retail incubator business plan

• Business Plans Handbook
• Business Plans - Volume 09
• Retail Business Incubator Business Plan

Retail Business Incubator

BUSINESS PLAN     ACME INCUBATORS

163 Perkins Street Jackson, Michigan 49204

Business incubation programs have become essential economic development tools for communities that are trying to improve their economies and keep them healthy over the long run. The programs—which house very-early stage companies and provide them with a full array of business planning, management, and financial services—yield excellent returns. According to research, a high percentage (84%) of the companies that "graduate" from incubation programs remain in their communities, and an average 87 percent of incubator graduates are still in business.

EXECUTIVE SUMMARY

The number of businesses being started in the U.S. has more than doubled during the past decade, with well over 520,000 new business incorporations during the first nine months of 1988 alone. But the percentage of those that survive has remained the same (according to the Massachusetts Institute of Technology) or declined (according to Dun & Bradstreet). Either way, business start-ups are facing tough odds nationwide. According to the Federal Small Business Administration (SBA), 80 percent of all new small firms opened in 1988 will fail by 1993—out of money or energy or both.

Is there any way for entrepreneurs to combat these statistics? One increasingly popular economic support tool is the business incubator which, as the name implies, is a place designed to foster the growth of small companies.

A retail business incubator located in Jackson is needed and will be the ideal project to stimulate and promote community and organization partnerships, along with economic growth. It can accomplish this by providing the opportunity for job placement, on-the-job training, entrepreneurial training, business development and technical assistance, career counseling, small business financing, space for business start-ups, space for existing business owners, and space for community organizations. This retail incubator could also satisfy the one-stop-shop needs of the community.

A retail incubator's main purpose would be to catalyze the process of starting and growing retail business. A proven model, it will provide entrepreneurs with the expertise, networks, and tools they need to make their ventures successful. This retail incubation program will diversify economies, commercialize technologies, create jobs, and build wealth. It will also shield new businesses from the harsh environment they face during the first few years of existence—the most critical period.

While the Jackson retail incubator won't work magic, it can provide an encouraging place for young companies to make their start. Oscar Wright, California's Small Business Advocate, is coordinating with numerous public and private entities to encourage and assist in the creating of incubators in the state. Mr. Wright comments: "Incubators are on the cutting edge of developing new and strategic tools for small business success and local economic diversity. Incubators afford each community an opportunity to address specific concerns germane to their own economic reality." Even though we currently have a business incubator in Jackson, it has been proven that no two incubators will be exactly alike, reflecting differing and divergent needs.

Highly adaptable, incubators have differing goals: to diversify rural economies, to provide employment for and increase the wealth of depressed inner cities, and to transfer technology from universities and major corporations.

For National Business Incubator Association's (NBIA) 1998 State of the Business Incubation Industry , surveys were mailed to all incubators in North America. Responses represented 67 percent of the 587 business incubation programs identified in NBIA's database as of spring 1998.

Researchers discovered the following:

• North American incubators have created nearly 19,000 companies still in business and more than 245,000 jobs
• Most incubator facilities (75%) are less than 40,000 square feet (the average is 36,657 square feet; median is 16,000 square feet)
• Incubators overall each served an average of 20 entrepreneurial firms in 1997 (the median number reported was 12)
• NBIA member incubators served, on average, twice as many client companies and nearly twice as many graduates as nonmember incubators
• Client companies in member incubators created, on average, one third more jobs than client companies of nonmember incubators

Primary Sponsors of Incubators

Nonprofit, public, or private.

51 percent of all North American facilities, these incubators are sponsored by government and nonprofit organizations, and are primarily for economic development. This mission includes job creation, economic diversification, and/or expansion of the tax base.

Academic-Related

27 percent of all North American facilities, these incubators are affiliated with universities and colleges and share some of the same objectives of public and private incubators. In addition, they provide faculty with research opportunities, and alumni, faculty, and associated groups with start-up business opportunities. (This percentage includes some of the Hybrid responses that noted universities, community colleges or technical colleges.)

16 percent of all North American facilities, these incubators are joint efforts among government, nonprofit agencies, and/or private developers. These partnerships may offer the incubator access to government funding and resources, and private sector expertise and financing.

Private, for Profit

8 percent of all North American facilities, these incubators are run by investment groups or by real estate development partnerships. Their primary interests are economic reward for investment in tenant firms, new technology applications, and other technological transfers, and added value through development of commercial and industrial real estate.

5 percent of all North American facilities, these incubators are sponsored by a variety of non-conventional sources such as art organizations, Native American, church groups, chambers of commerce, port districts, etc.

Incubator Focus

• 43%—Mixed Use
• 25%—Technology (general)
• 10%—Manufacturing
• 9%—Targeted
• 6%—Service
• 5%—Empowerment
• 2%—Other

The 1998 State of the Business Incubation Industry contains 67 charts and graphs profiling the industry and highlighting results. Some findings:

• Forty-five (45) percent of today's incubators are urban, 36 percent are rural, and the remaining 19 percent are suburban.
• Most (43 percent) are mixed use and another 25 percent are technology. Ten (10) percent focus on manufacturing companies and 6 percent on service companies. The study revealed growth of the newer, "targeted" incubators—ones that focus on a specific industry such as software, food manufacturing, multimedia, or the arts. They are 9 percent of the total.
• The average incubator was established in 1991.
• The average operating expenses are between $72,320 and $207,500.
• There is no such thing as a standard size for incubators. The average incubator is 36,657 square feet, the mean is 16,000 square feet and the range is from 600 to 500,000 square feet. (These numbers exclude space rented to tenants not receiving incubation services.)
• Eighty-five (85) percent of all senior incubator managers have a college degree or post-graduate education.
• The average incubator offers full incubation services to 20 in-house and affiliate companies; member incubators serve an average of 24.

A relatively new concept in economic development circles, business incubation has grown markedly—from 12 North American programs in 1980 to the 587 identified by this study.

The 1998 State of the Business Incubation Industry joins "The Impact of Incubator Investments" study (conducted in 1997 by Ohio University, the Southern Technology Council, University of Michigan and NBIA to paint a picture of today's incubators and the effect they're having. There's no question they are viable economic development tools. Through research we now know incubators are better at what they do if their managers remain involved through membership in the association, the industry's best professional development resource.

Economic Impact

The results of the largest study ever conducted on business incubation show that these support programs for entrepreneurial firms have impressive, measurable impacts on the companies they serve. In addition, experts are calling business incubators a "best value" in economic development, based on low program costs and high return on investment to communities.

"Business incubation programs treat entrepreneurial companies as important community and national resources, and they provide assistance that ensures company success. This study should convince communities that if they don't already have a business incubation program, they'll want to start thinking about one," says Dinah Adkins, executive director of the NBIA, Athens, Ohio.

The study, completed in October 1997, was conducted by the University of Michigan, NBIA, Ohio University and the Southern Technology Council under a grant from the U.S. Department of Commerce Economic Development Administration. It examined the impacts of business incubators, which house very-early stage companies and provide on-site management and a full array of business planning, management, and financial services. Entrepreneurial companies stay in an incubator for an average of two to three years, then graduate to become free standing.

Some of the most important results of the study—which enlisted incubator companies, graduates, managers, and stakeholders—show how effective business incubators are:

• Retail incubator companies experience very healthy growth. The average firm's sales increased by more than 400 percent from the time it entered until the time it left the incubator. In addition, the average annual growth in sales per firm in all types of incubators was $239,535.
• Business incubation programs produce graduate firms with high survival rates. A reported 87 percent of incubated companies that fulfilled program graduation requirements are still in business.
• Business incubation programs create new jobs for a low subsidy cost and a good return on investment. The estimated cost per job created in relation to public grants was $1,109. It's not uncommon for the cost per job of other job-generating economic development programs to be three to six times higher.
• Most firms that graduate from business incubators—an average of 84 percent—remain in their communities.
• Business incubation programs assist companies that create many new jobs. In 1996 incubators reported, on average, that their firms had created 468 jobs directly and 234 additional "spin-off" jobs in the community for a total of 702 jobs.
• Despite their early stage, most incubator firms provide employee benefits.
• Retail incubators contribute to their client companies' success and expand community resources, increasing early-stage capital, access to entrepreneurship education, and other sources of help to young companies.
• Retail incubation programs improve local community image.

