Planning an Incubator · 2020. 7. 3. · 5 03 PLANNING AN INCUBATOR TRAINEE MANUAL PART 2 Suite 2...
Transcript of Planning an Incubator · 2020. 7. 3. · 5 03 PLANNING AN INCUBATOR TRAINEE MANUAL PART 2 Suite 2...
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Trainee Manual Part 2
Planning an Incubator
Suite 2
Business Incubator Operations
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infoDevc/o the World Bank Group1818 H StreetWashington DC 20433USA
www.idisc.netwww.infodev.org/businessincubation
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Introduction to the Training Program
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INTRODUCTION TO THE TRAINING PROGRAM
This is the trainee manual for Module 3 Part 2 – out of 11 modules in total - of infoDev’s State-of-the-
Art Business Incubation Training Program for Business Incubator Managers in Developing Countries.
infoDev (www.infodev.org) is a research, capacity building and advisory services program, coordinated
and served by an expert Secretariat hosted by the World Bank Group. It helps developing countries
and their international partners use innovation and information and communication technologies
(ICT) effectively as tools for poverty reduction and sustainable social and economic development.
infoDev is a leader in business incubation of technology-enabled enterprises. infoDev’s global business
incubation network reaches close to 300 business incubators, more than 20,000 small and medium
enterprises, and has helped create over 200,000 jobs across 87 developing countries1.
infoDev has found that high quality leadership is a key factor determining the probability of success
for an incubator. infoDev therefore seeks to increase the capacity of business incubation managers
– and their stakeholders – through one-on-one technical assistance, regional and topical peer-to-
peer networks, the bi-annual Global Forum on Innovation and Entrepreneurship, and its web-based
networking and knowledge-sharing tool www.idisc.net. This training program was designed in direct
response to repeated requests from infoDev’s technology entrepreneurship community for an in-
depth business incubation training program relevant to the developing country context.
This training program is the first-of-its-kind, drawing from the lessons, models, and examples in business
incubation from across Africa, East Asia and the Pacific, Europe and Central Asia, Latin America & the
Caribbean, Middle East & North Africa, and South Asia. More than 30 experts contributed directly to
the writing of the training modules, and the materials were tested with more than 300 professionals
in developing countries all of whom provided inputs to the final design.
This training program is designed for business incubation managers and other business incubation
stakeholders wishing to increase their understanding and know-how of the business incubation
process. It consists of 11 training modules ranging from basic introductory topics designed for
professionals new to business incubation, to specialized topics such as Technology Commercialization
and Virtual Business Incubation Services.
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1 Source: infoDev activities from 2002 to 2009 - http://www.infodev.org/en/Article.473.html
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The modules include:
SuITE 1 – BuSINESS INCuBATIoN BASICS
Module 1 – Business Incubation Definitions and Principles
This module provides an introduction to business incubation. It introduces key definitions and
presents the main principles and good practices of business incubation. It aims to equip current and
future incubator managers and policy makers with the knowledge, skills and understanding of the
fundamentals of business incubation in order to effectively foster and encourage businesses.
Module 2 – Business Incubator Models, Including Success Factors
This module aims to illustrate various business incubator models based on practical examples of
incubators from all over the world. The ultimate goal of this module is to empower current and future
incubator managers with a thorough understanding of the various business incubator models and their
critical success factors as well as to help them identify the best model to adopt for their own incubator
to be successful.
SuITE 2 – BuSINESS INCuBATor oPErATIoNS
Module 3 – Planning an Incubator
This module, which divided in two parts, covers assessing the feasibility and designing the business
model for an incubator. The first part is aimed at providing a thorough understanding of developing
a feasibility study. This includes the steps to undertake a pre-feasibility study, the components that it
should address, as well as how to gauge the market need and decide whether an incubator is the most
appropriate solution. The second part of the module focuses on business planning to establish the
incubator business model.
Module 4 – Marketing and Stakeholder Management
This module is designed to support efficient and effective communication of the incubator with
key customers and other stakeholders based on a good understanding of the market place. This is
important since it will help the incubator to establish and increase its reputation as a sustainable
organization that fulfils its mission.
The first part of the module focuses on identifying, assessing, and reaching customers/ stakeholders, as
well as potential ally organizations providing business support services to enterprises; while the second
part is dedicated to defining the incubator’s value proposition and engaging marketing channels.
Module 5 – Financing an Incubator
The first part of this module aims to guide current and future business incubator managers through
mastering the incubator’s financial data (such as costs and revenues) in order to enable them to
identify the financing needs of the organization as well as to explore potential sources of financing.
Building on the first part, the second part of the module is dedicated to demonstrating, to current
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and future business incubator managers, how to develop a fundraising strategy and to monitor the
financial performance of an incubator.
Module 6 – Managing the Incubator
This module provides current and future business incubator managers with an overview of sound
management practices for a successful incubator.
The first part addresses the topics of incubator policies and governance and the second part is
dedicated to operations and human resources management.
Module 7 – Monitoring, Evaluation and Benchmarking
This module aims to provide incubator managers with the required information, skills and insights to
develop their own monitoring and evaluation system and to carry out benchmarking activities.
The first part of the module is dedicated to helping the incubator manager understand the added
value of monitoring and evaluating the performances of his/her incubator; defining relevant and
adequate performance indicators; and exploring how to monitor and evaluate, notably by studying
existing tools and methodologies.
The second part focuses on empowering the business incubator manager to use the data collected
through monitoring and evaluation activities to compare the business incubator’s performance with
those of similar organizations.
SuITE 3 – ADVANCED INCuBATor MANAGEMENT
Module 8 – Implementing a Mentoring Program
This module provides, in its first part, a conceptual framework for gaining a thorough understanding
of the mentoring process and its purposes from three perspectives: that of the business incubator, the
mentor, and the mentee.
The second part of the module focuses on how to implement a mentoring program.
Module 9 – Deals and Financing for Incubator Clients
This module aims to provide a thorough understanding of the alternative sources of financing for
incubator clients by notably describing programs and processes that will enable the incubator manager
to assist his/her clients in accessing financing.
The first part focuses on preparing incubatees to engage in the process of accessing financing while
developing the capacity of the incubator to assist incubatees in accessing financing. The second part of
the training module explores financing from the perspective of both the incubatees and the incubator.
Module 10 – Technology Commercialization through Incubation
This module describes technology commercialization divided in two parts. The first relating to
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challenges and lessons learned associated with this process as well as how to manage expectations
regarding the results of technology commercialization. This part also concerns the role of the incubator
in facilitating technology commercialization in the pre-incubation phase.
The second part of this module focuses on the role of the incubator in technology commercialization
in both the incubation and the growth phases.
Module 11 – Setting Up Virtual Services
The first part of this module provides a conceptual framework for understanding virtual services. It is
designed for current and future business incubator managers who are considering virtual incubation
either as a stand-alone business model or as part of their overall incubator service portfolio to extend
their current service offering.
In its second part, the module aims to guide current and future business incubator managers and help
them to decide if virtual incubation is the right solution for their incubator. The module then explores
the most common challenges and how to address them.
Figure 1 groups the modules by preferred level of experience and suggested module sequence.
