skills and help startups keep pace with other industries and competitors. Business incubators target both internal and external projects related to the company's activities, but the most common challenge faced by business incubators is the conflict between senior executives and committees over management goals and decisions.

Local economic development incubators

Local economic development incubators support small and medium-sized companies and specific groups for the general advancement of society. These groups include small businesses, handicraft-related businesses, and locally sourced businesses. These incubators are often associated with governance risks, fluctuations in the quality of management, long negotiation hours, and conflict.

Private investor incubators

Private investor incubators help companies with high potential (such as technology-intensive start-ups) reap the benefits by selling shares. These incubators lack quality and durability.

Academic incubators

Academic incubators provide new sources of funding with support for entrepreneurship and a focus on civic responsibility, targeting external projects and internal projects for academic institutions.

What is the role of a business incubator?

Incubators provide resources and services to entrepreneurs, including workplaces and offices, technical expertise and management guidance, assistance in compiling an effective business plan, joint administrative services, technical support, business networking, and advice on intellectual property, financing sources, markets, and strict entry or exit rules.

The incubator focuses its efforts on assisting innovative and fast-growing startups that are likely to have a significant impact on the local economy. Here are some of the functions of incubators:

-Guiding startups or ventures on how to compete with veteran players in the industry.

-Providing assistance with business essentials.

-Provide communication activities.

-Helping startups save on operating costs.

-Providing marketing assistance.

-Assist in market research.

-Provide high-speed Internet access.

-Creating long-term careers for recent graduates, experienced mid-career employees, and seasoned executives.

-Provide assistance in accounting or financial management.

-Provide access to bank loans, loan funds, and guarantee programs.

-Giving credibility to the company, and this helps the company in obtaining loans and credit facilities from financial institutions.

-Help with presentation skills.

-Having a strong network of influential people who can connect startups or projects with experienced companies and people.

-Provide access to higher education resources.

-Benefit from networks of experienced entrepreneurs and retired executives. And link companies with strategic partners.

-Provide access to angel investors and venture capital.

-Organizing comprehensive training programs in the field of business.

-Act as advisory and guidance boards.

-Assist in identifying the management team.

-Provide marketing and public relations assistance to new companies to create brands.

-Help with business etiquette.

-Assistance in technology marketing.

-Assistance with regulatory compliance.

-Provide intellectual property management.

-Creating jobs for mid-career employees and veteran CEOs, benefiting communities and driving economic growth.

The performance of business incubators is often affected by inefficiencies in business management, financial transactions, human resource management, and lack of personal and personnel skills.

With regard to the skills required by business incubators to have an impact, it has been revealed in many studies that the management body, technical management, financial management, marketing, human resource management and interpersonal skills are very important factors.

The main challenges faced by business incubators lie in the extent of access to advanced technology-based facilities, self-sustainability measures, and support and financing structures. Incubator managers, who lack the necessary entrepreneurial skills, are also recommended to attend business courses at local colleges or universities.