Earlier studies and surveys had suggested that business incubation was a successful economic development strategy. "The anecdotal information said the same thing, but there had been no large-scale, national study of the industry to confirm that," says research team member Larry Molnar, director, EDA University Center for Economic Diversification, University of Michigan Business School, Ann Arbor.

"Incubation is highly adaptable, which is another reason it's such a good economic development tool," Adkins says.

The research analysis also led investigators to formulate policy recommendations. They urge incubation program sponsors at all levels to, among other things: (1) invest more heavily in incubators as a major tool in economic development, (2) target their investments to the best program type for their community resources and (3) seek evidence that any program they support adheres to the authentic definition of an incubator and strives to institute best practices. They also charged the business incubation industry with developing standard impact measures and distributing to incubators a simple toolkit, developed by the researchers, that will make data collection easy at the local level.

"Adding these measures to incubators' total evaluation process will help them track their growth and effectiveness. It will also allow the industry to create a national database, making it possible to study and improve the business incubation process in years to come," says team member Hugh Sherman, assistant professor of policy and strategy, management systems department, Ohio University in Athens.

Incubator's Delivery

There is no single formula for retail incubators. In general, however, they are defined as physical facilities that provide new firms with the supportive network necessary to increase their probability of survival during the crucial early years when they are most vulnerable. Most start-ups are short of everything but the founder's energy, and a Jackson retail incubator is one way of building on that spirit while cushioning the demands on things formative businesses don't have—particularly working capital.

Industry leaders pinpoint three areas in which a facility should "deliver" in order to rightfully be called an incubator:

• The facility should provide flexible space for a number of companies at a rent that is either below average for the area, or an exceptional value for the services provided. There should be plenty of room for each business to expand.
• Shared equipment and services are provided that would otherwise be unavailable or unaffordable to help businesses cut costs. Receptionist, photocopying and conference rooms are most popular, with security, phone answering/message center, computer access, word processing, typing, audiovisual equipment and shipping/receiving also in high demand.
• The incubator should offer experienced management advice and access to professional expertise, backed by a policy which ensures that each participating business completes a thorough business plan and any other strategic planning necessary.

Most incubators with a success rate of over 80 percent also meet a fourth criteria: access to capital. Facilities with in-house funding are often difficult to get into because they evaluate businesses more strictly, but knowing that funding is available when needed helps both the individual business and the incubator management to prosper.

Incubator Characteristics

Incubators come in different forms. According to NBIA statistics, most (47 percent) are nonprofit, operated by groups ranging from community development organizations to municipal governments seeking to create new jobs and increase local tax bases. Academic related incubators (14 percent) serve as a link between innovations developed by universities or colleges and the businesses that market them to the general public. The so-called "mixed" incubator or "hybrid," which links private companies and public institutions in an effort to create new business, comprises 14 percent.

A growing number (25 percent) are for-profit incubators, which make money by acquiring part ownership in their tenant companies or from rental payments. For-profit operations are expected to grow to at least half the total of all incubators in the next few years. The future is private, for-profit incubators. Of that there is little doubt, the only uncertainty is timing (The NBIA's Adkins, however, contends that nonprofit incubators are still growing at an extremely rapid rate—faster than for-profits—and will continue to be a strong component of the overall mix).

While the major goal of for-profit incubators is to make money—they are in the business of helping young companies because it pays—their motivation is not dissimilar to that of their tenants. Says the owner of one: "Why are we for-profit? Because like the people in the incubator, we're entrepreneurs, too. It sets up the right incentives for us. We survive because we run it like a business."

Just as incubators come in different forms, their size also varies. The largest, measured by land area, is Science Park in New Haven, Connecticut, with 10 buildings on 80 acres. The Charleston Business and Technology Center in South Carolina has the greatest number of tenants—147 in one building. The University City Science Center in Philadelphia consists of 1,100,000 square feet sprawled over 10 square blocks and divided among approximately 100 tenants. Their proudest boast: graduating over 500 businesses. In addition, California is home to the largest incubator in the Western U.S.—the San Pedro Venture Center.

Model Incubator

Unlike the traditional incubator in the East, where older buildings were used for facilities, San Pedro boasts of "modern, clean, new surroundings and a 1,000-line Centrex communication system from Pacific Bell," states Manager Frans Verschoor. "We've also just opened a 5,000- square-foot pre-school daycare center, built according to state requirements at a cost of $100,000, that can accommodate 45 children. Operated by the local YWCA, which is paying $1 annually for rent, its central location means parents will never be further than 800 feet, or one minute, from their children," Verschoor comments.

"The pre-school center, the first we know of nationwide in an incubator setting, was constructed in recognition that the requirements of time have changed the traditional roles of women, who are now equally part of the workforce. The growth of single-parent families is also a factor. Having on-site daycare facilities helps the parent, the employer, and the child."

The San Pedro Venture Center, which opened in September 1988, will ultimately house 125 tenants in 11 buildings situated on 10 acres. It currently provides office suites (492 to 785 square feet) or combination office/warehouse spaces (584 to 1,400 square feet), each of which functions as a totally independent unit. Each unit has air conditioning/heating, lights, blinds, restroom, and transformer (to provide a range of power from normal household to industrial strength). All a tenant needs to bring is a desk and chair to set up operations. Each unit is individually alarmed, and connected to a central system complete with camera surveillance.

Not only space, but leases are flexible, unlike typical five-year contracts, it would require a minimum of only six months. While there is no long-term obligation, most tenants signed up for three years.

A host of "pay as you use them" services is available for tenants, including a fax machine, photocopying, and secretarial services, a conference room (with another under construction that will accommodate up to 400 people for seminars and social gatherings), mailroom, and staffed reception area. These services are provided at cost; the developers receive their income solely from rent.

Verschoor has also negotiated with service firms in the Los Angeles area (including accounting, tax, marketing, legal, advertising, and business planning) which have agreed to give sizeable discounts to San Pedro Venture Center tenants. "Not only does this give tenants access to first-rate counsel," Verschoor emphasizes, "but the arrangement makes sense for the consultants. A small company today could be a Fortune 500 in the future."

Additionally, the center can connect tenants with funding sources, both public and private, and has hooked up with NASA's computer database—the largest in the world—which, in Verschoor's words, "is ready to go when tenant needs for information so require."

While Verschoor uses the number of new tenants—now averaging one a week—as one indicator of success, he is most proud of the resultant job creation. "We're located within the San Pedro/Wilmington Enterprise Zone, where the goal is to establish 1,350 new and lasting jobs within the next five years. In its first five months of operation alone, the San Pedro Venture Center created 30 of those jobs."

Incubator Benefits

It's clear that retail incubators can significantly cut down on a start-up's overhead. They allow entrepreneurs to focus on the development of their ventures, rather than on the more mundane aspects of running a business. As a former incubator tenant in Washington, D.C., comments: "Why should you deal with issues such as what phone system or Xerox to buy? It makes far more sense to rent space in an incubator and concentrate on the success of your business."

In addition to surveying companies, incubation professionals, and community stakeholders, the research team conducted a macroeconomic study in four communities to analyze the expanded impacts of incubators, such as how many direct and community spin-off, or "indirect," jobs they add and what effect they have on the tax base.

The return on investment was clearly healthy. "Looking at the operating subsidies these incubators received and the jobs and local taxes they produced, we estimate the return on public investment at $4.96 for every $1 of public operating subsidies," says Larry Molnar. This calculation did not include state or federal taxes, he notes. "The numbers make it clear that business incubators add considerable resources to—not take resources from—their communities," Molnar adds.

The research team confirmed another important fact about incubators: They are not all alike. Although some impacts were similar regardless of incubator type, other impacts related directly to an incubator's mission and goals.

"For instance, firms in all types of business incubators had similar average increases in their annual gross revenues. But firms from technology incubators created more jobs than other types of incubators," says team member Lou Tornatzky, director of the Southern Technology Council, Research Triangle Park, North Carolina. Incubators that are focused on low-income people and minorities were rated high by their community stakeholders in assisting minorities and women business owners and enhancing the business climate. The study divided incubators into three main categories according to the main types of firms served—mixed use, technology, and empowerment/neighborhood revitalization. There are many other subtypes, though, including manufacturing, arts, software, kitchen, and multimedia incubators.

Phases of Project

For planning purposes it will be beneficial to divide the project into phases and establish the timelines for each distinct phase. The usual divisions are: Feasibility (average time is three months); Development (average nine months); Renovation (average time ranges from three months to one year); and the Early Stage Operations during which the project will experience operational losses (average time is 18 months.) The delineation of each phase's time period is particularly important for those phases that occur after you "sign on the line" as owners or lessees of a facility, thus incurring fixed operational costs.

