Do you want to start a business incubator company from scratch? Or you need a sample business incubator business plan template? If YES, then i advice you read on.
Starting a business is a very critical period in the life of an entrepreneur—one that brings a lot of fears and uncertainties.
Am I doing the right thing? What if I don’t succeed? Would I be able to recoup my investments? These and similar questions run through the mind of an entrepreneur at the startup stage. This stage requires a lot of hand-holding, reassurance and support from experts. This is where business incubators become relevant.
Business incubators help to breed a business and support it during its start-up stage by providing a variety of services such as accommodation, expert advice, facilities and support. Usually, business incubators are run as not-for-profit organizations either as a government-sponsored program to encourage entrepreneurship or by some other NGO’s or developmental organizations.
However, business incubation services have now become different from what it used to be years ago as it is now run by some people as a business on its own.
How Business Incubators Make Money
There are entrepreneurs who come up with several highly workable business ideas on a regular basis. If you know you have such attribute as an entrepreneur, then you should consider starting your own business incubator. Becoming a business incubator means that are able to turn ideas into money spinning machine, you will be able to nurture ideas from infancy stage to highly profitable stage.
Basically, what business incubator does is that, they provide support and all form of infrastructure to small business that are just starting out. They also provide a conducive environment for business ideas to be conceived.
For example, as a business incubator, you could create a hub where programmers who are just starting out without any office and the basic infrastructure needed to be productive to come under a roof to build their businesses. Normally most business incubator centers are supported by the government and they also receive grants from other organizations.
Starting a Business Incubator – Sample Business Plan Template
It is important to state that starting a business incubator requires vast business experiences. It requires huge capital to start and run and you are likely not going to start making profits from the onset. As a matter of fact, it pays to start it as an NGO or as a Community Social Responsibility – with that, you will be able to access funding and grants from appropriate bodies.
Now if you know you have what it takes to start a business incubator and you are ready to get started, then the following tips will help you to start on the right footings:
Starting a business incubator is not as easy as it sounds. You would have to do a thorough research on various business models. You would have to research on factors affecting businesses in the area you intend starting your business incubator; you would have to research on various ways of accessing funds for small business and all the support system they would need to grow.
The truth is that you would do well with your business incubator centre if you are good with research and also if you truly have passion for helping entrepreneurs grow their business. Without these qualities, there is no point starting a business incubator.
2. Pool Your Cash Together
In case you have not been told, you would need to pool all the cash you can gather to be able to start and run a business incubator. You might want to ask what you would need the cash for? The truth is that you would money to rent and equip the facility to be used, you would need money for daily running of the centre, you would need money to pay some of your utility personnel / mentors and you would even need money to foot your bills as well.
This is so because the money you generate from the students would likely not meet up with your expenditure. Of course the easiest way to make money from running a business incubator is from grants from the government and NGOs and it won’t start coming from the very beginning. Here is a sample business incubator business plan template to help you raise the funds you need.
3. Incorporate Your Business or NGO
If your idea of starting a business incubator is so that you are able to offer a support system and structure for budding entrepreneurs to leverage on to start and grow their own business for free or at a very minimal fee so that you will be able to access grants and funding from government and the private sector, then you should consider registering and NGO.
It is easier to access funding when you work as a non profit organization. Here’s how to start a non-profit organization. If you choose to run your business incubator as a full fledge business, then you should go ahead to register it as a business.
4. Lease or Rent a Conducive Facility
If you have pooled your cash together and you have incorporated your NGO / Business, then the next thing that is expected of you to do is to hire the services of a realtor to help you get a decent facility. Part of what you need to look out for when shopping for a facility is its location and space. You would need a facility that can easily be accessed by the public and a facility that has enough open space.
Starting a business incubator means that you would have enough experienced successful business men and women in your faculty that will serve as mentors to young entrepreneurs. The success of your business incubator largely depends on the pedigree of your faculty members. So, it is important that you look out for people who are not only successful as entrepreneurs, but people who are willing to impart business knowledge to budding entrepreneurs.