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Suggested to be done
sequentially
Suggested to be done
sequentially
These modules are for incubation practitioners who are “beginners”
or incubator stakeholders
Module 1 - Business Incubation Definitions and Principles
Module 2 - Business Incubator Models, Including Success Factors
Module 3 - Planning an Incubator
Don’t need to be done sequentially
Module 4 - Marketing and Stakeholder Management
Module 6 - Managing the Incubator
Module 7 - Monitoring, Evaluation and Benchmarking
Module 8 - Implementing a Mentoring Program
Module 5 - Financing an Incubator
Module 9 - Deals and Financing for Incubator Clients
These modules are for incubator managers and
their staff
MoreExperienced
Don’t need to be done sequentially
These modules are for incubation
managers dealing with high tech or looking at
extending their service offering
Module 10 - Technology Commercialization through Incubation
Module 11 - Setting Up Virtual Services
Stand Alone Modules
LessExperienced
Figure 1 – Module Selection and Sequence
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Acknowledgements
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ACkNOWLEDGEMENTS
The training curriculum was developed by the following consortium under the direction of infoDev:
European Business & Innovation Centre Network
• robert Sanders, Head of International Projects
• Julia Brethenoux, Project Manager
Babson College
• Mark P. Rice, Frederic C. Hamilton Professor for Free Enterprise
Sociedade Portuguesa de Inovação, S.A.
• Augusto Medina, President
• Mark Spinoglio, Senior Consultant
• Douglas Thompson, Senior Consultant
• Nuno Gonçalves, Consultant
infoDev wishes to thank its innovation and entrepreneurship community, including those who provided
material for and whose names appear in the case studies. In particular, infoDev wishes to thank the
following individuals for their contributions to developing this training curriculum:
• Seth Ayers ICT – Policy Specialist, infoDev
• Michel Botzung – Business Edge Manager, International Finance Corporation
• Alistair Brett – Cottingham Associates LLC, Consultant Member of the Science Technology
Innovation Global Expert Team, The World Bank
• raimund Broechler – Senior Delivery Manager, Intrasoft
• Valerie D’Costa – Program Manager, infoDev
• Heinz Fiedler – infoDev regional Facilitator for the Middle East and North Africa
• Han Fraeters – Manager, The World Bank
• Steve Giddings – infoDev Regional Facilitator for the Africa region
• Stephen Hampson – Managing Partner, Powerhouse-Ventures
• Jane Hill – Venture Partner, Powerhouse-Ventures
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• Gideon Maas – Co-Director of the Institute of Applied Entrepreneurship at Coventry university,
United kingdom
• Kiragu Maina – Senior operations officer, International Finance Corporation
• Siobhan McQuaid – Project Director, ABÚ International Project Management
• Mustapha Mezghani – infoDev Regional Facilitator for Africa
• Mark Nielsen – Senior Advisor, Business Edge Management Training, SME Management
Solutions, International Finance Corporation
• Ellen olafsen – operations officer, infoDev
• Edward rubesch – Director, Technology Licensing office National Science and Technology
Development Agency, Thailand
• Tania Saba Mazraani – Director, Technology & Health, Berytech, Lebanon
• Jill Sawers – infoDev Innovation and Business Incubation Consultant
• Stefan Schandera – infoDev Regional Facilitator the East European and Central Asian region
• Julian Webb – infoDev Regional Facilitator for Asia
• Cesar Yammal – infoDev regional Facilitator for Latin America and the Caribbean
• Krzysztof Zasiadly – infoDev Innovation and Business Incubation Consultant
• Sylvia Zulu – SME Toolkit Program Manager, International Finance Corporation
• Sheila Jagannathan – Senior Education Specialist (E-Learning), The World Bank Institute
• Natasha kapil – Private Sector Development Specialist, The World Bank
• Anthony Lambkin – Task Manager, Low-Carbon Innovation Program, infoDev
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Module Index
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INTRODUCTION TO THE TRAINING PROGRAM 3
ACKNOWLEDGEMENTS 11
MODULE INDEX 15
TABLES AND FIGURES 18
MODULE OBJECTIVES 19
INTRODUCTION TO THIS MODULE 23
COMPONENT 2 (PART 2 TRAINING): BUSINESS PLANNING 27
CoMPoNENT INDEX 29
CoMPoNENT oBJECTIVES 29
SECTIoN 2.1: VISIoN & MISSIoN STATEMENTS, STrATEGIES For AN INCuBATor 30
SECTION 2.2: DESIGNING A SUSTAINABLE BUSINESS MODEL 42
SECTION 2.3: COMPONENTS OF THE INCUBATOR BUSINESS PLAN 48
SECTION 2.4: THE IMPORTANCE OF THE INCUBATOR MARkETING PLAN 52
SECTION 2.5: MANAGEMENT AND OPERATIONAL PLANNING 56
COMPONENT CONCLUSIONS 62
CASE STUDIES 63
PLANNING AN INCUBATOR AS THE LOCAL SOLUTION TO FOSTER LOCAL ECONOMICAL DEVELOPMENT 65
THE IMPorTANCE oF HAVING A VISIoN For THE INCuBATor 69
LE kEF ESSOR TECHNOLOGIQUE 73
BIBLIOGRAPHY 77
ANNEX: MAPUTO BUSINESS INCUBATOR FEASIBILITY STUDY SUMMARY 83
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TABLES AND FIGURES
TABLE 3 - BUSINESS INCUBATORS’ POTENTIAL STRATEGIC OBJECTIVES 35
TABLE 4 - MISSION STATEMENT OBJECTIVES TRANSLATED INTO STRATEGIES AND GOALS 38
TABLE 5 - DEAL FLOW STATISTICS BIC INCUBATORS (EUROPE) 44
TABLE 6 - BUSINESS PLAN CONTENTS INDEX 51
TABLE 7 - AVERAGE NUMBER OF CLIENTS SUPPORTED BY A FULL-TIME EMPLOYEE OF AN INCUBATOR (MEMBER
OF EBN) 60
FIGurE 1 - MoDuLE SELECTIoN AND SEQuENCE 9
FIGURE 7 - DEAL FLOW PROCESS 43
FIGURE 8 - THE ‘FUNNEL’ LEADING TO BUSINESS INCUBATION 45
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Module Objectives
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The overall objectives of this module are to (1) provide a thorough understanding of planning and
implementing a feasibility study for an incubator and (2) to show how business planning can be used
to establish the incubator business model.
TRAINEE TRAINING OBJECTIVES
The training module is structured in two parts:
Part 1 is aimed primarily at individuals or stakeholder working groups who will investigate the potential
for establishing a business incubator. It will examine the steps involved in determining the viability of
establishing an incubator by means of a feasibility study. By the end of Part 1 of the training module,
the trainees will be able to:
• undertake a feasibility study for an incubator focusing, in particular, on market analysis and
stakeholder support;
• Ask the essential questions to ensure the sustainability of the planned incubator, notably
whether an incubator is the right solution;
• use the feasibility study results to select the right target market and strategic direction for their
incubator;
• Explore the physical layout options for the incubator, by taking into consideration the important
issues when planning aspects such as the physical location and the size of their incubator;
• Design the services to be offered, determining which are most appropriate and understanding
how to set prices; and
• Describe the skills set required for managing and running an incubator.
Part 2 is aimed at incubator stakeholder working groups or future incubation managers who have
completed the feasibility study for an incubator and/or have taken the decision to go ahead with the
establishment of an incubator. The aim is, building on the results of the feasibility study, to develop a
business plan for the incubator.
By the end of Part 2 of the training module, the trainees will be able to:
• Develop powerful vision and mission statements for the incubator and all its stakeholders; and
• Prepare an effective business plan for an incubator based on the vision and mission statements.
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Introduction to this Module
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Establishing an incubator is a significant, long-term investment. Effective planning is a key factor
in ensuring the future success of such an initiative and the return on investment for the principle
stakeholders. The incubator should focus on areas in which there is a market need and an opportunity
for growth. To this end, this training module will provide the stakeholder working group responsible
with a systematic approach to planning an incubator, from the development of a feasibility study to a
full business plan and the establishment of optimal operational strategies.
