Best Practices in Incubator Management

Jim Greenwood, PresidentGreenwood Consulting Group, Inc.

Sanibel, Floridagail-jim@g-jgreenwood.com

www.g-jgreenwood.com

Copyright © 2012 by Greenwood Consulting Group, Inc.

THE ORIGINAL NBIA “BEST PRACTICES”

• 1995: Growing New Ventures, Creating New Jobs: Principals & Practices of Successful Business Incubation, by Mark Rice & Jana Matthews– claims 10 common attributes of a successful incubator

• By 1996, adopted by National Business Incubation Association (NBIA) as “the” criteria by which incubator programs will be measured

• The beauty of this guide: useful guidance for developing and managing an incubator program

ORIGINAL NBIA “BEST PRACTICES” 1. Committed to 3 core principals of business incubation 2. Consensus on mission & strategic plan with measurable objectives 3. Realistic business plan, able to achieve financial sustainability 4. Effective board maximizing manager’s role in tenant success 5. Has & compensates good manager 6. Puts manager’s emphasis on client services 7. Has facility/resources/tools/methods for effective business assistance & meeting various tenant needs 8. Integrated into overall ED goals & the community 9. Supported by stakeholders, including a resource network10. Collect data for ongoing program evaluation & improvement & evolution to meet client needs

NBIA “BEST PRACTICES” DETAILS1. Committed to 3 core principals of business incubation

• Core Principals:– Focus incubator on developing companies– Manage incubator like a business– Develop array of services, apply to businesses based on needs

• Possible measures:– What % manager’s time spent on tenant service (not real estate)?– Does incubator have achievable goal of financial self sufficiency?– Is there flexibility in what services a tenant receives?

2. Agree on mission & strategic plan with measurable objectives• Possible measures:

– Does incubator have a mission statement?– Does incubator have a strategic plan with goals & objectives tied to that

missions statement?– Is there widespread agreement, both within the incubator program and

outside, regarding the mission of the incubator?

NBIA “BEST PRACTICES” DETAILS3. Realistic business plan, able to achieve financial sustainability

• Possible measures:– Does the incubator have a current business plan?– Is the plan based on realistic assumptions, and does it set achievable goals

for the incubator?– Does the plan reflect the mission statement and strategic plan (see #2)?– Does the business plan, and other financial projections, indicate that

financial self sufficiency can be achieved under reasonable assumptions?

4. Effective board maximizing manager’s role in tenant success• Possible measures:

– Do the board and manager have a good working relationship, based on mutual trust and respect?

– Is there an agreement that guides the relative roles and responsibilities of the manager, board, and executive committee?

– Does the board support the manager’s efforts to assist tenants?

NBIA “BEST PRACTICES” DETAILS5. Has & compensates good manager

– Possible measures:• Does the incubator have a manager who is well qualified to run the incubator?• Does the manager receive compensation at consistent with industry norms?• Does the board regularly evaluate the manager’s performance?• Does the board give the manager responsibility for day-to-day operations of

the incubator and supervision of all staff, consultants, and contractors?

6. Puts manager’s emphasis on client services– Possible measures:

• Does manager delegate non-client tasks (including facility management) to subordinates?

• Does manager have qualifications for counseling and assisting tenants?• Does the incubator have a well developed network of outside service

providers?• Do tenants indicate that the manager is available, effective, concerned with

regard to their questions and needs?

NBIA “BEST PRACTICES” DETAILS7. Facility/resources/tools/methods for effective business assistance &

meeting various tenant needs• Possible measures:

– Does the incubator facility provide the size & type of space needed by tenants?– Does the incubator link tenants with effective outside sources of help,

financing, and clients?– Are tenants surveyed regularly regarding their needs?– Does the incubator provide shared services and equipment that reflect modern

technologies?

8. Integrated into overall ED goals & community• Possible measures:

– Are there linkages between the incubator management/board and the management/boards of other economic development initiatives?

– Is the incubator supported in the community economic development plan?– Does the incubator business plan and/or strategic plan explain how it will be

integrated into the overall economic development strategy?– Does the incubator admit more than just start up and early stage tenants?

NBIA “BEST PRACTICES” DETAILS9. Supported by stakeholders, including a resource network

– Possible measures:• Can the incubator manager and board list its stakeholders?• Are stakeholders involved in the incubator, perhaps through seats on advisory

or ex officio boards?• Can stakeholders be found who speak well of the incubator?• Does the incubator show its appreciation and respect for its stakeholders?

10. Collect data for ongoing program evaluation & improvement & evolution to meet client needs– Possible measures:

• Does the incubator collect information about its tenants and graduates?• Has the incubator made changes based on results of such data collection?• Does the incubator have a record of improving and evolving to meet changing

tenant needs?• Did the incubator participate in NBIA’s survey for the “State of the Industry?”• Does the incubator regularly survey its tenants?

The Latest “Best Practices” Report• “Incubating Success. Incubation Best Practices that Lead to

Successful New Ventures”

– University of Michigan & National Business Incubation Association (NBIA)

– Completed in 2011

– http://www.edaincubatortool.org/pdf/Master%20Report_FINALDownloadPDF.pdf

The Latest “Best Practices” Report• Findings

1. Synergy among incubator practices, policies & services helps determine success

2. Successful incubators have some common management practices• Mission statement, tenant selection based on success potential,

each tenant’s needs determined upon entry, exit strategy for tenants

3. It matters who is on the incubator advisory board• Graduate company, tech transf specialist, accountant, attorney,

government/ED reps

4. Neither incubator size nor age determine success

5. Better incubators collect client outcome data• Include tracking graduates

The Latest “Best Practices” Report• Findings

6. Most successful incubators are not-for-profit

7. Public sector support contributes to incubator success• “some” level of public subsidy/support is helpful

8. Incubators w/big budgets outperform those w/small budgets• Can deliver critical services if have more money

9. Growth/size of area’s economy don’t predict incubator’s success

10. Region’s support of entrepreneurship also not a strong predictor

11. Incubation best practices correlate with incubator success• Advisory board composition, qualified staff, sufficient time to work with tenants,

tracking tenant outcomes

• Questions??