The availability of funds may necessitate that the renovation work on the facility be divided into phases. Certain sections of the facility may have to remain undeveloped until operating revenues generate enough to support increased mortgage, another tenant is located, or there is an allocation of operating budget revenues for renovation of the next phase.

We will identify portions of the facility we will probably lease first. Create a leasing schedule and, if possible, we will attempt to lease in concentrated areas of the building. Certain portions of the facility may be leased to tenants before renovations while other portions could be used during renovations.

When we formulate the project's classifications and timeline, we will remember that each situation is unique. Though this section sites the most commonly used divisions in the planning process many projects "go their own way" and may require classifications which are exceptions to these rules.

There are four phases in the incubator development process: preliminary planning, initiation and start-up, fine-tuning operations, and growing client firms. The following is a snapshot of the first phase.

• Preliminary Planning —Identify potential stakeholders. These will be the movers and shakers in our community: the successful entrepreneurs, politicians, administrators and community activists who are tied to economic development. After identifying stakeholders, we will get a good handle on their goals and objectives.
• Conduct a Needs Assessment —Identify local entrepreneurial base and gaps in the existing business and financial services for entrepreneurs in the community and barriers to accessing these services. This information would come directly from the entrepreneurs. This assessment will also let us know if the community's entrepreneurs and stakeholders mesh. This could be accomplished by facilitating a strategic planning session to allow the stakeholders and project developers to step back and take a look at the implications of their goals and objectives. Also a focus group would be developed of both experienced and start-up entrepreneurs in the sessions.
• Choosing the Right Real Estate —The following items will be taken into account when choosing a building: zoning, building codes, location factors, traffic, hazards, leasable space, security, insurance, access to facilities, material flow, staging areas, floor loads, ventilation, heating and cooling, electrical service, and plumbing.
• Evaluate Organizational Issues, Financing Options —Identify the relationship between the owner, the developer, and management. At this point, the decisions on legal structure of the incubator ownership and evaluation of potential sources of financing for development and operations.
• Determine Support Services and Operating Pro Forma —Determine the composition, organization, pricing and legal structure of shared services, management assistance, consulting, and business financing programs. To determine these factors we would do an operating scheme for the incubator—based on acquisition or site costs, construction costs, market analysis, rental rates, and lease-up schedule.
• Select a Management Team and Finalize Business Plan —Select a management team that is committed to the community, have sympathy for the need of start-up businesses, flexible, creative, steady under stress, high level of interpersonal skills, and they can mentor, administrate, handle public relations, facilitate and can be a friend. Included in our business plan will be preliminary drawings and a client outreach recruitment plan, fine-tuned construction costs, market and economic information, monthly cash-flow projections for the next five years, description of management team, description of legal and organization structure. We will then nail down our financing—get lenders, grantors, and equity partners to come up with money to start the project.

Service Programs

Our service program will precede the operation of the business incubator. A good business assistance service program will serve as one of our most effective tenant and client recruitment tools. Recruiting will begin well in advance of the availability of space for lease. It would be quite acceptable to begin our service delivery up to a year in advance of available space for lease or facility occupancy.

Our service program will be more concerned with the content and quality of each service provided rather than the number of services provided.

The typical management assistance service programs include office practice services, general management assistance services, and technical services. The following list is a sample of one menu of services provided by a business incubator located in Pennsylvania that has been in operation for more than three years.

Level One—Office Practice Services:

• Clerical services
• Switchboard services
• Voice mailbox/electronic mailbox
• Telephone equipment
• Least cost routing for telephone calls
• FAX service
• Postal service
• Overnight courier service
• Notary services
• Photocopier
• VCR/TV equipment station
• Audiovisual equipment rental
• Conference room
• Canteen and coffee service
• Sports ticket purchasing
• Auto service discounts
• Audiotape/videotape/journal clip services
• Annual exhibit event
• Group purchasing/warehouse membership
• Furniture rental
• Laser printing and clip art graphics
• Printing services
• Exhibit area
• Desktop Publishing Services
• Workshops/Seminars

Level Two—Management Services:

• Capital formation
• Customized job training
• Entrepreneurial classes/training
• Technical and commercial communications
• Technical writing—second draft
• Bookkeeping/accounting
• Facts about starting and operating a business in Michigan
• Legal referral
• One hour legal briefings
• New Venture Developments
• Business Plan preparation
• Employment services
• Maintenance of facilities/equipment
• Micro-loans
• Shipping and receiving services
• Marketing service sampler
• Marketing –Direct mail campaign –Worksheet series –Federal/state procurement –Offense/defense tactics –Panel presentation –Export assistance –Market research –Printed circuit design

A portion of these services will be offered at first for little or no fee in order to introduce and stimulate initial usage per client. This would be equivalent to a special introductory offer.

It is possible that our management assistance program would charge a fee unless our program's third party funding support restricts or prohibits charging a fee.

We will be proactive in order to generate and maintain a sufficient client base for the service program. One strategy to build our client base volume necessary to continue development of the service program is to accept nontenant client companies.

Program Management

Responding to an informal e-mail survey and phone interviews by the NBIA, business incubator managers said that their programs' successful entrepreneurial firms had the following characteristics:

• An effective management team that works cooperatively and consists of members selected to provide a range of knowledge and skills
• Sound financing, the earlier the better. Funding is directly related to a firm's success, and in some cases it can be the deciding factor between a business venture's success or failure
• Principals that are able to focus on a lead product or service, and avoid over-investing in development and diversification
• Principals that make business decisions based on a clear understanding of the market and the competition, rather than their own enchantment with their product or service
• Principals that keep on top of best business practices by surrounding themselves with knowledgeable people, by remaining open to their advice and ideas, and by being willing and ready to make changes based on new information
• A well-researched business plan in place that provides clear direction and focus
• Principals that are good money managers and remain in control of the venture's books
• Entrepreneurs who are passionate about their ventures and communicate that excitement to potential funders, customers, and mentors.

Entrepreneurial failures often lacked some or all of these elements, according to survey respondents.

The incubator manager should be able to explain why business planning is important, both during start-up efforts and afterwards. Some firms may never prepare a business plan, because they aren't eligible for venture capital, for instance, but they are the same companies that tend to make "seat-of-the pants decisions," and to lack a clear vision of their future.

Principles of the Incubator

As listed in the NBIA Regional Training Institute curriculum, these 10 principles state that incubators should:

• Concentrate on the development or collection of support services that nurture start-up or emerging businesses. Providing below-market rental rates should not be the primary focus of the incubator.
• Value growth and development of individual companies beyond their ability to pay rent.
• Be judged on their ability to create new businesses or help nurture emerging companies, not on the number of jobs directly created. Successful, growing businesses will create employment opportunities.
• Be structured so that the property element takes a secondary position relative to programs since serving businesses is the core of quality incubation programs. However, the facility can offer the following tangible and intangible benefits: a. a positive cash flow resulting from successful incubator facilities management b. a centralized place for entrepreneurs to meet c. a focus for small business support programs in the community d. opportunities for valuable interchanges among entrepreneurial firms
• Be viewed as one possible component of an integrated, overall, regional economic development plan and be designed to reflect the strengths and weaknesses of the region.
• Be structured so that program outcomes match both the short-and long-term benefits required by sponsors.
• Work from a clear mission statement with quantifiable goals and objectives tied to an evaluation process which rewards quality performance.
• Be run by highly skilled, street-smart managers who are willing to wear a large number of hats, e.g., those of: general business counselor, triage nurse, facilities manager, psychologist, investment banker, etc.
• Recognize the inevitable tension faced by the manager, who functions as both advocate for the companies and landlord of a facility.
• Set up and run operational policies and systems in a business like fashion.