6. Create Admission Procedures
This is on area that you need to be deliberate about; from the outset. You should be able to create a picture of what you want, and the kind of people you want to pass through your business incubator and that should inform your admission criteria. It would pay you to only admit people who are determined to succeed with their businesses so that you wouldn’t end up wasting your time and resources on people that don’t have the drive to grow a business.
Hence, it wouldn’t be a bad idea if you request that every entrepreneur seeking admission into your business incubator undergo a business pitching session where they can be screened by experts.
7. Open Your Door
If you are done with all that is expected of you to do, then the next thing to do is to open your door to only those who scaled through the business pitching session. It will pay you a great deal if you only admit those that have the passion, zeal and diligence to work hard to grow their businesses.
If you have successfully implemented the above, and you have started running your business incubator, then you should go all out to seek and apply for grants and funding.
There you have it, the seven steps needed to successfully start and run your business incubator. But the business incubation business problem could present a lot of challenges. The most prominent challenge is that you would be working with businesses that are just starting up and can hardly afford paying for such ‘luxurious services’. Therefore, if you plan to start making money providing business incubation services, here are some things you should know.
10 Critical Tips for Running a Profitable Business Incubator
a. Run your business as a ‘for-profit’ incubator
It is better to be upfront about things and run your business as a profitable enterprise. This means that you would register your business, draw up a business plan, and structure it as you would structure a regular for-profit enterprise.
b. Source for the right clientele
You need to source for the right people who recognize the importance of the services you render and wouldn’t mind paying you for it. Not everybody would be willing to pay for this type of service; only people who truly recognize and understand its potentials and what they stand to benefit would be willing to pay. These are the kinds of clients you should be searching for.
c. Accept equity as payment
Another strategy through which business incubators make money is to accept equity in the business instead of once-off payments. This way, you would continue to earn something from the business for a very long time. This also proves to be a win-win situation for both the business owner and the business incubator as both parties would strive hard to ensure that the business succeeds.
d. Accept deferred payments
One thing about start-ups is that funding is almost always a challenge. There would always be one or more expenses to undertake. Even entrepreneurs that recognize the potentials of business incubators may want to shy away from hiring their services due to unavailability of funds. You can help to ease such challenges by accepting deferred payments so that payments can be made only when the business becomes successful.
e. Employ strict selection process
Due to the fact that you may have to accept deferred payments and equity participation, it is only normal that you would want to select the businesses you incubate with care. You should carefully look at the plans and potentials of such businesses and discard businesses that look like they do not have good chances of survival without sentiments.
f. Offer your service as a consultancy-: When you are drafting your service agreement or terms and conditions, you must ensure that your service is structured as a consultancy service. Of course, everyone knows that a consultancy service has to be paid for one way or the other.
g. Offer additional services
You could also think of offering several other similar services, which you could make money from—such as business planning, marketing consultancy, negotiators, etc. There are several other services that business incubators can render and make money from.
h. Create awareness-: Involve the press or the media, so they can give your business widespread coverage. Basically, ensure that you do all it takes to create the necessary awareness and publicity that your business needs. This is why we provided a sample non-profit marketing plan template to help you out.
i. Encourage cross-pollination
This means that you should allow entrepreneurs or participants to communicate, patronize, and help each other to grow. There are likely to be ways through which each business can help the next to grow or patronize the next. This way, such businesses would be involved in one another and contribute significantly to the growth of each other.
j. Employ experts
You should build your team with people who are experts, understand various aspects of business, and can help other entrepreneurs to grow their businesses. With such people in your team, you will be able to achieve results that businesses will be eager to pay you to replicate for them.
Latest posts by Ajaero Tony Martins (see all)
- Designing an RV Park – 6 Critical Factors You Must Consider - January 16, 2020
- 8 Strong Reasons You Should Become an Entrepreneur - January 9, 2020
- How to Find a Business Partner or Investor With Money - January 9, 2020