The module is designed to be practical in nature providing future incubation managers with the tools
required to complete each stage of the planning process. Relevant case study examples are included in
order to provide stakeholder working groups with a variety of insights and perspectives from different
incubators that have been through the planning process and have resulted in the establishment
of successful incubators. Additional information regarding starting an incubator may be found by
consulting the infoDev Incubator Support Center (iDisc)2.
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2 http://www.idisc.net/en/Topic.1.html and http://www.idisc.net/en/Article.38686.html and
http://www.idisc.net/en/Article.86.html
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Component 2 (Part 2 Training):
Business Planning
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COMPONENT INDEX
Section 2.1: Vision & Mission Statements, Strategies for an Incubator
Section 2.2: Designing a Sustainable Business Model
Section 2.3: Components of the Incubator Business Plan
Section 2.4: The Importance of the Incubator Marketing Plan
Section 2.5: Management and operations Planning
COMPONENT OBJECTIVES
Following the introduction to the feasibility study in Component 1, Component 2 provides an
introduction to the next logical step in the establishment of an incubator – identifying the optimal
business model and putting together a business plan starting with the development of a strong vision
and mission statement and strategic objectives. Insight is given into important considerations when
deciding on whether or not to offer physical incubation space and the factors which should be taken
into account when planning for such a development.
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Section 2.1: Vision & Mission Statements, Strategies for an Incubator23
The strategic plan sets out the mission, vision and key strategic objectives of the incubator. The business
plan addresses how to achieve these objectives and includes detailed financial aspects.
These two documents which form an overall plan are essential to direct and motivate the operations
of the incubator at both a strategic and operational level. The original documents should be developed
with the board and key stakeholders, but once the incubator is up and running they should be ‘owned’
by the management team. A good policy would be to organize a strategic planning workshop once
a year (usually prior to the Annual General Meeting) at which the board, incubator manager and
key stakeholders are present. Ideally such a workshop should be held off-site and facilitated by an
independent expert in both strategic planning and incubation. The management team should prepare
the updated strategic and business plan for review and eventual ratification by the board prior to the
workshop.
In summary, the main elements of the strategic framework of an incubator are as follows:
• A vision for your future;
• A mission that defines what you are doing;
• Values that shape your actions;
• Strategies that define the approach to achieving the mission and vision;
• Strategic objectives to guide your daily, weekly and monthly actions;
• A risk evaluation; and
• Impact, monitoring and evaluation measures.
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23 Adapted from infoDev Incubator Manager Training: Suite 3, Washington
Section 2.1.1: Vision and mission statements
A vision statement summarizes the image that the incubator would like to convey regarding its future.
For example, a manager may seek a “highly competitive area with vital enterprises creating jobs.” The
vision should resonate with all members of the organization and help them feel proud, excited, and
part of something much bigger than themselves. A vision should stretch the organization’s capabilities
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and image of itself. It should give shape and direction to the organization’s future. Visions range in
length from a couple of words to several pages. A short, catchy statement that encompasses the vision
of the incubator is recommended. This vision should be at the forefront of the minds of the employees
and client companies.
A mission or purpose statement explores the role of the incubator in achieving the vision. It is a precise
description of what an organization does. It should describe the business the organization is in. It is a
definition of “why” the organization exists currently. Each member of an organization should be able
to verbally express this mission. The following are a few examples:
The vision of the Bulungula Incubator in South Africa is “to be a catalyst for the creation of
vibrant and sustainable rural communities.” They aim to achieve this vision through their mission
“by partnering with our community, government, Non Government Organization’s and other
innovative thinkers to find synergies between the traditional rural African lifestyle and culture,
and external technologies and innovations. These synergies must always seek to enhance the
positive aspects of traditional rural life and/or mitigate the problematic aspects. They must be
in accordance with our values must recognize the fundamental human rights enshrined in our
constitution. The Bulungula Incubator further aims to be an agent for change by influencing
government and corporate policy in an effort to spread our vision more widely.”24
The mission of ‘Inkubator’ in Slovenia is “to be an operating local innovation instrument for
economic development of the Primorska operating area” with the vision “to become a recognized
and respectable full member of EBN Network”. Their mission includes their Unique Selling Point
or Proposition (uSP) which is “our strong point is our location on the border with Italy and
closeness of important science and technology institutions.”
The vision of the TREC-STEP incubator in India is “Partnership for mutual benefit across the
public and private sectors” focusing on:
• Knowledge based industrial clusters;
• Academia and entrepreneurs partnership in cutting edge achievements;
• Entrepreneurship spirit at all levels of the society;
• Intellectual asset and diffusion of wealth in the society; and
• Quality of life, environment and growth.
To this end, TREC STEP’s mission is to:
• Promote knowledge based industries;
• Develop and transfer technologies;
• Train technology and business skills; and
• Develop new project initiatives.
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24 Source : Greater Good, South Africa - http://www.myggsa.co.za/connect/receivers/bulungula_incubator/
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The mission of Ankara Cyberpark in Turkey is “to create new resources and to improve the
utilization of existing resources of its stakeholders (shareholders, tenants, academicians,
students, government, Ankara Municipality, etc.) by providing its tenants with an atmosphere
that creates synergy, the best quality and most cost-effective techno park services.” This
responds to Ankara Cyberpark’s vision to contribute to the economical and scientific
development of the country by converting the scientific researches into technological
products as well as preventing the brain migration by offering attractive job opportunities to
highly qualified graduates and researchers.
Who develops the mission and vision statements?
• The vision and mission statement for an incubator cannot be delegated to external
parties to prepare.
• It must be owned from the outset by the key stakeholders involved in the long-term
planning and support of the incubator.
• Very often a local champion emerges with their own very clear vision about what the
incubator should set out to achieve.
• It is important, however, to get ‘buy-in’ to this vision from the outset.
• For this reason the first version of the mission and vision statements should be
developed or at least discussed and agreed by the first board of directors and key
stakeholders.
• Thereafter, although the mission and vision statements should not change frequently,
they should be reviewed for continued relevance as part of a strategic planning review
which should take place periodically at least once per year.
Section 2.1.2: How to build a powerful vision statement
Although the vision and mission statement have to be created by local stakeholders, if resources
permit it is often useful to bring in an external consultant specialized in incubation to help with
the strategic planning process. Vision and mission statements should be agreed by all stakeholders
interested in establishing and supporting an incubator in their area in the long-term. As an incubator
provides services to several clients, such as public administrators, entrepreneurs, existing SMEs etc., it
can be challenging to overcome local rivalries and differing points of view to reach a common position
which satisfies all parties. When it comes to developing the vision and mission statement, an external
consultant can help to reach a consensus by encouraging stakeholders to brainstorm and think more
creatively, to thing long-term and to aim high.
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The essence of a vision statement:
It should be a powerful motivational tool which brings all stakeholders together to work
towards a common inspirational goal.
To kick start discussions about a vision statement, the following questions could be
considered:
• What were the stakeholders’ primary motivations for setting up the incubator?
• related to these motivations and thinking more broadly, how would each stakeholder
define success for the incubator?
• From a client perspective, how would you like clients to experience and benefit from
the incubator services?
• Setting aside the question of funding, how would each stakeholder envision the
incubator in 10 years time?
Through brainstorming these points, a common vision should eventually emerge. This
vision may vary from a short sentence, such as “To be the unquestioned leader in technology
incubation within the X area” to several pages in length. Once the long-term vision for the
incubator has been created, it defines the context in which all other decisions are made.