Many incubation programs are hard to staff. A number of "pressures" on the incubator program drive up expenses and drive down revenue. Many business incubation programs respond to these income pressures by restructuring their staff in one of the following ways:

• Balancing the duties and responsibilities of the incubator manager between facility management and the delivery of management assistance services to the tenant companies. If the duties and responsibilities do not emphasize the management assistance side of the equation, most managers will spend the majority of their time on the property and will neglect client services.
• Carefully considering the need to have a full-time staff member attend to the central switchboard and clerical/word processing services for the tenant companies. This is a key position. The switchboard is the lifeline of communication between the incubator and its marketplace. The impression of the incubator's quality is most influenced by the style and content of the switchboard services. The skill to operate a switchboard is rare. Many secretaries have clerical skills and consider the switchboard a "prison sentence." Someone who enjoys the interaction of a switchboard and has word processing skills as well is invaluable.
• A full-time switchboard/word processing staff person with a part-time manager is more effective than a full-time manager and a part-time switchboard/word processing staff person. If we can afford to have both positions full-time, that is great. However, many incubation projects are forced to operate with part-time staff support and you cannot have a part-time switchboard service: business communication requirements are not part-time. Management assistance, however, can be scheduled into a part-time manager's work week.
• Utilizing community organizations' school-to-work and on-the-job training participants, is another way of addressing staffing needs. This concept accomplishes two objectives: a. It helps community organizations to place their program completers b. It maintains an ongoing pool of incubator staff candidates.

Targeting a Facility

The following steps will be used to reach an acquisition lease price for using a facility as a business incubator.

• We will examine floor plans and use our best judgment to sketch partitions on the floor plans to accommodate tenant spaces of 140, 400, 1,100, 3,000, and 6,000 square feet. For each large space we will have two spaces of the next smaller size.
• Measure the linear feet of each designated area.
• Measure the net rentable square feet of the partitions.
• Grade and label our leasable spaces A, B, C, or D based on the quality of the space and its location.
• Seek input from three or four commercial realtors regarding market lease rates for similar property and set our market value at the average.
• Calculate the potential revenue at full occupancy by listing A space at full market value, B space at 90 percent of market, C space at 80 percent of market, and D space at 70 percent of market. The total is our potential full occupancy revenue.
• Starting with this potential full occupancy figure, we will subtract 8 percent for vacancy and 6 percent as bad debt expense.
• Next we will subtract at least $.90 but no more than $1.40 per square foot for contributions toward our service program and staff.
• We then will subtract fixed costs for taxes, insurance, etc.
• By calculating $.90 per square foot for maintenance, cleaning, and repairs, we will subtract it from our balance. The rate can be adjusted up or down depending upon the condition of the facility.
• This final figure is the amount we may spend on a lease or mortgage at "full occupancy," regardless of when this is achieved.
• We will follow a conservative schedule of what we anticipate will be leased to tenants such as: a. 10 percent pre-leased b. 40 percent lease-up achieved by end of year one c. 50 percent lease-up achieved by end of year two d. 80 percent lease-up achieved by end of year three
• These steps can determine what we will have available for lease or mortgage payments through the first three years.

We will then ask ourselves the following questions: Is there is enough money to support our monthly payment with the anticipated subsidy for the first there years? Is there enough money to support an unsubsidized program at "full occupancy"?

If the answer is yes, we will hire an engineer to corroborate our partitioning plan and construct a rough estimate of our renovation costs. If not, we will go back to the property owner to renegotiate and acquisition cost or lease rate.

Based on both the engineer's assessment of renovation and the evaluation of our leasing plan, we can weigh the advantages and disadvantages of constructing a new facility versus proceeding with acquisition and renovation.

Industry "Rules of Thumb"

• We should be able to demonstrate that the facility will break even at 67 percent occupancy or less.
• We will need at least 30,000 square fee gross space to have any hope of breaking even.
• The candidate facilities that look the best financially would be our targeted facilities. We will need to focus on what the facility will generate in income as an incubator than on the actual market value of the property. The purchase price will be dictated by our calculations.
• Having collected the operating data and renovation estimates, we would then be ready to negotiate a tough acquisition price and terms payment.

Strategic Planning Issues

As development plans are prepared, there are a number of strategic issues that need to be addressed. The issues listed below represent very important, basic questions that will be answered as we move forward with the program.

• Who will fund the phases of this program?
• Will this program be place on a plan to self-sustain?
• How large should the facility be?
• How should we structure management assistance services within the program?
• What comes first?

Most business incubators struggle to attain break-even operating status. Those that generate an operating surplus usually achieve returns on investment that would not excite an investor. Many business incubation programs fall victim to sustaining a difficult facility and having client bases that do not generate user fees sufficient to meet management and office practice costs.

Hopefully, our program will generate regular operating profits or our program's budget and cash flow will never become a concern. The income potential of a building can increase its market value and, hopefully, each audit will show an increase in the physical assets of the corporation so our facility's assessed value will increase our net worth annually.

Most business incubators that achieve self-sustaining operations have more than 30,000 square feet of net rentable space and can generate revenues more than $1.50 per square foot above facility fixed costs. However, with very few exceptions, business incubators cannot support adequate returns on investments to more than one stakeholder organization.

Funding Sources

Retail incubators have received loan and grant funding from literally hundreds of public and private funding sources. The following are a few planning issues to be considered relating to funding:

• A. Establishing a nonprofit public or private corporation that will offer access to the widest range of funding sources.
• B. If we plan on accessing federal funds from an organization such as EDA we will plan on allowing nine months to one year for a decision.
• C. After our investment in facility renovation/acquisition, we will plan on raising funds to cover an average of 18 months of operational losses.
• D. Federal and state public funds to support business incubators are growing in number and dollar volume allocated.
• E. Most business incubators have not received grant funding support beyond three years.
• F. We will research the dozens of ways to structure the acquisition or lease of the facility that involve creative financing techniques with the seller that will produce far greater cost savings benefits than do most third party grants and loans.
• G. Unfortunately, there are more funding sources available for facility acquisition and renovation than for service delivery and early stage operational losses.
• H. It is difficult to repay money borrowed for delivery of services and the early stage operational losses of our facility unless we have a substantial return on our leasing plan once we achieve a high occupancy rate. We may be able to support these early stage operational losses via debt financing if the money we borrow is a program-related investment from a foundation. The program-related investment usually provides us with a long-term, unsecured, zero-interest loan.
• I. It is now easier to raise grant funds for new construction than it has been in the past.
• J. We have to beware of agreements accompanying the acceptance of a grant such as: Agreement to have tenant companies sign lease agreements with strict employment clauses. Agreeing to create dramatic job growth in early years. Agreeing to maintain the incubator program for 15 years or longer.
• K. Beware of being pressured into undercapitalizing our project.
• L. Within our proposal narrative we will discuss the entrepreneurs and prospects we have met, surveyed, and served rather than to speak philosophically about our marketing approach for locating tenant prospects.
• M. If training must be offered as a condition to our funding, we will make sure that training includes nontenant business training as well as tenant company training.
• N. Establish a for-profit organization and utilize venture capitalists.

Marketing Strategy

Underlying the retail incubator marketing plan is an exploration of the question: Are there prospective customers for a business incubation program in this community? The following questions are suggested to serve as a catalyst to stimulate some creative ways of identifying collection points where our prospective clients may congregate.

• Are there any clusters of businesses that appear to be significant or emerging in markets that appear to have a positive near-term future?
• If so, what do these cluster companies purchase in some volume that could be supplied locally?
• Do the owners of these cluster companies ever meet together?
• What topics would attract these prospective entrepreneurs to attend a meeting at which the incubation program plan could be introduced and discussed?

In addition to answering these four questions, we would identify a minimum of five or more key contact points in the community whom new entrepreneurs can call or visit to receive information and resources to start their company. These contacts would be educated on the objectives of the incubation program. These contacts would also refer to the incubator those entrepreneurs who show the best promise of business survival and who express an interest in facilities which offer an accompanying access to services.

Identifying these key contact points and answers to the preceding questions will help us to locate potential clients. It will also be important for us to be able to assess the demand for a business incubation program. In addition to conducting a traditional survey and collecting demographic statistics, an alternative approach of assessing client demand will be to offer a demonstration of some components of our management assistance services program. We can then gauge an indication of demand by recording the number and type of participants who access our services.

These services can be demonstrated by a variety of ways: one-day workshops, a series of workshops, one-on-one counseling assistance, etc. These ongoing workshops provided by the incubator will be designed to help the program assess the level of entrepreneurial activity in the area as well as to market the incubator itself.

Once we have gathered this information allowing us to identify sources of potential clients as well as assess market demand for management assistance services, we will be ready to consider other important questions as we prepare our marketing plan.

