Business incubation is an important strategy to foster entrepreneurship and innovation, it has gained enormous popularity in China since the mid-1990s. It is a process of support for businesses with growth potential. It can be targeted at one or a combination of support to: start-ups, early stage business and established businesses with new products/new directions.
Business incubation supports the start-up and early stage of new business ventures by providing them with the safe harbor, intensive resources and a development environment in which they can flourish. A business incubator is usually the ‘physical’ manifestation of this process and generally involves the provision of a ‘with-walls’ facility through which concentrated business incubation support processes can be delivered. Businesses can thus gain from close proximity to like minded enterprises, mutual development and a shared learning environment.
‘Virtual’ business incubation programs also exist, though they seek to deliver business incubation processes using means other than physical premises. Although even virtual business incubators frequently provide some contact or hot desking facilities i.e. client meeting rooms, conference mail and address hosting facilities. Business incubatees (either in situ or virtual), often are only a part of a larger mass of businesses supported by or at the business incubator.
Why is business incubation important?
Business incubation features strongly in local, regional and national economic strategies and is a key component in the development of most overseas, developed and developing economies, particularly those aiming to develop a knowledge based economy. The benefits of business incubators are numerous. Amongst other things, they can:
1. act as a catalyst for economic change development;
2. help young companies to negotiate the hurdles that often lead to their early downfall;
3. help entrepreneurs overcome the isolation and stress of starting a business;
4. provide access to an array of expertise, mentors, investors and specialist advisers;
5. provide visibility and credibility in the marketplace;
6. facilitate linkages with and the commercialization of university or corporate research and new ideas utilizing research and development expertise and proof of concept functions;
7. encourage faster sustainable growth and greater survival rates of new and existing companies;
8. act as catalyst for urban and rural regeneration;
9. enable growing companies to become stand alone entities within the community.
Business incubation, innovation centers and managed workspace
Business incubation (process) is not managed workspace (place), nor is it universally provided by innovation centers. There are indeed some innovation centers which purely provide managed workspace. As detailed above, business incubation is fundamentally about the provision of bespoke, hands-on business support to businesses at a stage of their business life cycle where they are the most vulnerable.
Business incubators are focused, fundamentally, on mentoring their growing client businesses and while the provision of office space is a key element, it is nonetheless secondary. Whereas business incubation provides an environment allowing start-ups and early stage businesses to accelerate their growth up to the point where ‘they can fly the nest’, services offered by managed workspace commonly fit the needs of established, self sustainable businesses. Links with managed workspaces are therefore useful when preparing the incubatees to exit the business incubator and helping them finding grow-on space. provided.
Business incubation can be a resource intensive intervention and there are only a small number of private sector providers which go beyond providing fully serviced managed office space. When properly conducted business incubation is therefore almost invariably subsidized from public revenues in one way or another.
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