are programs designed to accelerate the successful development of entrepreneurial companies through an array of business support resources and services developed and orchestrated by incubator management and offered both in the incubator and through its network of contacts.

The main goal of a business incubator is to encourage the development of new business within the local community.

The business incubator helps to fill a void that is found in many areas. Not everyone is able to spend the time or money necessary to attend college and obtain a business administration degree. Further, not everyone has access to resources that can fund a new business effort until it becomes profitable. Incubator programs help to fill the gap by providing rudimentary training to entrepreneurs, a space to launch the business, and in some cases connect the new business owner with others who are in a position to invest in the future of the company.

Incubators vary in the way they deliver their services, in their organizational structure, and in the types of clients they serve. Successful completion of a business incubation program increases the likelihood that a start-up company will stay in business for the long term: Historically, 87% of incubator graduates stay in business.

By assisting a local entrepreneur to start a company in the area, the community is likely to benefit from an increase in the number of available jobs in the area, and the additional revenue that is brought to the city or town as a result of the new business activities. Both elements can help to revitalize a local economy that is somewhat sluggish and thus enhance the quality of life for everyone who lives and works in the area.

Incubators differ from research and technology parks in their dedication to start-up and early-stage companies. Research and technology parks, on the other hand, tend to be large-scale projects that house everything from corporate, government or university labs to very small companies. Most research and technology parks do not offer business assistance services, which are the hallmark of a business incubation program. However, many research and technology parks house incubation programs.

Although most incubators offer their clients office space and shared administrative services, the heart of a true business incubation program is the services it provides to start-up companies. 

Most common incubator services  

  • Help with business basics
  • Networking activities
  • Marketing assistance
  • High-speed Internet access
  • Help with accounting/financial management
  • Access to bank loans, loan funds and guarantee programs
  • Help with presentation skills
  • Links to higher education resources
  • Links to strategic partners
  • Access to angel investors or venture capital
  • Comprehensive business training programs
  • Advisory boards and mentors
  • Management team identification
  • Help with business etiquette
  • Technology commercialization assistance
  • Help with regulatory compliance
  • Intellectual property management

Unlike many business assistance programs, business incubators do not serve any and all companies. Entrepreneurs who wish to enter a business incubation program must apply for admission. Acceptance criteria vary from program to program, but in general only those with feasible business ideas and a workable business plan are admitted. It is this factor that makes it difficult to compare the success rates of incubated companies against general business survival statistics.

Each community sets criteria that applicants must meet in order to participate in the business incubator. Of necessity, a local incubator program will not cater to anyone who wants to start a business. Setting qualifications helps to ensure that limited resources are directed toward proposed business ventures that are more likely to result in a lasting positive impact on the whole community.

The amount of time a company spends in an incubation program can vary widely depending on a number of factors, including the type of business and the entrepreneur’s level of business expertise. Life science and other firms with long research and development cycles require more time in an incubation program than manufacturing or service companies that can immediately produce and bring a product or service to market. On average, incubator clients spend 33 months in a program. Many incubation programs set graduation requirements by development benchmarks, such as company revenues or staffing levels, rather than time in the program.

Business incubation has been identified as a means of meeting a variety of economic and socioeconomic policy needs, which may include:

  • Creating jobs and wealth

  • Fostering a community’s entrepreneurial climate

  • Technology commercialization

  • Diversifying local economies

  • Building or accelerating growth of local industry clusters

  • Business creation and retention

  • Encouraging women or minority entrepreneurship

  • Identifying potential spin-in or spin-out business opportunities

  • Community revitalization