A business incubator provides an entrepreneur with conditions aimed at promoting fast and sustainable development of their small business. There are few key questions an entrepreneur should ask from the onset in order to see whether the incubator would contribute to the profitability and sustainability of the business. Legshaan Ariefdien, COO of Furniture Technology Centre Trust (Furntech) schools us.
- What are the entry criteria for joining the incubator?
There should be a clear set of criteria that will allow the entrepreneur to qualify to enter into the incubation process. This can include a comprehensive CV, portfolio, business plan framework or idea, and technical skills evaluation when applicable.
- What are the exit criteria?
The entrepreneur should be made aware of the process for exiting the incubation process. The goals the entrepreneur needs to achieve before s/he can graduate from the incubator, have to be defined.
- What is the maximum period of incubation?
This should be usually based on measurable deliverable and goals, rather than time only. The suggested period for incubation is between 12 and 36 months.
- What are the phases of incubation and how long is each phase?
Incubation models vary from industry to industry but incubation phases are generally the same. Phases include: pre-incubation phase (average 3 months), application process, incubation phase (2-3 years) and the post incubation phase (3-5 years).
- How will the incubator contribute to the small business’s performance?
Specific business development support services, mentoring and coaching, and infrastructure are provided to a specific client to assist them achieve the agreed upon goals and objectives. It is critical that the entrepreneur understand the incubator is not there to do the work for them, but is an enabling environment, and that the responsibility of building a successful small business lies with the entrepreneur.
- How will the incubator minimise the small business chance of failure?
Weekly and monthly mentoring and coaching sessions are structured in the terms of relevance under under which the client enters the programme. This is done so that challenges are detected from the onset. The process also assists with remedial or corrective action early in the process.
- What payments are required from the small business?
Generally, there are two types of fees paid by small businesses; monthly incubation and cost recovery fees.
- What are the value-added services offered by the incubator?
The incubator should stipulate the value-added services that they will offer such as; coaching, technical advisory services, prototyping/product design etc.
- What is the unique offering of the incubator and how does it differ from the open market offering?
Furntech’s goals are based on the organisation’s proven model of placing equal emphasis on business technology incubation and skills development. The model is also base on its flexible combination and integrated approach of vocational training and business development processes, infrastructure, and people.
- Why should I join an incubator? What is the competitive advantage of the incubator?
This is arguably the golden question that the entrepreneur should ask. Incubation models have 80%+ success while other methods of small business development have a 35% success rate. This is based on entrepreneurs who were evaluated 3 years after an incubation process.
- What are the objectives and goals of the incubator?
The primary goal of business incubation is to facilitate economic development by improving the entrepreneurial base (of a local area, town, province, country, or sector) through the provision of infrastructure, people and a variety of business support services.
- What type of incubation models does the incubator have: resident (on-site), virtual or a combination?
- The residency incubation is particularly relevant and useful for startup businesses with no or very little capital and equipment available. Due to the high barrier to entry for woodworking businesses, the resident incubation option within protected environment can be very attractive.
- Virtual incubation is an off-set incubation for graduates from the incubation programme who cannot afford to purchase all the machines they need or cannot afford the specialist machines which are not used every day.