• How can we position ourselves, our staff, and board to initiate marketing and sales activities rather than just to react to opportunities for promoting our program?
• Do we plan to escrow/allocate funds for marketing and sales activities?
• Do we us the word "incubator" as the primary descriptor to prospective tenants?
• Do we split our potential customers into vertical segments to help target special features of our program to customers?
• Do we have plans to develop a "constancy of purpose" among our staff and stakeholders regarding the continuing development and effective implementation of our marketing plan.
• Do we have plans to establish a "track system" to guide our staff and board through the correct process of presenting the facilities and services of our program to prospective tenants?
• Do we have a clear statement of how we are distinguished from your competitors?
• Are we planning to become an active member in our state and national incubation associations?
• Will our marketing materials focus primarily on what just happened vs. what is planned to happen?
• Will our incubation program staff and service providers have regular planning sessions to focus on new services for our existing clients and to plan activities that demonstrate our services to prospective clients?
• Will we actively use our clients' successes to market to target groups?

Creative Funding Strategies

Because financial resources are limited, one solution we will use is to be creative in negotiating acquisition, renovation, lease agreements, and leasehold improvements. We will use the following suggestions to get our creative thought processes flowing.

• A. Remember to ignore the asking prices on the property/facility. Do our calculations as detailed and make an offer to purchase or lease based on the income value of the property—not the market value.
• B. Request that seller carry a portion of the lease/mortgage, receiving monthly payments based on a graduated scale as defined by a prorated three-year lease plan. This will allow us to pay more only after we have rented a larger percentage of our space.
• C. Consider capital equipment needs and seek contributions for the phone system, office equipment, furniture, etc., from companies that manufacture and/or sell these products.
• D. Ask area banks to pool funds via a CRA plan for leasehold improvements. Then base our leasehold improvements on tenant loans a few percentage points higher than CRA terms, amortizing the payments to the length of the leases. This will enable us to have the tenants pay for more of the capital improvements as well as encourage longer lease agreements.
• E. Permit the anchor tenant to sublease to others as long as the tenant agrees to commit to a larger square foot area than they currently need, but eventually plan to utilize. Give them a lower rate on the extended space allowing them to gain a margin of income on that space.
• F. Include the rental space, leased furniture, and a package of office practice services in one flat rate monthly charge. When using this method, we will calculate the square foot rate of this office at double our normal lease cost. The services fee should be calculated at an hourly rate based on defined usage—assume the maximum number of hours whether or not they use their full allotment. The sum of all three factors equals the monthly charge.
• G. Determine whether the seller has the opportunity to obtain a tax deduction for the amount of the difference between the market appraisal and the sales price. Such a tax deduction would create an incentive for the seller to discount the sale price by the net effect of the tax deduction.
• H. Attempt to restrict grant funds to a specific portion of the facility in order to increase project flexibility and leverage other sources of debt equity.
• I. Identify our net rentable lease units as A, B, C, or D grade space. Attempt to package A space with some B, C, and/or D space per tenant. This will prevent the possibility that we will rent the A space first and experience the increased difficulty of lease the B, C, and D space. Price the lease rates accordingly.

Community Reinvestment Act (CRA)

The CRA, revised in 1989, offers the incubation industry two opportunities: to obtain bank participation in an incubator development project, and to obtain money for revolving loan funds or other lending programs in order to extend credit to incubator tenants and the small- and minority-business community.

Banks can fulfill some of their CRA compliance factors related to their effectiveness in communicating with—and working with—community groups by participating in the development of a business incubator. There are a number of services the incubators can provide to banks with good data about what's happening economically in their neighborhoods and alert banks to the latest neighborhood business trends. Additionally, they can provide banks with a wide range of services including helping to review loan packages and other technical assistance.

Incubation Part of Policy Statement

After a broad-based community task force assesses the credit needs of the community—which is always the first step—it is commonly found that almost every market reports the same needs: financing for small businesses for working capital and for fixed assets. This would be included in the needs statement, the policy statement asks the banks to come with a plan to address these needs. And that's where an incubator can fit in.

The CRA implementation plan can specifically include funding for an incubator project or loans for incubator clients and small businesses.

Raising Awareness

Federal Reserve states that "Support of small business incubator programs affords institutions an opportunity to provide other services which can stimulate small-business development. These activities, in our view, would be included as part of an institution's record of performance under CRA."

Washington added that this communiqué, received in November 1988, placed incubator projects under the category of "other activities" in which financial institutions may engage in order to receive CRA credits. According to Washington, banks can help incubators address two pressing needs: funding for incubator project and loans for start-up businesses.

According to Washington, an incubator looking to secure these kinds of CRA-related funds from banks must first participate in the formation of a community group such as a city-county reinvestment task force. This task force represents all segments of the community, which is responsible for coordinating and assisting with the assessment of needs and eventually developing a plan.

Funding for projects is not a given. An incubator has to be a viable project and be on the alert for opportunities to promote its work.

Banks must be shown that incubators can offer them a good deal that will help them meet the regulators' CRA expectations.

One group meets with a consortium of seven banks. The group meets with top officers once a month to help them meet CRA requirements. This group has adequate information about their real estate transactions, where they might be lagging behind and what they may do to better market their services in terms of meeting CRA requirements.

Blending bank funds with government and foundation sources creates a solid building block and helps the incubator to be viewed as less risky. The incubator can also engineer some other CRA-related deals: seed capital and subordinate loan pools to help meet the needs of minorities and underserved people in the community.

Another way a bank can help is to provide scholarships for low-income entrepreneurs and owners of small businesses or start-ups to take classes.

The retail incubator can also assist with providing a one-on-one service covering the "pre-application" loan process for a possible citywide seed-capital revolving loan fund; this service can be funded by the Small Business Development Center (SBDC).

Utilizing the CRA is an excellent way for our incubator to leverage financial support, both for ourselves and, perhaps more importantly, our tenants.

Empowerment Zone Initiatives

In December of 1994, Detroit, Atlanta, Baltimore, Chicago, New York, and a partnership of Philadelphia and Camden were awarded empowerment zones.

Detroit's winning proposal was the result of many people representing the community and the gamut of public and private organizations throughout Detroit and the metropolitan area. The vision expressed, the projects proposed, and the commitment guaranteed, truly set Detroit's proposal apart from any of the other submissions.

According to a the Jackson Journal article dated September 27, 2000, and entitled "Gore envisions cash aid for Jackson," it is possible that Jackson, Michigan, may have another opportunity to apply for an empowerment zone designation. A state-of-the-art business incubator could play a role in the strategic plan to outline programs and strategies aimed at reducing the effects of poverty in the inner city. It could also assist in bringing together unlikely groups of community residents, city and state officials, and representatives of local business and financial institutions to work side by side to determine the best ways to address poverty issues in their communities.

The business incubator will also assist with the framework of the EZ/EC programs' four key principles:

• Economic Opportunity, including job creation within the community and throughout the region, entrepreneurial initiatives, small business expansion, and training for jobs that offer upward mobility
• Sustainable Community Development, to advance the creation of livable and vibrant communities through comprehensive approaches that coordinate economic, physical, environmental, community, and human development
• Community-Based Partnerships, involving participation of all segments of the community, including the political and governmental leadership, community groups, health and social service groups, environmental groups, religious organizations, the private and nonprofit sectors, centers of learning, other community institutions, and individual citizens
• Strategic Vision for Change, which identifies what the community will become and a strategic map for revitalization

Since the aim of the EZ/EC Initiative is to serve as a catalyst for locally generated strategies, its accountability can be assured through the development of benchmarks such as a business incubator. The initiative's design reflects the benefit of prior experience and knowledge of successful economic development efforts by combining targeted tax incentives with such things as direct financial assistance, job readiness training and placement services, improvements to physical infrastructure and public safety, and the development of strong community partnerships shown to be essential for long-term success.

Like Detroit, Jackson can also empower itself through the strength of a city committed to a new economic future. Our future can also be built upon:

• New economic foundations blending business into the neighborhood, linking training and jobs to Zone residents, offering real access to new financial resources
• The proposed Zone's new vitality can succeed by citywide and regional cooperation. We can build and maintain a positive flow of employment, capital and innovation. Each section of our Plan can also demonstrate a commitment to build new bridges across all economic and social sectors, while removing barriers between citizens, government, foundations, institutions, and our regional neighbors.

By sponsoring small business incubators in their state, state governments can encourage local economic growth through job creation and job retention, the revitalization of underutilized property and the establishment of public-private partnerships.

Partnering for Economic Development

As a focal point of entrepreneurial activity, our business incubator may provide key leadership to the new business formation component of our community's economic development plan.

The most important planks in our economic development plan are retention and expansion of new businesses. The other area of economic development has to do with all of those areas that affect business development. It includes education, taxation, infrastructure, and availability of financing—whether you are expanding or relocating or creating a new business.

