Home > Topics > The Public Sector and Entrepreneurship > Formation of a Business Incubator > Editor's Summary, Implications and Best Practices

In the last decade and a half, business incubators have become increasingly common tools for stimulating local economic development. The incubator concept is simple and appealing: they provide facilities and services (for example, business planning and legal, accounting and marketing support) to catalyze small business growth. They have proven very effective. Incubated companies have a dramatically higher rate of survival than the average spinout. Companies that “graduate” from incubators provided an average of 85.3 full-time jobs per incubator. Used to promote the growth of entrepreneurial ventures of every imaginable type, small business incubation is now entrenched in both urban and rural areas throughout the U.S.

This chapter explains the steps for setting up an incubator. These include completing a feasibility study, generating practical broad-based community support, identifying and securing stakeholders, and identifying a market niche. It also discusses the basic structure of a business incubator, highlighting organizational structure, financing, marketing, strategic planning, and the various kinds of services to be provided.

Established by a wide variety of sponsors, incubators have been formed to serve entrepreneurs of every ilk. Successful incubator programs are marked by foresight, focus, and leadership that makes the most of community support and entrepreneurial networks.

Key Implications and Best Practices

Given that IP management is heavily context specific, these Key Implications and Best Practices are intended as starting points to be adapted to specific needs and circumstances.

For Government Policymakers

• Governments can encourage regional economic development through the encouragement and financing of business incubators. Ideally, they should be located at strategically selected regions and build on potential synergies of existing institutions.
• Small business incubators have proven to be effective economic development tools.
• While each incubator’s circumstances are unique, anticipated stakeholders would likely include local and state governments and a variety of public and private sector organizations (universities, major corporations) interested in fostering new business development in the region.

For Senior Management (university president, R&D manager, etc.)

• Incubators are used to promote the growth of entrepreneurial ventures of every imaginable type.
• Conducting a feasibility study for a proposed incubator can achieve a number of important objectives and, if properly done, can provide a solid basis for judging the economic and political viability of the proposed project.
• An incubator represents an important community investment, both practically and symbolically, and requires broad-based community support to be feasible.
• While each incubator’s circumstances are unique, anticipated stakeholders would likely include local and state governments and a variety of public and private sector organizations (universities, major corporations) interested in fostering new business development in the region.
• A governing body, typically a board of directors, provides the organizational vehicle for maintaining, building, and strengthening commitment to the incubator program.

For Scientists

• As the originator of new technological discoveries, which spring from your research efforts, you will generate the inventions that are the essential fuel that business incubators use to drive commercialization.

For Technology Transfer Officers

• As the incubator concept has evolved, the range of services offered by incubators has greatly expanded. Today, incubators themselves provide or provide access to a broad spectrum of office, business consulting, and professional services.