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Business incubators: What you should look for when choosing one

Brian O'Connell on July 26, 2011 Source: Kauffman Foundation

The National Business Incubator Association says there are about 1,200 business incubators operating in America.

The Athens, Ohio-based group also has some ideas on how healthcare entrepreneurs can latch on to a local incubators group – and make it work for them.

So how do you go about it?

David Monkman, the president of the National Business Incubation Association, has some specific tips on what entrepreneurs should look for before joining an incubator.

Monkman tells MSNBC in a recent interview that a business incubator has many advantages. “Business owners can get counseling and mentorship options and incubators give them access to financial support,” he says.

But don’t come in with your eyes closed, he adds.

“Incubators are more than office space,” he says. “Actually, business incubators work more like a university – it’s the mentors and counselors who make incubators work, and not the buildings and classrooms.”

What else should entrepreneurs do?

“Look for what specific services they offer,” he advises. “How active are the incubators in the entrepreneur’s life? How many entrepreneurs have they assisted? What kind of face time can a business owner get?”

“You’ll also want to ask how many businesses have graduated from an incubator and are they still around?” he says. “I call that validation capability.”

Also look for a niche that your company operates in, Monkman adds.

In most cases, business startup owners shouldn’t have to pay for a business incubator. “Financial models do vary,” he says. “In some instances the experience could cost a bit of equity, but in most cases, that won’t happen.”

The NBIA has some specific tips on its web page for entrepreneurs seeking a business incubator. It’s well worth checking out.

Also, the association has a list of state and local business incubator groups. Give it a good look.

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