Business incubators are becoming an increasingly popular method of business retention and growth for many areas across the country. In fact, there are incubators in 49 states. The goal of incubators is to increase business success by providing support and reducing start-up costs. Incubators are operated by state and local economic development agencies, not-for-profit organizations, chambers of commerce, colleges and universities and private corporations.

Service…Service…Service…
You need to offer two things: space and services. Specific services that incubators provide are office services and equipment on a pay-as-you-go basis, such as a reception service, on-site counseling, fax machines, copy machines, etc. There's sometimes also an on-site incubator manager as a resource for business advice, orchestrated exposure to a network of outside business and technical consultants, often providing accounting, marketing, engineering and design advice, assistance with financing, opportunities to network and transact business with other firms in the same facility, and flexible space and leases.

What Kind of Incubators Are There?
The National Business Incubation Association reports that the number of incubators has ballooned over the last 12 years, from 40 to well over 500. Many of these programs focus on minority and women-owned businesses. 25 percent of incubators specialize in technology companies and 43 percent are mixed-use (10 percent light manufacturing, 6 percent services). Some incubators specialize in software development, others in medical and biotechnology research, food production or arts and crafts.
In terms of clients, incubators may have three tiers of clients:
1) anchor, 2) regular, and 3) affiliate. Anchor clients are tenants who pay market rates for the incubator's space and services; they are stabilizing forces that literally "anchor" the incubator. The income from the anchor tenants helps offset the cost of providing services to the regular and affiliate clients. Regular clients are usually the smallest and weakest firms (start-ups); they rent space within the incubator facilities and use the services- sometimes at below-market rates. Affiliate clients are a little stronger; they just access the incubator's services, but are located outside of the incubator facility. A good mix of clients- from "superstars" to "long shots"- is needed to make the incubator work.

How Long to Stay In an Incubator?
According to the National Business Incubation Association, there is an 87 percent national success rate and the average stay is 2.3 years. Remember, the primary emphasis of business incubators is to see clients graduate and become self-sufficient.

Some Incubator Feedback…
Finally, some points to remember: Look at the local economy for your incubator theme, choose your anchor tenants wisely, place a five-year cap on tenancy, help clients get ready to graduate and expect the return to be additional tax revenues from employers, additional payroll taxes, additional income tax paid by employees and dollars spent in the community.

For more information, you may call the National Business Incubation Association at (614)593-4331 or access their web site at www.nbia.org.

Doug Ververs is Cooperative Extension Team Cordinator for Cornell Cooperative Extension in Oswego County, New York.