The mission statement describes:
• Why the incubator has been established; and
• What the organization aims to achieve.
If resources do not permit an independent consultant to be used, then a neutral stakeholder from
a local university or management consultancy should be approached to chair the initial strategic
workshop.
Section 2.1.3: How to build a powerful mission statement
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A typical mission statement contains three components:
1. The overall purpose of your incubator – What are you trying to achieve right now? Why
are you in business?
2. What your incubator does – What are the core products and services it provides?
3. What is important to your business? What are the values your business holds and aims to
convey to clients and other stakeholders; for example accountability, objectivity, creativity,
and ingenuity?
To construct a good mission statement several steps are recommended:
• A brainstorming meeting should be organized amongst the stakeholders that support
the launch of the incubator. This can be combined as part of the strategic workshop in
which the vision statement and other key strategies are developed.
• This workshop will identify the needs the incubator will satisfy. It is useful at this
stage to refer to the market research completed as part of the feasibility study which
should include aspects such as the needs expressed by potential entrepreneurs and
existing SMEs and the size of the market included in
the catchment area, among others.
• A SWoT (Strengths, Weaknesses, opportunities,
and Threats) analysis is often used by organizations
as part of the strategic planning process. It can help
to clarify the positioning of the incubator in the
marketplace looking at its strengths and weaknesses
in relation to market conditions and competitors
as well as looking at emerging opportunities and
threats.
• In some cases, the mission statement may refer to
the way the incubator will be financed. This is a way
of clarifying to the users if the infrastructure in place
is financed by public funding or private income or a
combination of the two.
• Last but not least, incubator missions should always
include business creation as their main objective
either by helping to create or consolidate new high
potential growth companies or introduce innovation
in already existing ones.
Note: It is important to reiterate that although the initial mission statement is developed by stakeholders and board members, once an operational team is established it is essential they fully understand and support the mission statement. It can be an ‘elevator pitch’ or ‘mantra’ for the incubator. All team members should have this mantra embedded in their minds and be able to communicate the mission of the organization clearly and unambiguously to third parties. Mission statements should strive to be concise so that they can be easily and clearly communicated, such as “To accelerate the formation, growth and success rates of scalable, technology-based businesses and retain them in the X area.”
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There are several key points to strategies and action plans:
• The core values of a company or organization are usually defined in their guiding
principles.
• The overall objective is to align all activities within the organization toward the
common theme(s) that support a winning business strategy.
• Different strategic objectives result in different types of incubator.
• Strategic goals go beyond the mission and vision to better define how the organization
aims to relate to its business environment.
• Strategies usually consist of four or five well defined key approaches that an
organization will employ to accomplish its mission and drive itself toward the vision.
• Goals and action plans usually flow from each key approach and form the individual
elements of the strategy.
• A business model is also the means by which an organization achieves its strategy.
• operational plans concern the implementation of the strategy by identifying and
organizing the all key activities.
POSSIBLE OBJECTIVE POSSIBLE BUSINESS INCUBATOR VARIANT
TECHNOLOGY COMMERCIALIZATION
OR TECHNOLOGY TRANSFER
Technology business incubator – linked to an r&D
organization (such as a research university) e.g. Timisoara
Software Business incubator in romania:
http://www.idisc.net/en/Incubator.159.html
Section 2.1.4: Translating mission statements into strategy and action plans
Table 3 illustrates how different types of incubator are best suited to meet the strategic objectives that
are defined by the key stakeholders/ shareholders of the incubator.
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POSSIBLE OBJECTIVE POSSIBLE BUSINESS INCUBATOR VARIANT
FOREIGN INVESTMENT ATTRACTION
Business incubator focused on the sectors being targeted. For
example:
• A technology business incubator in the ICT Industry
being used to help attract foreign companies or stimulate
joint ventures;
• Manufacturing business incubator for sub-contractors
to MNC manufacturing companies;
• International business incubators exist for
companies wanting to enter a specific market.
In Europe such incubators are known as ‘soft
landing centres’. The Euroffice incubator network
in Europe provides such soft landing facilities for
companies (for example, Indian companies) wanting to
explore or set up in Europe. To access the list of members
of the Euroffice network: http://www.cicom.fr/euro-
office/Parcipants%20List.pdf
• For Example: Polar Star: Bilateral Norwegian-Russian
Business incubator Project in Murmansk, the first
Norwegian-Russian business incubator, which contributes
to the economic development between Norway and
Russia: http://www.idisc.net/en/Incubator.273.html
EMPLOYMENT CREATION
A mixed, service industry or manufacturing business incubator
may be the most appropriate, such as Rural Technology and
Business incubator (RTBI) in India:
http://www.idisc.net/en/Incubator.18.html
WEALTH CREATION
A technology business incubator and a high growth focus,
such as Maxum Incubator South Africa:
http://www.idisc.net/en/Incubator.182.html
DEVELOPMENT OF A PARTICULAR
INDUSTRY
Industry focused business incubator.
There are many variants, some of which require special
facilities, such as food processing business incubators, bio-
technology business incubators, and high end ICT business
incubators, e.g. micro scale food processing at Village Business
incubator, Syrian Arab Republic: http://www.infodev.org/en/
Article.359.html
ECONOMIC DIVERSIFICATION Mixed or technology
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HELPING STUDENTS BECOME
ENTREPRENEURS
Pre-incubation associated with participating universities,
such as Youth to Innovation (Y2i) Contest organized by Eastern
European and Central Asian business incubators network
(www.ecabit.org).
POSSIBLE OBJECTIVE POSSIBLE BUSINESS INCUBATOR VARIANT
ENTREPRENEURSHIP DEVELOPMENT
Any type of business incubator will generate important role
models and stimulate interest, but a mixed use business
incubator will be able to service a wider range of clients than
a more specialized variant.
TO ADDRESS MARGINALIZED
GROUPS, SUCH AS WOMEN, ETHNIC
MINORITIES, YOUTH, DISABLED,
REFUGEES OR RURAL INCUBATORS
When there is systemic disadvantage to overcome and
where for one reason or another these clients cannot
be accommodated in other business incubators, such as
Georgian Business incubator/Georgian Association “Women
in Business”: http://www.idisc.net/en/Incubator.214.html
Table 3 – Business incubators’ potential strategic objectives
Table 4, presents comprehensive examples of how the different strategic objectives, of different types
of incubators, laid down in a mission statement could be translated into strategies and goals.
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Busin
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Incu
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ratio
ns
03 | PLANNING AN INCUBATOR
POSS
IBLE
OBJ
ECTI
VE
POSS
IBLE
BU
SIN
ESS
INCU
BATO
R VA
RIA
NT
EXA
MPL
ES O
F RE
LEVA
NT
STRA
TEG
YEX
AM
PLES
OF
RELE
VAN
T G
OA
LS (N
OTE
TH
ESE
GO
ALS
SH
OU
LD B
E
FURT
HER
QU
AN
TIFI
ED IN
ACT
ION
PLA
NS)
TECH
NO
LOG
Y
COM
MER
CIA
LIZA
TIO
N
Tech
nolo
gy b
usin
ess
incu
bato
r –
linke
d to
an r
&D
org
aniz
ation
(suc
h as
a r
esea
rch
Uni
vers
ity)
Build
rela
tions
hips
with
loca
l uni
vers
ities
and
rTD
(res
earc
h &
Tec
hnol
ogy
Dev
elop
men
t) in
stitu
tes
lead
ing
to th
e id
entifi
catio
n of
new
tech
nolo
gy
idea
s re
ady
for
com
mer
cial
izati
on a
nd p
rovi
sion
of a
prog
ram
of i
ncub
ation
sup
port
ser
vice
s, w
hich
will
ultim
atel
y re
sult
in th
e cr
eatio
n of
new
tech
nolo
gy
base
d bu
sine
sses
.
