Business Incubation Centres & Business Incubators

Copyright (c) 2009 Dr Mark Yates

Given that business incubators are not widely recognised by many within the business fraternity, I'd like to explain what a business incubation unit is, and what a business incubation centre does. Most business people's frame of reference regarding business incubation, and the support offered by business incubation centres is limited to either small business incubation or university business incubation. In reality we have national business incubation and global business incubation units. We even have a national business incubation association dedicated to ensuring a flow of information between the various business incubators.

In its broadest terms, a business incubator is set up either by a University to assist graduates making the transition into running their own business. These graduates become members of business incubation. They generally receive financial and business support to assist them during the first 1,2 or 3 years as a new business.

Other uk business incubation units are set up by venture capitalists or other well financed blue chip companies who want to give something back to the new breed of business entrepreneurs who are hungry to grab their share of the business spoils.

A business incubation centre also offers new business owners the chance to mature as a business while in close proximity to a number of other start up businesses. The added value of this concept is that business incubation in run in the one building allows each of these businesses to help each other. For example if the business incubation centre operates a no compete entry criteria you would only have one printing company. But the next business to you might be a marketing company and another might be a public relations business. Clearly these all offer standard services that each business requires. business incubation in this fashion obviously has its benefits.

Many business incubator staff members look to the business incubation association for advice and support. I've personally never had any dealings with the business incubation association, so can offer no advice or recommendations on their business support.

What I can state is that business incubation is a fantastic concept providing it's set up and run properly.

I was asked to interview at a high tech business incubation unit, which managed approximately 20 or so new start up business ventures led by 20 different high tech business entrepreneurs. The business incubation unit was outside of England and its role was to advise, support, mentor and facilitate the fast growth of each of these businesses. In short they provided the top end directors skills to the individual business. The senior management team of the business incubator consisted of a mixture of lab rat techie directors and business advisors placed in the business incubator by venture capitalist investors. Lab Rat Techie 1 paraded around the room in front of a medium size group of male and female workers and directors like someone demented. Before any formal or informal introductions were made, he addressed me.

"What is the definition of empirical formula?" Before I had time to respond he continued, "I'd also like you to tell me the fourth line in Pascal's Triangle?" Without pausing for breath he continued, "And I want you to outline the definition of an isotope."

A severely embarrassed senior business incubation director stood and introduced me, "ladies and gentlemen I'd like to introduce Dr. Mark D. Yates. He is a specialised business trouble shooter and business growth expert. He is here on the highest recommendation of several directors of other business incubation units. His business growth references are impeccable and for the record we asked Dr. Yates to attend this interview."

I stood and thanked him before I looked at Lab Rat Techie 1, who was still pacing up and down like someone off his Bi-Polar medication. "Sir I'd like to park your three questions for the moment and offer you three reasons why I'm here." A one up on you smirk creased his face.

1: Because your business incubation is in trouble.

2: Because your financial backers are convinced the business incubator leaders and the business incubation thinking that got you into this mess, are not the same leaders and the thinking that will get you out of this mess.

3: Because concise communications is a big problem at this business incubation facility, and I would hazard a guess that your people are afraid to communicate directly with you Sir.

I looked directly at Lab Rat Techie 1 In my peripheral vision, I could see that the real players in the room i.e. the financial backers who also backed other business incubators were relating to my business assessment. Lab Rat 1 responded. "That's ridiculous I have established several layers of assistants between myself and the individual business owners to relay and convey all communications relevant to this business incubation centre. I believe that communications here are concise and timely, and far better than any other business incubators I have assisted. Furthermore I certainly feel comfortable that I am receiving effective communications required to deal with any issues at hand."

"So you feel confident enough that your subordinates would convey bad news or detrimental information to you before it caused you, or this business any embarrassment," I asked him. "Absolutely," he responded. "How long is it since you last took a rest room break Sir?" I asked. This was the first time I'd seen Lab Rat 1 lost for words. "It's a relatively simple question" said I. "About 30 minutes, but I fail to see the relevance of this question. I'm guessing it's a smoke screen designed to steer you away from my three questions." He responded smugly.

"The definition of empirical formula is the simplest ratio of elements in a compound. The fourth line in Pascal's Triangle is 1, 4, 6, 4, 1 and the definition of an isotope is an atom of the same element, with the same atomic number, but a different mass number." Lab Rat Techie 1 was dumbstruck at my response, but before I allowed him to slump completely dejected in his executive chair, I asked him, "perhaps you could explain, if you have a clear and concise chain of communication, why has not a single one of your subordinates had the balls (forgive the pun) to tell you, you have been addressing everyone in this room for 30 minutes with your trouser flies wide open?" It was a coup d'état. His face blushed as red as a fire engine and he never spoke again. I went on to work with several of the business under incubation and sadly for him, Mr. Lab Rat Techie was replaced. I'm not suggesting Mr. Lab Rat Techie 1 was a bad or incompetent person; in fact I'm sure he was a nice enough guy, and probably the toast of the town at every annual 'Lab Rat Convention.' He was just the wrong person to be leading a high tech business incubation unit looking to achieve fast growth.

I've also worked with various other business incubation centre, including one linked to a prominent university business incubation which allegedly received over £19 million pounds to facilitate its set up, and to become a self sustainable business by the end of 2008. Sadly this university business incubation unit like most others linked to Universities suffered from the same problem as the high tech incubator mentioned above. When academics are tasked with running the management side of anything relating to business development, growth and long term sustainability, they generally fail miserably. This is a sad reflection on academia mixing it up with businesses. I'm certain there are a few university business incubation units that have experienced some success.

Within my International business network I have received several e-mails concerning global business incubation units some of which fly under the flag of a university business incubation unit.

Given my thoughts above, I still believe in the added value benefits of business incubation units, providing they are formed with the correct balance of management and business academics. When running correctly I believe professional business incubation units offer new business starts ups a better survival rate than independent start up businesses.