What is an incubator for a company? What are they doing? What are they doing? Why is it important to have an incubator for a new and small company? Look for a New York City business incubator (e.g., use Google). What if no incubators were available? Who would benefit? Who would benefit?
Company incubator is an entity or institution that is structured mainly to accelerate startup companies or entrepreneurs’ creation and overall success. in doing so, they provide different services to the startups through various combination of business support resources as well as services which could range from physical space, financing, coaching, shared equipment and expertise and the entire theme of networking in different opportunities (Rice 163). In summary, business incubators usually offer services such as market research and extension, product development, analytics tools, loan facilitation, and even offering legal advice to them (Grimaldi and Alessandro 111).
Business incubator offer array benefits of economic propensity to the new businesses which are starting up operation and less informed about market structures and how to network internally and externally to promote their business. New businesses, especially small businesses are commended to secure a business incubator at its early stages due to the following reasons.
First, access to capital; business incubators are well staged in the economy and thus they can easily help the business in meeting the initial cost for establishing the business than resorting to other financial institutions, sometimes becomes frustrating. Secondly, incubators have well-established management systems and this can help small business with key management decisions which are vital in propelling the business to spur its growth. This can be in terms of human resource management, financial management decisions and overall management of the business at a cheaper cost compare to other companies offering such services (Rice 163).
Thirdly, small businesses need business incubators for synergy purposes. This simply means that they can easily share information with giant businesses to enhance their performance and realize faster growth rates. Incubators also offer mentorship services to small business making them fully equipped to manage volatile situation within the business. Furthermore, incubators also help small business to enhance the acceptance of their ideas, products or services to the society. It is always a big challenge to startups and sells new ideas to the society unless assisted with that individual who has a public image in the society, in such aces, incubators role sets in to sell your ides to the society ion your behalf. Sometimes, small business is likely to enjoy the benefits of sharing operational cost in the business such consultation fee, legal fee among many other overheads which enables the business to establish itself faster (Rice 163).
Contraswise to above benefits, the absence of incubators would result in dire consequences to many small startups. For example, it will be very difficult for those entrepreneurs who have an idea to sell but lack enough resources to formalize massive production. It could also be difficult to have a wide market share as the rate of networking will be reduced and thus low information transfer and sharing which slow down innovation. Access to funds, which is a major challenge to many small businesses, would amplify its austerity and thus shattering the growth of new business (Hackett and Dilts 57). TechStars is an example of an incubator located in the New York. In the event, business incubators were not in existence or cease to be, then the main beneficiaries would be consultants and other professionals as well as other financial institution as small business owners will be now seeking their assistance at a cost.
Grimaldi, Rosa, and Alessandro Grandi. “Business incubators and new venture creation: an
assessment of incubating models.” Technovation 25.2 (2005): 111-121.
Hackett, Sean M., and David M. Dilts. “A systematic review of business incubation research.”
The Journal of Technology Transfer 29.1 (2004): 55-82.
Rice, Mark P. “Co-production of business assistance in business incubators: an exploratory
study.” Journal of business venturing 17.2 (2002): 163-187.
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