Advantages of joining a business incubator
There is a lot of work that goes into starting up a business and turning it into a profitable success. While that success won’t happen overnight, the use of a good Business Incubator program to help cultivate an idea in its early stages can go a long way toward helping it grow quickly with strong roots. But before we look at the advantages that using a business incubator can give a startup, we must first understand the most common reasons why startup business fail.
Why do startup businesses fail?
There are many reasons why startup businesses fail. A 2018 study Top 20 Reasons Startups Fail by CBInsights, gives a glimpse into the most common reasons. As you would expect topping the list is the lack of matching an idea for a product or service with an actual problem that the market needs solved. While a business incubator won’t come up with an idea for you, it can help give you guidance in a variety of ways early on to validate that your idea meets a market need.
How to determine there is a market for your idea
This all starts with the application process to get accepted into a business incubator program. Presenting your idea, often accompanied by your business plan, as part of an application process serves as the first test that you have a viable product or service. It puts your idea in front of a group of your peers who often have entrepreneur experience themselves in the subject area of your concept. Gaining acceptance to join a business incubator is an early sign that your idea can address a market need.
Once you are part of a business incubator program you will have resources and guidance available to take further steps quickly to test that your idea meets a market need and you don’t fall victim to the #1 reason why startup businesses fail. With focus and structure provided by the incubator, you will be well on your way to building a minimal viable product (MVP) which will help test your idea with customers and open the door for potential funding by investors.
How to get funding for your startup
While identifying and developing a product or service that meets the need of the market is at the core of a successful business it is not the only reason startups fail. Another common thread on the top 20 list revolves around running out of cash due to issues like high costs, slow-moving progress and struggles to find investors. We already talked about how the business incubator can help give you focus to build your MVP which will help acquire investors but how will these investors find you or more accurately how will you find them?
Some business incubators will serve as an investor themselves by providing funding to help support startup businesses. Business incubators also often have a network of existing relationships with venture capitalists and angel investors they can help connect to your business. They also help startups prepare their presentation for potential investors which increase the chances of landing the financial backing needed to take the business to the next level when the time is right.
Business incubators can also help stretch your dollar by providing discounted and shared services such as office space, internet, printers, or other equipment that would be cost prohibitive to purchase on your own. These resources will help by reducing your overhead for operational costs and could result in the ability to offer your product or service at a more competitive price point.
Build your business community
Another advantage of joining a business incubator for a startup comes with the support system that is in place. Many startups are the brain child of a single individual, who in addition to developing their idea into a tangible good or service must also be able to have understanding of business functions such as marketing, finance, accounting and even regulatory compliance. They also need to have soft skills such as the ability to present in front of potential investors or customers and general business etiquette. That is a lot to undertake for a group of people, let alone one person trying to get their company off the ground.
Good business incubators can help with all of these challenges. They can provide education to entrepreneurs through mentoring and business training programs. They can connect startups to reliable resources that provide services to perform marketing, social media, financial or accounting functions. While some incubators might even provide some of those services themselves for the startups. Business incubators also put startups alongside other startups which builds a community of individuals with a variety of skill sets, expertise and experience. This creates a great networking opportunity to seek out advice in areas of need while helping provide education, feedback or referrals on things that have worked and have not worked for others.
Turning failure into success
As the famous quote by Werner Heisenberg states, “An expert is someone who knows some of the worst mistakes that can be made in his subject, and how to avoid them.” While not all business incubators are created equally, the good ones know some of the worst mistakes that can be made by startups and provides them with the tools, education and support system to help avoid those mistakes. Good business incubator programs (like at iStart) are more than just an office space with cheap high-speed internet. They are a motivator. They are an educator. They are a support system. All with the common goal of helping a startup turn an idea into reality.