Incubators are an important trend in the startup world. Especially in technology hot spots such as San Francisco and New York, select small businesses take parts in these startup communities as a way to gain contacts, mentoring, infrastructure, and education to guide them on their journeys to small business growth.
While incubators can offer advantages to participating startups, they are not for everyone. In addition, although much media attention is given to startups permeating the startup community, they are not critical to the success of startups and small businesses. Just as is the case with any hot trend or topic with media buzz, it is important to understand the reality of incubators.
Here are a few important things to keep in mind when considering whether or not your startup or small business should pursue involvement with an incubator:
Incubators tend to work best for high-potential technology-based startups. In general, internet- and technology-based companies are the most likely to benefit from incubators since these communities are especially prevalent in high-tech cities. In addition, startups with high potential in the venture capital community are more likely to be a part of an incubator. On the other hand, you aren’t likely to see many mom and pop businesses, solopreneur operations, or the other 99% of small businesses in incubator environments.
Incubators can deliver meaningful benefits to startups. The intent of incubators is to provide a community to foster cross-pollination among various startups. In addition, they can also provide mentorship, education, shared infrastructure and office space, and a host of other benefits to entrepreneurs and their startups. It is important to identify the exact benefits of any incubator you might consider and assess how valuable or important those benefits will be to your small business or startup.
Be sure to understand the costs associated with an incubator. Often times, the costs associated with incubators are steep – even when considering the upside potential. Many require giving up a hefty equity stake, the cost of relocating your business to the incubator office space for a prolonged period, and other costs that can be prohibitive to small business owners. It is important to weight these costs against the upside potential when considering these options.
There are plenty of good surrogates for small businesses that can’t become part of an incubator. As beneficial as incubators can be for some small businesses, the reality is that they are not feasible for an overwhelming majority. Some businesses can’t participate because of their geographic location, while others don’t because the costs are prohibitive, while still others can’t participate because the incubators won’t accept them in the first place. Regardless of the reasons, there are plenty of support options for entrepreneurs and small business owners, ranging from online small business training courses to small business consultants to peer to peer mentoring.
At the end of the day, incubators can be extraordinarily helpful for many startups and small businesses. However, an overwhelming majority of successful small businesses do so without the help of an incubator, so it is by no means a prerequisite for success.
Whether or not you decide to pursue potential incubator communities, there are plenty of other options that can help you become successful. Learn more about some of the small business training courses that can provide you with some of the benefits of an incubator – at a fraction of the cost.