If your start-up business is off to a good start, you may be considering an incubator to take it to the next level. They offer mentors who can provide the right advice at the right time, educational opportunities to improve the way you operate and potential funding. These programs can be of great benefit.
The challenge here is that there are so many incubators around the world that you must carefully select the one that’s the best match for you and your business. With incubators, one size does not fit all. They each have their individual strengths and weakness so taking the time to weigh your options can make the difference between reaping huge rewards or minimal ones as a result of participation.
Considerations for choosing the right start-up incubator
With such a critical decision, you need to do thorough research so you receive optimum benefit. Here’s what you should know so you select the best small business incubator for your start-up:
It’s important to look at which other companies got started at each incubator program you consider because participation can be an excellent resource for improving your network. So, make sure you’ll be in good company.
It’s not only about how many successful companies have come out of a particular incubator. You want to make sure that the alumni have a similar business philosophy to yours so it’ll be a good fit.
One way to determine this is by actually speaking with some of the alumni. Instead of making assumptions, take the time to pick someone’s brain to ask questions and identify questions you haven’t yet thought to ask. You’ll develop a much clearer picture of the realities of each potential incubator by doing so.
Mentorship is a key resource offered by an incubator. Unfortunately, just because someone has more experience than you, they aren’t necessarily the best candidate to mentor you. You want to be sure that the mentors in the incubator that you select are, in fact, a good match for your specific business based on their background.
You also need to find out what kind of access you will have to the mentors. Will mentoring sessions be one-on-one or will they be group chats? This makes a huge difference so be clear about this prior to selecting an incubator to apply to so you’re certain to have an experience that meets your expectations and requirements.
Since being part of an incubator program means that you’re part of a group, make sure to select one where you’ll be well aligned with the other participants. This will ensure that you’re able to receive full advantage by fitting in and having opportunities to commiserate and network comfortably.
Consider if you prefer a more casual environment or one that’s more professional. You want to gain a good feel for each incubator’s vibe so you’ll know in advance if it’s a good cultural fit for your company.
An incubator typically requires a one to two year commitment, which is not a short-term commitment. So, it’s important to approach this decision with this in mind. It demands more of you than simply the hard work of running your business. Make sure that you’ll be able to handle the added activities such as attending classes and completing coursework on top of normal business requirements. If you’re not in a position to take full advantage, perhaps you shouldn’t apply right now.
The Offer and Other Costs
Although a small business incubator provides your company with many things, you also need to consider what you’re giving up in return. It’s common for programs to offer funding in exchange for equity. But, is it truly a good deal for you? Yes, capital may be useful in the short term to aid in the expansion of your business, but it may pale in comparison to the long-term value of the equity you give in exchange. It’s critical to carefully consider this as a cost that you are paying to be part of an incubator program.
In addition to the cost associated with the equity you give in exchange to funding offered, there are other cost considerations. Don’t forget to check to see how much it costs to use the incubator’s workspace and equipment. If funding is in the form of a loan, you’ll also want to carefully consider the terms offered.
It’s often a requirement of participation that you relocate yourself and your business to the geographic area of the incubator. This can be costly and time-consuming. So, before you apply, make sure that you’re prepared to make this sort of change. Other location-related considerations include whether the location is good for your type of business and if you’ll want to stay.
It’s important to look at what your prospective small business incubators have been doing in the past years and how well they are doing in the market. Things to find out include:
Which successful businesses it has helped launch.
What type of funding they offer.
What percent of graduates from the program have gone on to achieve key milestones?
What the incubator does to ensure the success of alumni companies.
How long they have been operating.
Who backs them?
This information will give you a much clearer picture of the incubators you’ll seriously want to consider.
Every start-up has different needs. For example, some need funding, others need guidance on running their business and others need more knowledge or education. Be clear on what your particular business needs to ensure that the incubator you select is focused on fulfilling the needs that are most important to you.
Competition to enter into an incubator is often fierce so it can be quite helpful to have a referral from someone who’s connected in some way to the one where you’re applying. This can make all the difference. Checking to see if you have a connection who can offer this type of assistance with entrance to the incubators you’re considering is worth the effort.
The actual founders of the incubators you’re considering can make a difference. Look into their educational background, their track record as entrepreneurs and their experience in operating businesses. You may also want to see if and how often they meet with their participants.
As you can see, there are many details to consider when selecting the best start-up incubator for your business. It’s a critically important decision so you end up in the program best suited to your needs while receiving the support and guidance you desire. Selecting the right one can have a huge impact on your rate of growth and the future success of your business.
When you’re ready to grow your business and you’re uncertain about how to overcome the hurdles you’re encountering, a business incubator may be what you need. Learn more about business incubators and how you can benefit from them.