Baby boomer entrepreneurs can get tips from the core principles business incubators use to help newbie entrepreneurs. The fast growing new group of boomer entrepreneurs is made up of people seeking to retire from their current employment. They look for a semi-retired life as business owners as compared to traditional retirement. Boomers have an extra time pressure that makes learning from trial and error a poor choice for getting their businesses off the ground. Following a proven model can greatly expedite the development of your business and improve your odds of success. Business incubators regularly help new businesses launch. Taking a look at the core principles by which they assist newbie entrepreneurs has the potential to give you a head start.
Not just Baby Boomer Entrepreneurs, but almost everyone has thought about being in business for themselves. Yet only a few people ever go beyond the point of dreaming and actually start their business. Of those few, 95 percent will ultimately see their business close and not realize their dream of success. Unlike younger entrepreneurs, baby boomers do not have the time to learn by trial and error to overcome the risks of startup. Is there a way to reduce that risk?
Clearly, the answer is YES. Risk can be mitigated. It depends upon knowing what the 5% who are successful do differently from the way the other 95% approach the task of forming a business. The process used by business incubators may give us the clue to that difference.
What Are Business Incubators?
Business incubators are organizations that offer specific training programs for entrepreneurs to nurture fledgling businesses. Incubators generally involve starting a business in a location, somewhat like an industrial park, that is specifically structured to share resources and develop skills for people seeking to become entrepreneurs.
The National Business Incubation Association (NBIA) says that business incubation programs provide entrepreneurs with a guiding hand to help them turn their ideas into viable businesses. Since the first incubator opened in Batavia, N.Y., 50 years ago, incubation programs around the world have been providing client companies with business support services and resources tailored to young firms to help increase their chances of success.
The US Government Says Business Incubators Improve Odds of Success For New Companies
The U.S. Department of Commerce Economic Development Administration (EDA) validates that incubation works. Their research says that business incubators provide communities with significantly greater results at less cost than do any other type of public works project.
Researchers found that business incubators are the most effective means of creating jobs; more effective than roads and bridges, industrial parks, commercial buildings, and sewer and water projects. In fact, incubators provide up to 20 times more jobs than community infrastructure projects (e.g., water and sewer projects) at a Federal Government cost of $144 to $216 per job compared with $2,920 to $6,872 for the latter.
In another EDA-funded study in the mid1990s, it was found that 87 percent of all firms that had graduated from NBIA member incubation programs remained in business; and about 84 percent remained in the incubator's community.
It is estimated that in 2005 alone, North American incubators assisted more than 27,000 start up companies that provided full-time employment for more than 100,000 workers and generated annual revenues of more than $17 billion. Many thousands more jobs were created by companies that had already graduated from these business incubation programs and now operate self-sufficiently in their communities.
If a strategic focus on innovation and entrepreneurship makes the difference in businesses started in business incubators, a similar focus must certainly work for baby boomer entrepreneurs facing the same problem of starting a business and avoiding the pattern of failure that most businesses experience.
What Are The Core Practices of Business Incubators that Make A Difference For New Entrepreneurs?
The National Business Incubation Association has consistently shown that incubation programs that adhere to the principles and best practices of successful business incubation generally outperform those that do not. They cite two industry principles that effectively characterize business incubation programs around the world, regardless of their focus or mission.
1. The incubator aspires to have a positive impact on its community's economic health by maximizing the success of emerging companies.
2. The incubator itself is a dynamic model of a sustainable, efficient business operation.
The essence is that incubators provide a structure for entrepreneurs to learn to avoid the problems that typically cause failure. Entrepreneurs learn a behavior modification process to use deliberate business development techniques, business operation by design rather than by accident. Incubators normally admit entrepreneurs into a structured learning experience that expands their skills as they move toward a required level of skill and graduation from the incubator once the skills are developed.
What Can New Entrepreneurs, Especially Baby Boomer Entrepreneurs, Learn From Incubators?
Incubators are about expectations and systems. Incubators strive to be good models of a company that uses systems effectively for their own operations. They use systems to design the training experience of companies that enter their programs. Additionally, they teach their member companies to design and operate effective systems. It stands to reason that businesses created on such a systems model have a better chance of survival.
Baby Boomer Entrepreneurs can learn from the success of business incubators and the businesses they help start. If business incubators have systems that include key elements, your business should have key elements too:
- Commit to the core principles
- Obtain consensus on mission
- Structure for financial sustainability
- Build an effective board of directors
- Prioritize management time
- Develop an effective facility
- Integrate activities into the fabric of the community
- Develop stakeholder support
- Maintain a management information system
How Can Your Business Benefit From What We Know About The Success of Incubation?
1. Find out if there is an incubation service near you. Though most of these are resident programs, a number of variations are often directed by local economic development groups that do not require your business to be resident in an incubation facility. The the National Business Incubation Association cooperates with many local programs and may be able to help you find out if there is an incubator near you.
2. If you can't find an incubator, you may want to try a do it yourself approach. Get the best book written on applying the systems concept to business development. Many incubators use this as a a book in their training of new entrepreneurs,This is Michael Gerber's The E-Myth Revisited: Why Most Businesses Don't Work and What To Do About It. Each year, the owners of the fastest growing privately held companies in America credit this book as being the most important business book they have ever read. Again, many of the formal business incubation programs are based upon the concepts discussed in this book.
3. Look for Internet based information that can help you develop your own business incubation systems at low to no costs. Especially look for ideas that align with your specific needs in your stage of life as a Boomer. Remember, you are looking to design a plan that allows you to avoid the most common errors that take place when new businesses are formed. Boomers who really want to make a mark do not have the luxury of running their businesses by the seat of their pants.
In summary, the most important point of incubation is to build a business by design. The first step is defining expectations. The second step is building systems to make those expectations happen.