• Si
gn a
mem
oran
dum
of u
nder
stan
ding
(MO
U) o
r pa
rtne
rshi
p
agre
emen
t with
loca
l uni
vers
ities
and
rTD
cen
ters
.
• o
rgan
ize
a nu
mbe
r of
ent
repr
eneu
rshi
p tr
aini
ng c
ours
es p
er y
ear
in
each
RTD
cen
tre
/uni
vers
ity.
• Co
mpi
le a
dat
abas
e of
new
tech
nolo
gy id
eas
read
y fo
r
com
mer
cial
izati
on in
eac
h rT
D c
entr
e /u
nive
rsity
.
• Pr
ovid
e cu
stom
ized
ass
ista
nce
from
pre
-fea
sibi
lity
stud
y pl
anni
ng to
IPr
supp
ort r
esul
ting
in th
e es
tabl
ishm
ent o
f new
tech
nolo
gy b
ased
busi
ness
es fr
om e
ach
RTD
cen
tre
/uni
vers
ity p
er y
ear.
TECH
NO
LOG
Y
TRA
NSF
ER
Tech
nolo
gy b
usin
ess
incu
bato
r –
linke
d to
appl
ied
an r
&D
org
aniz
ation
or
tech
nica
l
univ
ersi
ty
Build
rela
tions
hips
with
loca
l uni
vers
ities
lead
ing
to th
e id
entifi
catio
n of
new
tech
nolo
gies
and
the
tran
sfer
of t
hese
tech
nolo
gies
to lo
cal b
usin
ess.
• Si
gn
a m
emor
andu
m
of
unde
rsta
ndin
g (M
OU
) or
pa
rtne
rshi
p
agre
emen
t with
loca
l uni
vers
ities
and
rTD
cen
ters
.
• Co
ntra
ct t
echn
olog
y an
d IP
r sp
ecia
lists
to
iden
tify
tech
nolo
gy id
eas
read
y fo
r te
chno
logy
tran
sfer
i.e.
pro
of o
f con
cept
exi
sts.
• Bu
ild a
dat
abas
e of
tech
nolo
gy re
quire
men
ts o
f loc
al b
usin
esse
s.
• M
atch
bus
ines
s te
chno
logy
requ
irem
ents
with
new
tech
nolo
gies
.
• Pr
ovid
e as
sist
ance
in s
ucce
ssfu
l tec
hnol
ogy
tran
sfer
per
yea
r.
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Incu
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ratio
ns
POSS
IBLE
OBJ
ECTI
VE
POSS
IBLE
BU
SIN
ESS
INCU
BATO
R VA
RIA
NT
EXA
MPL
ES O
F RE
LEVA
NT
STRA
TEG
YEX
AM
PLES
OF
RELE
VAN
T G
OA
LS (N
OTE
TH
ESE
GO
ALS
SH
OU
LD B
E
FURT
HER
QU
AN
TIFI
ED IN
ACT
ION
PLA
NS)
FORE
IGN
INV
ESTM
ENT
ATTR
ACT
ION
Busi
ness
incu
bato
r fo
cuse
d on
the
sect
ors
bein
g ta
rget
ed. F
or e
xam
ple:
• A
tech
nolo
gy b
usin
ess
incu
bato
r in
the
ICT
Indu
stry
bei
ng u
sed
to h
elp
attra
ct
fore
ign
com
pani
es o
r sti
mul
ate
join
t
vent
ures
;
• M
anuf
actu
ring
bus
ines
s in
cuba
tor
for
sub-
cont
ract
ors
to m
ulti-
natio
nal
corp
orati
on (M
NC)
man
ufac
turi
ng
com
pani
es; a
nd
•Int
erna
tiona
l bus
ines
s in
cuba
tors
for
com
pani
es w
antin
g to
ent
er th
e lo
cal
mar
ket.
• Id
entif
y th
e in
tere
sts
and
com
pete
ncie
s of
loca
l
busi
ness
es
open
to
in
tern
ation
al
coop
erati
on/
coop
erati
on w
ith M
NCs
in a
spe
cific
sec
tor,
such
as IC
T.
• Id
entif
y rel
evan
t for
ums f
or m
eetin
g in
tern
ation
al
com
pani
es in
tere
sted
in c
oope
ratio
n.
• M
atch
the
inte
rest
s of
inte
rnati
onal
com
pani
es
with
loca
l com
pete
ncie
s.
• Bu
ild a
dat
abas
e co
llecti
ng d
etai
ls o
f int
eres
ts a
nd c
ompe
tenc
ies
of
loca
l bus
ines
ses
open
to in
tern
ation
al c
oope
ratio
n/co
oper
ation
with
MN
Cs.
• Att
end
rele
vant
inte
rnati
onal
eve
nts
to id
entif
y re
leva
nt a
nd
inte
rest
ed in
tern
ation
al c
ompa
nies
. Mee
t with
MN
Cs to
exp
lore
requ
irem
ents
for
coop
erati
on.
• Pr
ovid
e ha
nds-
on a
ssis
tanc
e in
mat
chin
g th
e in
tere
sts
of
inte
rnati
onal
com
pani
es w
ith lo
cal i
nter
ests
lead
ing
to:
o Th
e es
tabl
ishm
ent o
f a s
peci
fic n
umbe
r of
join
t ven
ture
s pe
r ye
ar
loca
ted
in th
e bu
sine
ss in
cuba
tor;
o A
spe
cific
num
ber
of o
vers
eas
com
pani
es lo
cate
d in
the
incu
bato
r; a
nd
o A
spe
cific
am
ount
of n
ew c
ontr
acts
bet
wee
n M
NCs
and
busi
ness
es lo
cate
d in
the
incu
bato
r.
EMPL
OYM
ENT
CREA
TIO
N
A m
ixed
, ser
vice
indu
stry
or
man
ufac
turi
ng
busi
ness
incu
bato
r m
ay b
e th
e m
ost
appr
opri
ate
‘Cla
ssic
al’ i
ncub
ator
str
ateg
ies
such
as:
• Pr
omoti
on a
nd d
etec
tion
of n
ew id
eas
in
sect
ors
with
hig
hest
pot
entia
l for
em
ploy
men
t
crea
tion
and
grow
th;
• Fe
asib
ility
stu
dy a
nd b
usin
ess
plan
ning
sup
port
;
• Ph
ysic
al in
cuba
tion;
• So
urci
ng fu
ndin
g; a
nd
• O
ngoi
ng s
uppo
rt to
war
ds g
row
th a
nd
empl
oym
ent.
• o
rgan
izati
on o
f a
spec
ific
num
ber
of e
ntre
pren
eurs
hip
awar
enes
s
even
ts p
er y
ear.
• Id
entifi
catio
n of
a s
peci
fic n
umbe
r of
idea
s.
• Co
mpl
etion
of a
spe
cific
num
ber
of fe
asib
ility
stu
dies
.
• Co
mpl
etion
of a
spe
cific
num
ber
of b
usin
ess
plan
s.
• Fu
ndin
g se
cure
d fo
r a
spec
ific
num
ber
of c
ompa
nies
.
• Tu
rnov
er
and
empl
oym
ent
grow
th
duri
ng
incu
batio
n an
d po
st
incu
batio
n.
• Co
ntri
butio
n to
war
ds t
he c
reati
on o
f a
spec
ific
num
ber
of j
obs
per
year
.
