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John Peate: A few questions to ask those who grow business

Entrepreneur’s corner

Posted: March 7, 2012 2:00 a.m.
Updated: March 7, 2012 2:00 a.m.
 


Business incubators are programs designed to support the successful development of entrepreneurial companies, with an array of business support resources and services offered both in the incubator and through its network of contacts.

Incubators come in all shapes and sizes, just like the start-ups and early-stage companies they nurture. There are incubators,
accelerators, labs and tech centers. They can be virtual or physical.

Some are long-term, flexible and provide assistance only at your request. Others are short-term, curriculum-focused and provide intensive support. With so many options to choose from, how do you decide which one is right for you?

Before you can find the right answers, you need to ask the right questions. Here are some questions to ask yourself and the incubator team before you commit:

1) What does the management of the center consider a success? You have goals for your own business. Do they align with the goals of the incubator you’re thinking of joining? 

Some organizations will use the term “incubator” to lure in participants or tenants but actually provide very little added value. You want to find an incubator where their success is measured by your success, and as specifically tied to your own goals as possible.

2) What resources do they provide? 

Incubators can provide a wide variety of resources, including networking opportunities with other entrepreneurs, mentors, consultants, events targeted to clients and information about and access to relevant groups in the community.

Ask about the background of the mentors and advisers. Some incubators provide clients with free or very low-cost access to resources through programs, such as the Microsoft BizSpark program. Others provide access to physical locations and services to help build their business.

3) Do they have heavy expertise in an industry vertical sector relevant to your business?

Some incubators focus on an industry in which the management has expertise or efficiencies, or they provide access to sophisticated machinery. They may have an infrastructure in place to help you get your prototype out, or your first sales dollars in, quicker than with other incubation partners. 

4) What is the price of membership?

Physical incubator pricing ranges from subsidized market rent or shared administrative services to substantial discounts — even free rent in some case.

Virtual and physical incubators may charge for mentoring and advising services, or they may be provided at no charge.

Some incubators charge very little up front, but seek an equity stake in the business. You’ll want to understand their pricing model before getting too far in your discussions.

5) How many clients/tenants have achieved economic milestones or received funding and from what sources?

Often incubators will make promises of success or access to capital resources but it’s prudent to see what their track records are and just how trusted a resource they are.

You’ll want to find out how much influence they have with financial sources (lenders, angel investors, venture capitalists and grant specialists). Ask about their success to date.

6) How selective are they?

Some incubators will let you in only if you pay the rent or membership fee every month. Other incubators subject clients to a screening process which can include an online application followed by one or more in-person interviews. They care about the quality of the collection of companies they serve and the results they stand to deliver.

Incubators can provide you with access to capital, consulting, targeted training, networking opportunities and access to work space, software resources and a calendar of relevant events.

The i3 Advanced Technology Center at the Small Business Development Center hosted by College of the Canyons is an example of one of these incubators.

If you are interested in learning more about incubation, the i3 ATI will be hosting a Business Incubation Panel at 2:30 p.m. on  March 28, at the Dr. Dianne G. Van Hook University Center, located on the college’s Valencia campus.

The directors of local physical incubators will attend and talk about how incubators can contribute to the success of your business.

For more information or to register for the event, please call the ATI at (661) 362-3241 or email John Peate at john.peate@canyons.edu. John Peate is an SBDC Business Advisor and Program Leader of the i3 Advanced Technology Incubator at the SBDC. Mr. Peate’s column reflects his own views and not necessarily those of The Signal.
 
For more information call (661) 362-5900, email us at sbdc@canyons.edu or visit our website at: www.cocsbdc.org

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