Incubation or isolation? An important consideration for a start-up businesses!
The last time I walked into the canteen of our Centre there were three people from three different companies having an animated debate about the best current scheme to secure some much needed development funding. I was tempted to put in my “six penneth worth” but the draw of the coffee machine was slightly greater and I made a mental note to send them the latest funding opportunities list when I got back to my desk and arranged for our onsite mentor to pop in and see them all.
“That’s incubation in practice” I thought as I sat down. We’re creating a supportive community where entrepreneurs can share their experiences, and frustrations! We are there in the background giving a helping hand when needed. There’s even potential for those companies to join forces and perhaps look at collaborating on a funding bid. “I must mention that to the mentor too.”
The value of business incubators for companies who are just starting out or are in the early stages of growth have been long recognised. Research from UK Business Incubation (www.ukbi.co.uk) shows that the average success rate of businesses based in incubators is 98%, compared to a national average of less than 30% of all SMEs registered. In addition 87% survive five years on. Impressive statistics!
So why don’t more businesses use them? Is it because:
- They don’t understand how they are different to serviced offices?
- They think they may be too costly?
- Or, there just isn’t enough true incubators being actively developed and promoted?
I suspect all of these apply to some degree. Some start-up companies don’t realise that with incubators comes business support, not just office accommodation. Often there’s access to mentoring, training and a proactive business community. And with the community comes opportunities to work together.
Also, they don’t have to cost too much. Many incubators recognise that start-up companies, by definition, have limited funds and can’t support high rental costs. Hence they usually provide low cost entry points, with options of hot-desking and dedicated workstations, as well as flexible easy-in easy-out lease terms.
Because many of the support services provided are either free or subsidised, incubators are not particularly profitable business ventures and indeed the motivations for setting them up tend to be more about supporting entrepreneurship and less about profit. Hence many are underpinned by private sponsorship or public sector funds. The pursuit of finding supporting funds has stifled many a good incubator concept.
Why aren’t all small businesses based in incubators? Well many of them, 2.9m in fact according to the latest research, are working from home (http://www.telegraph.co.uk/sponsored/business/sme-home/11058313/work-from-home.html). Back bedrooms, garages and sheds are the working base for many of our most promising entrepreneurs. I wonder if at times they feel isolated? It must be hard to tackle problems and make major business decisions without having someone “to bounce ideas off” or guidance from others who’ve already set up their own companies. Also, are they missing out on commercial opportunities by not being part of a wider business community where collaborations can take place and deals done?
To my mind, the more businesses I see nattering in the canteen together, the better. I certainly welcome the time when I can’t even get to the coffee machine!
For more information on the Nottingham CleanTech Centre, please visit www.cleantechcentre.co.uk.