After looking at who's doing what in our community and how we are accomplishing our overall economic development, the city, county, and private sector are becoming more educated to the significance of new business formation and to the role it could play in Jackson's economic development.

By bringing together the Jackson Chamber of Commerce, Small Business Development Center, Community Capital Development Corporation, Jackson Area Investment Fund, colleges and universities, Small Business Administration, Business Information Center, Women's Business Center, City of Jackson, Michigan Minority Business Development Center, Enterprise Community, Career Alliance, Metropolitan Chamber of Commerce, Jackson County Planning Commission, HUD, and our local banks into a partnership, we could create a Council of Small Business Enterprises (COSBE). The retail incubator will be the nucleus of these community partnerships and for a new business council component in our economic development plan. This concept can continue to grow by forming linkages with other organizations interested in economic growth.

National Business Incubator Association (NBIA)

Membership in nbia.

A key alliance and support system for the proposed Jackson business incubator will be our membership with the National Business Incubation Association (NBIA). It is the world's leading organization advancing business incubation and entrepreneurship. It provides thousands of professionals with the information, education, advocacy, and networking resources to bring excellence to the process of assisting early-stage companies. It is also the world's largest membership organization for those involved with business incubation programs, and it is committed to advancing the business incubation industry by providing research, technical assistance, and educational opportunities for business incubation professionals, business service providers, investors, and others involved in helping start-up businesses grow and thrive.

NBIA Activities

NBIA offers professional development activities and specialized training to help business assistance professionals create and administer effective incubation programs. The Association's public awareness activities educate entrepreneurs, public sector leaders, corporations, and investors on the benefits of business incubation. NBIA also conducts research, compiles statistics, produces publications that provide hands-on approaches to developing and managing effective programs, tracks relevant legislative initiatives, and maintains a speakers' bureau and referral service. It creates partnerships with leading private-sector and public-sector entities to further the interests of the industry and its members.

Who belongs to NBIA?

• Incubator executive directors, managers, and staff
• Incubator developers and researchers
• Business assistance professionals
• Economic development professionals
• University-related research park managers
• Corporate joint venture partners
• Industry consultants
• Venture capital investors
• Educational institutions
• People exploring feasibility of business incubation for their communities
• Anyone interested in business incubation

NBIA Objectives

• Provide information, research, and networking resources to help members develop and manage successful incubation programs
• Monitor and disseminate knowledge of industry developments, trends, and best practices
• Inform and educate leaders, potential supporters, and stakeholders of the significant benefits of incubation
• Build public awareness of business incubation as a valuable business development tool
• Expand capacity to create valuable resources for members through partnerships
• Engage and represent all segments of the industry
• Create value for members

Member Benefits

• Subscription to NBIA Review and NBIA Updates
• NBIA Member Directory
• Access to members-only section of NBIA website
• Eligibility to join NBIA's member-only listserve
• Information research, referral, documentation, and dissemination service
• Legislative and government program updates
• Special money-saving programs for goods and services with leading providers
• Targeted member mailings including industry press releases and media tool kit
• Eligibility to vote in NBIA elections and run for the NBIA board

Members-only Discounts on:

• NBIA bookstore purchases, including important publications for incubator managers, developers, and clients

Incubator Risks and Failures

Incubator developers are always interested in what makes an incubator work. But we found it can be more useful at what makes an incubator fail. We found there to be five main stumbling blocks to success.

• Expecting too much too quickly. The dynamics behind incubators can be very complicated, which means everything does not come together as quickly as a real estate operation might. But people don't understand that. Some developers believe they can acquire a building and put out a sign shortly thereafter. They fully believe that once the incubator opens, the jobs and companies will flow in. This type of expectation leads to frustration and dissatisfaction at best and failure at worst. Developers also must manage expectations of the public. This is always tough. When city councils and economic development administrators get involved in a job creation goal, they want the community to see immediate results. But they must be made to understand that it takes two to five years for most companies to become viable in the marketplace.
• Selecting the wrong manager. Because the incubator manager is the key person running the incubator—and sometimes the only person—he or she must be well-rounded, well-organized, have good business sense, and be a skilled networker. The latter is especially important. The ability to gain resources and cooperation from important institutions, individuals, and organizations often spells the difference between success and failure.
• Overestimating the incubator's role. Economic development planners can make the error of viewing an incubator as a cure-all for economic growth. It can make a significant contribution, but it cannot cure all the economic ills of a region. The existence of an incubator most likely won't influence a large industry to relocate, for instance. Incubators can make a contribution to expansion and retention of industries already in a region by training, expanding and providing additional resources to companies there. The most important purpose of an incubator is to work with entrepreneurs to accelerate the development of emerging companies. That must be the key focus of management. Thinking that incubators are there to create jobs is a mistake; jobs follow the companies, not vice versa.
• Overspending. Some incubators don't understand the dynamics of their own business—and an incubator is a business after all. The ability to manage cash flow and stay within the boundaries of the operating budget are as critical to incubators as they are for any business.
• Failure to leverage resources. It takes an incubator a few years to get running and become financially stable. Developers must set a realistic timeframe, then leverage resources. As an example, the Austin Technology Incubator in Texas looked for funding for three years out. Its city council committed to $50,000 a year for each three years. The Chamber of Commerce put in $25,000 a year for each of the three years. The incubator raised $50,000 a year from private sources. In addition to that, private companies—such as accounting, law, and marketing firms—made three-year commitments of in-kind support amount to about $100,000 a year. Resources are thus leveraged and, as a bonus, a lot of people gain a stake in the incubator's success. Although Austin did not start out doing so, more incubators are taking equity in client companies as another important leveraging tool.

Funding Needs

Until a building has been located and our calculations completed it is difficult to pinpoint exact funding needs. According to NBIA, the average start-up of a business incubator is between $72,320 to 207,500. The breakdown is as follows:

Retail incubators are proven tools for creating jobs, encouraging technology transfer, and starting new businesses. Set up to assist in the growth and development of new enterprises, incubators are themselves a growth industry. In 13 years, their number has increased thirty-fold, to more than 500 in 1993. A new incubator becomes operational each week, on average. More than 9,000 small firms currently reside in incubators; thousands more are program "graduates," having moved on to occupy commercial space within their communities.

Retail incubators accelerate the development of successful entrepreneurial companies by providing hands-on assistance and a variety of business and technical support services during the vulnerable early years. Typically, incubators provide space for a number of businesses under one roof with such amenities as flexible space and leases; office services and equipment on a pay-as-you-go basis; an on-site incubator manager as a resource for business advice; orchestrated exposure to a network of outside business and technical consultants, often providing accounting, marketing, engineering and design advice; assistance with financing; and opportunities to network and transact business with other firms in the same facility. Incubators reduce the risks involved in business start-ups, and their young tenant companies gain access to facilities and equipment and equipment that might otherwise be unavailable or unaffordable.

Our incubation program's main goal is to produce successful graduate-businesses that are financially viable when they "graduate" from the incubator, usually within two or three years of entering the program. Research shows that more than 80 percent of firms that have ever been incubated are still in operation. And research on graduates by Coopers & Lybrand has found that these graduates are increasing revenues and creating jobs.

Formalization of the industry was accelerated from 1984 through 1987 by the active involvement of the U.S. Small Business Administration's Office of Private Sector Initiatives. Under the direction of John Cox, now SBA's Director of Finance and Investment, the agency held a series of regional conferences and published a newsletter and several incubator handbooks.

The National Business Incubation Association was formed by industry leaders in 1985, and by 1987 was recognized as the main source of information on incubators. NBIA's membership today numbers over 700 and is primarily composed of incubator developers and managers. Its mission is to provide training and a clearinghouse for information on incubator management and development issues and on tools for assisting start-up and fledgling firms. This organization will provide the technical support and research needed, plus ongoing support in the developmental and completion stages of our incubator.

User Contributions:

Comment about this article, ask questions, or add new information about this topic:.

Business Incubator Business Plan [Sample Template]

By: Author Tony Martins Ajaero

Home » Business Plans » B2B Sector

Are you about starting a business incubator? If YES, here is a complete sample business incubator business plan template & feasibility report you can use for FREE .

Okay, so we have considered all the requirements for starting a business incubator. We also took it further by analyzing and drafting a sample business incubator marketing plan template backed up by actionable guerrilla marketing ideas for business incubators. So let’s proceed to the business planning section.