WEA
LTH
CRE
ATIO
NA
tech
nolo
gy b
usin
ess
incu
bato
r an
d a
high
grow
th fo
cus
• A
s pr
evio
us, b
ut w
ith v
ery
stri
ngen
t sel
ectio
n cr
iteri
a, fo
cusi
ng o
n gr
owth
pot
entia
l as
mea
sure
d by
turn
over
. Man
y IC
T
busi
ness
es a
re c
apab
le o
f gen
erati
ng h
igh
reve
nues
, but
with
out n
eces
sari
ly c
reati
ng m
any
jobs
. Con
vers
ely
mor
e la
bor
inte
nsiv
e tr
aditi
onal
indu
stri
es m
ay b
e ca
pabl
e of
gen
erati
ng m
ore
jobs
than
wea
lth. T
here
fore
it m
ay b
e ap
prop
riat
e to
com
bine
thes
e st
rate
gies
with
sec
tor-
spec
ific
appr
oach
es a
s de
taile
d in
the
next
poi
nt.
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4003 | PLANNING AN INCUBATOR TRAINEE MANUAL PART 2Su
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Busin
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Incu
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ratio
ns
03 | PLANNING AN INCUBATOR
POSS
IBLE
OBJ
ECTI
VE
POSS
IBLE
BU
SIN
ESS
INCU
BATO
R VA
RIA
NT
EXA
MPL
ES O
F RE
LEVA
NT
STRA
TEG
YEX
AM
PLES
OF
RELE
VAN
T G
OA
LS (N
OTE
TH
ESE
GO
ALS
SH
OU
LD B
E
FURT
HER
QU
AN
TIFI
ED IN
ACT
ION
PLA
NS)
DEV
ELO
PMEN
T
OF
A P
ART
ICU
LAR
IND
UST
RY
Indu
stry
focu
sed
busi
ness
incu
bato
r. Th
ere
are
man
y va
rian
ts, s
ome
of w
hich
requ
ire
spec
ial f
acili
ties,
suc
h as
food
pro
cess
ing
busi
ness
incu
bato
rs, b
io-t
echn
olog
y
busi
ness
incu
bato
rs, a
nd h
igh
end
ICT
busi
ness
incu
bato
rs.
Putti
ng in
pla
ce th
e ne
cess
ary
tech
nica
l, bu
sine
ss
supp
ort t
ools
and
net
wor
k re
sour
ces
to s
uppo
rt th
e
crea
tion
and
grow
th o
f sec
tor
base
d bu
sine
ss.
• D
evel
opm
ent o
f a te
sting
labo
rato
ry fo
r ne
w fo
ods.
rai
se a
war
enes
s
and
prom
otion
of t
his
faci
lity
to e
ncou
rage
usa
ge. M
easu
rem
ent o
f
usag
e ag
ains
t tar
gets
.
• Cr
eatio
n of
a lo
cal c
lust
er o
f com
pani
es, r
TD p
laye
rs, i
ndus
try
play
ers
and
othe
r st
akeh
olde
rs in
a g
iven
sec
tor
and
deve
lopm
ent o
f a lo
cal
deve
lopm
ent s
trat
egy.
• Co
nnec
ting
the
natio
nal c
lust
er w
ith re
leva
nt in
tern
ation
al c
lust
ers
to
supp
ort i
nter
natio
nal B
2B c
oope
ratio
n.
ECO
NO
MIC
DIV
ERSI
FICA
TIO
NM
ixed
or
tech
nolo
gy
• D
evel
opm
ent
of n
ew m
arke
t op
port
uniti
es f
or
exis
ting
busi
ness
es
in
a pr
edom
inan
t in
dust
ry
sect
or in
the
area
, suc
h as
inte
rnati
onal
izati
on.
• Id
entifi
catio
n of
new
eco
nom
ic d
evel
opm
ent
oppo
rtun
ities
for a
n ar
ea w
hich
util
ize
som
e of
the
com
pete
ncie
s fr
om tr
aditi
onal
indu
stry
sec
tors
.
• Se
lecti
on o
f a
polic
y or
ient
ed e
ntire
ly t
owar
ds
the
supp
ort
of n
ew in
nova
tive
busi
ness
ven
ture
s
that
are
unr
elat
ed to
trad
ition
al in
dust
ry s
ecto
rs.
• o
rgan
izati
on o
f com
pany
vis
its to
ove
rsea
s tr
ade
fairs
and
exhi
bitio
ns.
• Co
mpl
etion
of t
echn
olog
y ro
ad-m
appi
ng b
y re
leva
nt e
xper
ts
to id
entif
y sp
in-o
ff d
iver
sific
ation
opp
ortu
nitie
s fr
om tr
aditi
onal
busi
ness
es.
• Pr
oacti
ve s
timul
ation
of n
ew b
usin
ess
idea
s in
non
-tra
ditio
nal a
reas
thro
ugh
wid
espr
ead
prom
otion
and
ent
repr
eneu
rshi
p aw
aren
ess
activ
ities
and
trai
ning
in u
nive
rsiti
es a
nd la
rge
popu
latio
n ce
nter
s.
HEL
PIN
G
STU
DEN
TS B
ECO
ME
ENTR
EPRE
NEU
RS
Pre-
busi
ness
incu
batio
n as
soci
ated
with
parti
cipa
ting
univ
ersi
ties
Build
rela
tions
hips
with
loca
l uni
vers
ities
or
rTD
cent
ers
lead
ing
to th
e id
entifi
catio
n of
new
bus
ines
s
idea
s an
d th
e de
velo
pmen
t of p
re-b
usin
ess
virt
ual
incu
batio
n se
rvic
es.
• Si
gn a
mem
oran
dum
of u
nder
stan
ding
(MO
U) o
r pa
rtne
rshi
p
agre
emen
t with
loca
l rTD
cen
ters
/un
iver
sitie
s.
• o
rgan
ize
entr
epre
neur
ship
aw
aren
ess
activ
ities
and
trai
ning
cou
rses
in e
ach
rTD
cen
tre
/uni
vers
ities
.
• Es
tabl
ish
a pr
ogra
m fo
r pr
e-bu
sine
ss in
cuba
tion,
pre
fera
bly
one
that
can
be d
eliv
ered
vir
tual
ly. I
nvol
ve u
nive
rsity
teac
hing
and
rese
arch
sta
ff
in m
ento
ring
new
bus
ines
s id
eas
as p
art o
f the
ove
rall
pre-
incu
batio
n
prog
ram
.
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4103 | PLANNING AN INCUBATOR TRAINEE MANUAL PART 2Su
ite 2
Busin
ess
Incu
bato
r Ope
ratio
ns
POSS
IBLE
OBJ
ECTI
VE
POSS
IBLE
BU
SIN
ESS
INCU
BATO
R VA
RIA
NT
EXA
MPL
ES O
F RE
LEVA
NT
STRA
TEG
YEX
AM
PLES
OF
RELE
VAN
T G
OA
LS (N
OTE
TH
ESE
GO
ALS
SH
OU
LD B
E
FURT
HER
QU
AN
TIFI
ED IN
ACT
ION
PLA
NS)
ENTR
EPRE
NEU
RSH
IP
DEV
ELO
PMEN
T
Any
type
of b
usin
ess
incu
bato
r w
ill g
ener
ate
impo
rtan
t rol
e m
odel
s an
d sti
mul
ate
inte
rest
, but
a m
ixed
use
bus
ines
s in
cuba
tor
will
be
able
to s
ervi
ce a
wid
er ra
nge
of
clie
nts
than
a m
ore
spec
ializ
ed v
aria
nt.