Business incubators are organizations that help start-up companies grow speedily as well as ensure that early stage companies become successful. In starting a business incubator, you would need to ensure that you have a high source of networks with angel investors, venture capitalists, state governments, as well as with other investors.

This is also a business that requires you to pick a niche and understand the target market you intend to help accelerate towards success in order to become a success yourself.

Even though business incubators have often either been private non-for profit businesses, non governmental agencies or a government sponsored programme, there now exists business incubators that are private and are started with the intention of making profit.

As with starting any business, you need to conduct a feasibility study on if it is worthwhile going into this kind of business.

Most new start-ups usually hire a reputable business consultant, who understands the industry, to help them handle this phase. Using a business consultant is helpful as they would point out the obstacles you are likely to face during the course of starting or running the business and how best you can overcome these challenges.

Another serious aspect you shouldn’t overlook is in having a business plan, as it is vital to the success of your business. Below is one of such samples, a business incubator business plan template;

A Sample Business Incubator Business Plan Template

1. industry overview.

Business incubators came into existence in 1959 in the united states as Joseph Mancuso started the Batavia Industrial Center in Batavia, New York. This led to the growth of business incubators all over the country and as at 2006; there were more than 1,115 business incubators in the United States of America. Globally, there are more than 7,000 business incubators in existence.

Business incubators usually fall into several categories in order for the specific business incubator to be able to use best industry practices and evaluation to successfully determine outcomes for start-up businesses. The National Business Incubation Association has therefore categorized business incubators into five; mixed-use, service, technology, manufacturing, and other.

There are majorly two types of business incubators in existence; those that have a physical facility and an on-site management for clients to exploit. Also, business incubators that have a physical location usually offer start-ups space in which to operate their business.

Virtual business incubators on the other hand, do not offer clients on-site space for their business and may not even be located in the same geographic areas as the clients. They however usually have a central office in which activities are coordinated and clients can go to for conferences.

Business incubators started being judged based on providing best industry practices in the early 1990s as a determinant to ensuring successful programs for their clients. Another thing used to evaluate business incubators during this period was what value they added to client firms that ensured that these firms had improved outcomes and other economic benefits.

There have started emerging new business incubators that seek to help foreign firms enter the United States’ market. Even though these business incubators provide the same entrepreneurial services as traditional incubators, they also help foreign firms have easier access to the U.S market and resources or partnering with U.S firms.

These services offered usually include language training, translation services, cultural training, immigration and visa assistance, helping to obtain vital licenses (business and driving), as well as housing assistance. The immigration services offered are usually to help spouses and children so they find it easier to settle in their new intended location.

In the United States of America, most business incubators usually receive start-up funding as well as continuous support from donors and the government.

According to research, 85% of business incubation programs usually receive continuous public support for their annual operating budgets. However, more nonprofit incubators usually receive higher support in comparison to profit-based business incubators.

Also, the business incubator category that receives the most attention is that of technology especially if these incubators are close to universities and colleges. Most technology based business incubators are often located close to or with science/technology parks.

2. Executive Summary

Business incubators are usually programmes that are designed to ensure that start-up entrepreneurial companies are successfully accelerated towards successful development through diverse business support resources as well as services. Our aim is to ensure that we achieve a 90% success rate with all those who see our services here in Mountain View – California.

Our location in 1500 Amphitheatre Parkway, Mountain View, California is very strategic especially as there are several new businesses starting up every now and then as well new businesses already in existence; that require guidance on how to become a success as well as force in the industry they intend going into.

Our aim as a business is to ensure that we help our clients attain their goals by using best practices and providing the best evaluation tools and other form of guidance that will be helpful to our clients. We have set processes and structures in place that enable our team best interpret the United States’ economy and use this in helping our clients become the success they intend to be.

We now that there is no one best incubation practice that would suit all our clients and ensure that they become a success and so in this regard, we intend to have a synergy of multiple policies and services so as to have optimal outcomes that will be most suitable for specific clients’ needs.

To achieve all these, we have built a business structure that is guaranteed to ensure that our business runs smoothly and that we are able to achieve what we set out to do.

It is for this reason that we have sourced for and hired proficient and professional employees who are not only competent in their assigned responsibilities but also believe enough in the organization and are committed to seeing corporate goals achieved.

In order to ensure that we achieve a high level of productivity, we will ensure that our employees are well trained and undergo training regularly to ensure that they enhance their sills. We also intend to ensure that our employees work in an environment that is not creatively limiting and is also conducive.

Also, we have the best welfare packages for our employees’ that is the best across similar business incubator start-ups similar to ours here in Mountain View – California as well as across the entire industry in the whole of the United States of America. Also, our incentive packages for hardworking employees are also top notch.

Our owner, Brad Bradley has an experience of over 30 years in the business management and entrepreneurial solutions.

Both are Havard Business School alumni and have hands-on experience in several business incubators both private and state sponsored, and will therefore bring their experience to bear in the business and ensure that the corporate goals and objectives set are achieved.

3. Our Products and Services

Our intention at Bulb Business Incubator Inc, is to ensure that we offer our customers the intended services they require virtually especially as we are a virtual business incubator that intends to deal in the service based niche, even though we will have a central establishment in which to coordinate activities.

We intend to ensure that we whilst offering our core service that we also create multiple sources of income as well for Bulb Business Incubator Inc.

Our intention is to ensure that we generate revenue and also make profits from the several services we intend to offer in addition to our core service here as permissible under the laws of the United States of America. Therefore below are some of the services we intend to offer;

• Fees for mentoring and guiding of clients’ businesses
• Consultancy and advisory services for already existing businesses
• Provision of technical assistance
• Negotiators
• Marketing consultancy
• Training services

4. Our Mission and Vision Statement

• Our vision is to help our clients achieve their corporate goals of breaking into the market, securing investment or getting acquired. We hope to achieve a 90% success rate. We also intend to become the preferred brand for start-up and growth companies in our niche.
• To achieve our vision, we intend to ensure that our clients are provided with a low-impact fee structure, great mentoring as well as have competent employees to help them achieve success faster than they would have done on their own.

Our Business Structure

As a business that understands how to help new startups and growing companies achieve success, we know and understand the importance of having the right business structure for our business and are willing to go the extra mile. We therefore intend to go all out in ensuring that we build a business structure that aligns with our vision and corporate goals as a business here in Mountain View – California.

We intend to hire competent and professional employees who understand the industry thoroughly and who are also attuned to our company’s vision and are committed to ensuring that we achieve our corporate goals and also reach an intended standard for our business whilst positively projecting and promoting the business to clients – existing or potential.

We also intend to ensure that our employees are well paid across similar start-ups such as ours in the industry. This is so that they remain productive, motivated and committed to ensuring that we achieve our goals here at Bulb Business Incubator Inc.

Therefore, the business structures we intend to build at Bulb Business incubator Inc include;

Chief Executive Officer

Business Development Manager

Customer Service Executives

Business Coach

Human Resources and Admin Manager

Marketing Executives

Accountant/Cashier

Security Guard

5. Job Roles and Responsibilities

• Makes decision that will affect the strategic direction of the company
• Seek for funding on behalf of the company by approaching several sources
• Reviews policies that aren’t working or having much impact and remove or modify them in order to achieve organizational growth
• In charge of coordinating the management staff and ensuring that organizational policies are implemented
• Identifies areas in the company that needs an upgrade
• Liaises with management staff in order to know how best to move the organization forward
• Identifies new income sources for Bulb Business incubation Inc
• Drafts proposals on behalf of the business
• Works with manager to ensure that corporate goals are achieved
• In charge of ensuring that all clients’ inquiries and complaints are promptly attended to
• In charge of ensuring that customer database is accurate and updated
• Remain updated about industry trends and company policies so as to have the right information for the client
• Provides the required mentorship for new start-ups and growing businesses
• Reviews mentorship processes and continually upgrade so that clients can get the best
• Know what mix will best suit a client and how best to use the mix
• Sources for and recruits the right employees for the business and ensures that they undergo orientation to help them settle in
• Conducts training for the employees as well as performance appraisals in order to increase the productivity for the organization
• Ensures that all administrative tasks are smoothly conducted and that the policies of the management are implemented by staff.
• Conducts continuous market research on behalf of Bulb Business Incubator Inc in order to help identify new markets
• Helps new start-ups as well as Bulb Business Incubator Inc develop marketing strategies intended to generate more revenue for the company
• Conducts direct marketing on behalf of the organization
• Carries out an internal audit on behalf of Bulb Business Incubator Inc
• Serves as a temporary financial adviser and guide for new start-ups and growing businesses
• Prepares financial information and statement on behalf of the company and ensure that they are correctly reconciled with ban records at the end of the month
• Ensure that the facility is kept clean at all times
• Ensure that depleted cleaning supplies are re-stocked
• Carries out any other duties as might be determined by the human resources and admin manager
• Ensure that the premises is secure at all times especially after work hours
• Watch the surveillance cameras in order to monitor activities

6. SWOT Analysis

In order to better understand our business ideology and concept and how well it would help us fare in this environment, we deployed the help of a reputable business consultant in the service industry here in Mountain View – California, to walk with us through our concept and help us determine if we were going to succeed in the business environment especially in this location which we have chosen.