Dev
elop
an
entr
epre
neur
ial c
ultu
re in
a p
artic
ular
area
thro
ugh
a br
oad
stra
tegy
of e
ntre
pren
eurs
hip
prom
otion
and
aw
aren
ess
build
ing
targ
eting
the
follo
win
g:
• Sc
hool
s an
d un
iver
sitie
s
• La
rge
cent
ers
of p
opul
ation
and
em
ploy
men
t
• Ru
ral a
reas
• Pr
epar
e an
ent
repr
eneu
rshi
p pr
omoti
onal
and
mar
ketin
g ca
mpa
ign
base
d on
inte
rnati
onal
goo
d pr
actic
e an
d ad
apte
d to
ope
ratin
g lo
cal
spec
ifici
ties.
• Se
cure
the
budg
et fo
r th
e en
trep
rene
ursh
ip m
arke
ting
and
awar
enes
s ca
mpa
ign.
• Im
plem
ent a
mar
ketin
g an
d aw
aren
ess
cam
paig
n.
• M
easu
re th
e im
pact
and
resu
lts.
TO A
DD
RESS
MA
RGIN
ALI
ZED
GRO
UPS
(SU
CH A
S
WO
MEN
)
Whe
n th
ere
are
syst
emic
dis
adva
ntag
es
to o
verc
ome
and
whe
re, f
or o
ne re
ason
or a
noth
er, t
hese
clie
nts
cann
ot b
e
acco
mm
odat
ed in
oth
er b
usin
ess
incu
bato
rs.
• Ta
ilor
the
mar
ketin
g st
rate
gy o
f the
incu
bato
r
to ra
ise
awar
enes
s am
ong
fem
ale
entr
epre
neur
s
abou
t the
ben
efits
of e
ntre
pren
eurs
hip
and
supp
ort s
ervi
ces
avai
labl
e.
• A
dapt
the
serv
ices
offe
red
to th
e ne
eds
of
fem
ale
entr
epre
neur
s.
• Pa
rtne
r w
ith w
omen
’s c
oope
rativ
es to
rais
e aw
aren
ess
of th
e
bene
fits
of e
ntre
pren
eurs
hip
and
the
supp
ort s
ervi
ces
avai
labl
e.
• Ta
ilor
a cu
stom
ized
pro
gram
of s
uppo
rt fo
r fe
mal
e en
trep
rene
urs.
In s
ome
coun
trie
s vi
rtua
l inc
ubati
on s
ervi
ces
may
be
a m
ore
soci
ally
acce
ptab
le s
oluti
on.
Tabl
e 4
- Mis
sion
sta
tem
ent o
bjec
tive
s tr
ansl
ated
into
str
ateg
ies
and
goal
s
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Section 2.2: Designing a Sustainable Business Model25
An incubator is a business-like entity. In order to survive in the long-term all businesses need to
be profitable. Even in the case of not-for-profit businesses, profits are still generated, but they are
reinvested in the business instead of being distributed to owners.
Where do incubators fit in? This depends on the business model decided at the stage of planning and
establishing an incubator and is typically guided by the objectives for the incubator, such as economic
development, for-profit, not-for-profit, or others.
As mentioned in Module 2 on “Business Incubator Models, Including Success Factors” of the training
program, an incubator must adopt a business model that is geared toward sustainable success, the
unique characteristics of the incubator’s surroundings, and its objectives. A feasibility study may
suggest that certain sector specific incubators are more appropriate for the area, or whether virtual
services are /or are not needed for local growth. In essence, the study will supply a path forward for the
incubator, provided there is sufficient market, political, and civic support. To ensure that the chosen
incubator model is successful, an incubator must also identify, acquire, and secure all the necessary
and available financial resources. Doing so allows the incubator to meet its costs, attract and support
talented staff and foster business growth. A sound financial plan, which identifies a variety of funding
sources and predicts incubator expenses, is also important to an incubator’s long-term success.
Although there is much talk about ‘triple bottom line’ sustainability meaning achieving sustainability at
economic, social and environmental levels, from an incubator perspective, the three aforementioned
perspectives are paramount in any discussion on sustainability.
“A business model (also called a business design) is the mechanism by which a business intends
to generate revenue and profits.”
The issue of self-sustainability in business incubators is a perennial issue for business
incubators across the globe, one that should be considered from three principal
perspectives:
1. ‘Deal flow” i.e. the need for an ongoing critical mass of quality clients;
2. on-going support from innovation and entrepreneurship stakeholders such as the
government, industry, academia, and banks; and
3. Financial self-sustainability.
_____________________________________________________________
25 Adapted from infoDev Incubator Manager Training: Suite 3, Washington
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Incubator stakeholder working groups should take into account from the outset that for the planned
business incubator to have a significant impact on its catchment area, it needs to be financially self-
sustainable and may need to rely upon on-going financial subsidies, particularly in smaller states, and/
or integrating business incubation with other related activities. Across the globe, self-sustainability,
whilst a major aspiration, is a big challenge. As pointed out by Mark P. rice and Jana B. Matthews in
their book Growing New Ventures, Creating New Jobs, Principles & Practices of Successful Business
Incubation:
Good practice dictates that the issue should be addressed from the outset at the feasibility study and/
or business planning stage and not once the business incubator has been established when initial
(often public) funding is running out.
Section 2.2.1: Ongoing quality ‘deal flow’ – demand from quality clients
Business incubation relies upon a critical mass of clients at any one time, commonly 20 to 30, and
ongoing demand from quality clients, with something like 6 to 10 new companies entering the program
each year, as others graduate at the other end of business incubation. A critical mass of quality deal
flow may be difficult to achieve in smaller economies, calling for flexibility and creativity in the design
and management competency, marketing the services and nurturing future and sustainable demand.
Figure 7 – Deal flow process
“Experience suggests that sponsors often get the numbers wrong, either by being overly optimistic
or by making unrealistic assumptions. For example, they often underestimate the length of
time and the amount of effort required to grow a new generation of successful companies. To
achieve its objectives, the incubator needs to have the resources to grow companies – after the
high energy enthusiasm of the incubator launch and before the community is re-energized by
incubator companies’ successes. (…) If the incubator is going to be around long enough to have
an impact, it needs to be self-sustainable.”26
_____________________________________________________________
26 Source: Mark P. rice and Jana B. Matthews. “Growing New Ventures. Creating New Jobs. Principles & Practices of Successful
Business Incubation.” Quorum.p. 21.
3
100
Business Incubation Intensive
Virtual and outreach incubation
Pre-incubation
Entrepreneurship awareness
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Figure 7 shows a typical deal flow process. The figures are taken from an example in India and show
that out of 100 students attending entrepreneurship awareness events, a smaller number go ahead
with pre-incubation and virtual or outreach services before eventually three of them ending up in full
on-site incubation. Although deal flow statistics will vary from area to area, the same filtering process
applies with only a small number of the original interested parties becoming full incubation clients.
Table 5 shows average deal flow statistics for the European BIC incubator network.
Table 5 – Deal flow statistics BIC incubators (Europe)27
Table 5 illustrates that the final number of new start-ups is about two or three percent of the total
number of participants in awareness raising events.
PERFORMANCE INDICATOR AVERAGE RESULT PER BIC INCUBATOR
Number of training events organized for new entrepreneurs or
existing SMEs40
Number of people that attended events to promote
entrepreneurship1509
Number of start-up or other enterprise projects identified prior
to feasibility study210
Number of business plans produced during the year 105
Number of start-ups created during the year 39
Deal flow issues may include:
• Incubator design: The incubator should be designed in terms of both size and services
to meet target market demand. Normally the feasibility study will identify the target
market and indicate the most suitable size and service portfolio of an incubator to
optimize the potential deal flow.
• Critical mass: Is there a sufficient ongoing critical demand mass from start-ups to
sustain the incubator in the short to medium-term or does the incubator need to take
actions to ‘pull’ or create the market, for example through establishing entrepreneurship
training programs?
• Networks: Where does the deal flow come from? What are the best ‘feeder’ channels
and mechanisms? Figure 8 illustrates the ‘funnel’ leading to deal flow for the business
incubation process.
_____________________________________________________________
27 Source: BIC Observatory 2007 - http://quality.ebn.be
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PhysicalBusiness
Incubation
Outreach and/or Virtual Incubation
The widerBusinessIncubation Environment
Formal and informal gatewayse.g. universities, chambers of commerce...
Feeder channels
Figure 8 - The ‘Funnel’ leading to business incubation
Section 2.2.2: Ongoing government and policy support
It is important to raise awareness about the business incubation process in the wider business
environment. Feeder channels can come through channels, such as university or research institutes
liaison officers, or through referrals from Chambers of Commerce, industry leaders, investors, or other
clients. Tiered incubation should be considered as a way of developing the market.
ongoing policy and government support is always important for business incubation, which relies
upon public policy and tangible support to address failures in the market for early stage business
development. The important role of start- ups/ small businesses is recognized by governments in
most countries and policy makers realize that an understanding of why firms fail (or are successful)
is crucial to the stability and health of the economy. An understanding of such factors enables public
policymakers and small business organizational plans to better serve the small business sector.
In many cases incubators are managed through public-private partnerships. Although they may have a
public goal, they should be managed like private sector businesses (either for-profit or not-for-profit).
It is often difficult to marry the two perspectives, but nonetheless essential in order to secure long-
term sustainability. If an incubator is fully financed by the state for a short-term period (three to five
years) and then funding is withdrawn, it is often very difficult for the incubator to be self-financed.
In the circumstances when state authorities own a considerable stake in the business incubator,
appointing a politically suitable manager and team may be favored by certain parties. Instead the
importance of selecting the most competent staff that has the skills, knowledge and experience to
drive the incubator towards long-term sustainability should be stressed. The topic of PPP, including its
risks is covered in more detail in Module 2 “Business Incubator Models, Including Success Factors” of
the training program.
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Section 2.2.3: Financial self-sustainability
Business incubators should be run with an entrepreneurial mindset, and it is advisable that a
significant portion of the business incubator’s income is derived from earned revenue. Even if the
business incubator relies upon ongoing funding from government, it still needs to operate as a
business-like organization. Many long-term business
incubation practitioners are wary of ongoing funding;
as governments change so do their priorities and
funding might suddenly cease. Cash and/or in-
kind donations can be used to supplement earned
income, particularly at the start-up stage of the
business incubator. These are generally less used as
the incubator reaches maturity.
The extent to which business incubation can be financially self-sufficient, the strategies to be used and
the time it will take, need to be addressed carefully in the design and planning phases of development.
Taking a global perspective, not all business incubation environments are expected to be financially
Note: This element is explored in more depth in Modules 2 “Business Incubator Models, Including Success Factors” and 5 “Financing an Incubator.”
_____________________________________________________________
28 Source : EBN Vademecum, Brussels
How to secure on-going public support – aspects to watch out for:
• Adapt to trends: To maintain public support and relevance over time the business
incubator needs to continually adapt to changing circumstances and public policy
priorities. It is necessary to understand the changing environment, emerging market
failures and recognize the social process of incubation. To survive incubators must
constantly review their fundamentals – their target market, service portfolio and social
objectives.
• Accountability to stakeholders: Incubators should be aware they do not operate in
isolation. They are always accountable to their shareholders and also if the board of
directors includes public representatives and the incubator receives subsidies from
public money, from the outset a clear policy should be put in place to demonstrate
accountability and value for money to the general public as well as the direct
shareholding organizations. This could take the form of an annual performance report
and/or a client survey for example. Success stories should be highlighted through PR
or appropriate media. According to EBN incubator experience in Europe “The trick is
to enable the maximum number of people and bodies to claim part of the merit if the
project is a success.”28
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self-sufficient. For instance, in Europe 37.3% of costs are met by subsidies, for the sample of business
incubation environments used for the CSES 2002 ‘benchmarking’ exercise on behalf of the Eu.29
However, business incubation environments in some countries (uSA and Australia for example) are
expected to be financially self-sufficient after initial seed funding for the first two to three years,
often taking the form of the provision of buildings for which they do not pay the capital costs, nor
commercial rent.
If achieving self-sufficiency means management needs to spend substantial time on non-business
incubation activities, possibly fundraising or developing and managing other revenue earning
businesses, then problems can arise. Management will have less time to spend helping develop the
clients’ businesses and over time the value of the services provided can deteriorate, diminishing the
business incubator’s brand and image in the community. ongoing operational funding can relieve
this pressure, allowing management to spend more time working with clients. Another outcome of a
strong focus on financial sustainability is to concentrate on lower risk enterprises that are more mature
and thus act more as an accelerator for existing businesses rather than an incubator for nascent firms.
The former can also constitute a valuable contribution to the economy and may be a better solution if
the push towards early financial self-sustainability is strong.
_____________________________________________________________
29 Source: Benchmarking of Business Incubation Environments, CSES, 2002 Table 23, Page 50.
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Section 2.3: Components of the Incubator Business Plan30
Preparing a business plan is an essential stage for incubators. It is particularly important during the
early start-up phase of an incubator and will be useful for seeking funds, and also for systematizing
ideas, processes and techniques.
The business plan provides answers to questions about the incubator before it is established, but
needs to be updated regularly.
The feasibility study will have identified the need for
the incubator, established the extent of the market
for new businesses, verified the size of the incubator,
and assessed the financial and other resources.
The business plan needs to address the following:
• It should start with a set of business goals;
• Then also indicate the reasons why the goals are attainable and continue with a
thorough and well thought out proposal for reaching them within a specific period of
time;
• The plan should conclude with an indication of the resources required for the
incubator and the means by which they will be attained;
• Business plans for incubators will also:
o Confirm the feasibility study results and assumptions;
o Identify and resolve any remaining problem areas;
o Set performance monitoring, and evaluation benchmarks;
o Indicate how the strategy will be communicated to stakeholders, including
incubator tenants, to secure their continuous support and involvement in the
incubator’s operations; and
o Provide a template for the management and operational procedures.
_____________________________________________________________
30 Source: Business Innovation and Incubation Australia - http://www.businessincubation.com.au/incubation/business-plans
Note: Finance-related information is not explored here, but in detail in Module 5 related to “Financing an Incubator”.
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BIIA31 recommends that the Incubator business
plan be developed by the incubator’s Board and
management team for the following reasons:
• To facilitate understanding of the feasibility
study;
• To ensure the plan is within scope of the interests
and capacity of those required to implement it;
• To give a sense of ownership; and
• To enable easier updating.
The feasibility study, in consultation with local stakeholders, will have determined the most appropriate
type, size and management structure for the incubator given its particular economic and other
circumstances.
The business plan should guide the set up and detailed operation of the incubator over a three to five
year period. It needs to be reviewed regularly and adjusted to meet changing external factors (flexible
planning).
The main sections of the business plan typically include the following:32
• Executive summary. This is a very important section of the plan and should be the last part to
be drafted; its contents will depend on the contents of the whole of the rest of the plan, since this
section will offer an overview of the enterprise, abbreviating the business plan content to its main
points.
• Vision and mission. The desire