Having gone through our business plan and looked through our concept and processes, the business consultant deployed the SWOT (strengths, weaknesses, opportunities and threats) analysis that would help in determining our rate of making it in the industry.

Below is the result of SWOT analysis that was conducted on behalf of Bulb Business Incubator Inc;

Our strength lies in the fact that we have processes and structures in place to ensure that we achieve our goal of achieving a 90% success rate in helping our clients.

We also have put much emphasis on our business structure in the sense that we are careful in sourcing for and recruiting the right employees who are professionals and competent enough to ensure that we attain our corporate goals and objectives.

Also, we are strategically located in Mountain View – California as there are new start-ups cropping up every now and then in the service based industry often looking for guidance on how to succeed. Finally, the experiences that our owner, Brad Bradley is bringing to the table are more than likely to help us attain our corporate goals and objectives and succeed.

Our weaknesses lie in the fact that we are mostly a virtual business incubator offering services to our clients, and this might affect clients who are not in our geographical location.

Also, the service based industry is one that requires that we might have to intensely compete with other already established business incubators for clients; however we have put strategies in place that would ensure we create awareness for our business.

• Opportunities

The opportunities that abound for us as a business is in offering other new services that might crop up as the business and industry evolves leading to more streams of income. Also, there are many investors looking to invest in service based ideas and so we would not have a lack of investors for start-ups requiring this.

Every business is faced with threats every now and then and as a business we are prepared to face any threats that might crop up during the course of starting or running this business.

Therefore the threats we are likely to face are government policies concerning business incubators that are established for profits. Also, we are likely to face the threat of an arrival of a competitor in same location offering same services as we do.

7. MARKET ANALYSIS

• Market Trends

In the 1980s, even though business incubators were becoming the preferred means by which new start-up companies preferred seeing assistance from, there were only a handful of business incubators present. However as at 1992, according to the National Business Incubator Association on the state of the business incubation industry, it was found that business incubators had tripled.

The trend in the business incubator industry has it that majority of its operators; almost 90% are nonprofit entities and enjoy more state funding than the minority business incubators that were operating in the same industry.

Also, most of the incubators that receives higher attention and funding were those that were in technology-based. Incubators that have also received a fair share of attention are those that target disadvantaged populations such as minorities and women.

Business incubators especially those for small businesses have played a major role in economic development by enhancing the survival rates of companies.

Reports for the incubation industry have it that start-up companies that have used the services of business incubators have an 80% chance of remaining in existence 5 years after. This has led business incubators especially those for small businesses to be seen as an accepted economic development tool in the rural and urban areas all over the United States of America.

8. Our Target Market

In deciding the target market for our business incubator program so as to know what range of customers we would be likely serving here in Mountain View – California in reference to our niche category as well as all over the United States of America, we have conducted a market research that would help us in this regard.

The reason for the market research is so as to know what our target market would likely be expecting from us. This would allow us draft the best strategies that are not only effective but also necessary in ensuring that we rightly penetrate our target market.

Therefore form the result of the analysis; we are in business to offer our services to the following customers;

• New Start-ups in the service based industry
• Growing service based businesses in need of an accelerator
• Other business incubators

Our competitive advantage

Bulb Business Incubator Inc is being established to help our clients achieve their corporate goals of breaking into the market, securing investment or getting acquired. Our intention is to achieve a 90% success rate and also become the preferred brand for start-up and growth companies in our niche.

With this, we have come up competitive strategies that will allow us compete favorably as well as have an edge over our competitors.

First off, our virtual as well as physical location is opening us up to having more customers than we would have if we were strictly serving customers based on physical locations. Another edge we have is in the offering of standard services regulated by international best practices.

Our clients also get a dedicated and competent staff that helps them reach their intended goals. We have also hired competent and professional employees who now and understand the market well to help us achieve our corporate goals.

Our employees have the necessary expertise that will inspire our clients and an excellent customer service that will ensure that we get referrals from our successful clients.

We not only intend for our clients to work in a conducive and creative stimulating environment, but we are also paying them well better than most similar start-ups in the same industry here in the United States of America. This is aimed at motivating them to put in their best in ensuring that the business grows to the required standard.

9. SALES AND MARKETING STRATEGY

• Sources of Income

Bulb Business Incubator Inc. is a private business incubator that has been established to help start-ups and companies still in their early stages whilst generating revenue and making profit here in Mountain View – California.

We intend to offer our clients various services that are intended to bringing in more revenue that will ensure the sustainability and growth of our business. Therefore, Bulb Business Incubator Inc will generate income from the following services;

10. Sales Forecast

Every business is established in order to make profit, sustain itself and grow, however not all know how to go about achieving this, which is why there would always be a need for business incubators. Our virtual as well as physical location is very strategic and will allow us to not only generate the needed revenue as it is less expensive to operate but also make profit within six months of operations.

In carrying out an accurate sales forecast on behalf of the business, we have conducted a critical examination of the business incubator industry in order to determine our chances in the industry. We garnered data from similar start-ups such as ours here in Mountain View – California.

Therefore, below are the sales projections for Bulb Business Incubator based on several factors:

• First Fiscal Year-: $300,000
• Second Fiscal Year-: $600,000
• Third Fiscal Year-: $1,200,000

N.B : It should be noted that above projections were carried out based on certain factors such as there won’t be an economic meltdown which will make it difficult for new businesses to start up and that we won’t have a competitor arrive at our location within the period of the above sales projections. However, a change in any of the factors would mean that the above projected figures might increase or decrease.

• Marketing Strategy and Sales Strategy

Before starting any business, it is important to ensure that the marketing strategies have been laid down so that there would be any hitches during the revenue generation process.

This is why we have conducted a market survey that will help us determine how we will best penetrate the market and attract the needed number of customers for our business while also favorably competing with our competitors here in Mountain View – California.

It is for this reason that we have hired a reputable marketing consultant that understands the business here in Mountain View and will help us develop marketing strategies that will allow us effectively attract the right customers and enable us gain a huge share of the target market here in Mountain View – California as well as all over the United States of America.

We have also empowered our marketing executives to ensure that the right strategies are adopted that are in line with our corporate goals and that will allow us achieve our intended objectives at Bulb Business Incubator Inc.   Below are some of the strategies we would use to market the services of Bulb Business Incubator Inc;

• Ensure that we place adverts about our services in local newspapers, business magazines as well as on radio and television stations
• Engage in direct marketing to target customers
• Encourage our satisfied clients to refer us to others
• Introduce our business formally to industry stakeholders, government agencies, private investors, as well as in campuses
• Ensure that our business is listed in online and offline directories
• Use our social media platforms such as LinkedIn, Twitter and Facebook and other Online business inclined forums to market our business.

11. Publicity and Advertising Strategy

Having the right publicity for our business is very essential as we aware of the benefits that publicity would bring to our business.

Publicity and advertising go hand in hand because the benefit of a business getting intense promotion is also revenue generation. This is why we would ensure that we intensify publicity for Bulb Business Incubator Inc here in Mountain View – California.

To ensure that we draft and implement effective publicity strategies, we intend to hire a reputable brand consultant who understands how best businesses such as ours can utilize publicity to maximum advantage. We would be using a mix of strategies in order to achieve our intended publicity and advertising strategies for Bulb Business Incubator Inc. Below are the publicity strategies we at Bulb Business Incubator Inc intend to adopt;

• Throwing a grand opening party that would create an awareness and make the right impression
• Attend business seminars and events in the service based industry and offer to address the audience. We would also use the opportunity to network
• Create a website and ensure that it is Search Engine Optimized (SEO) so that it can easily pop up on top of search engines
• Install bill boards in strategic locations in and around Mountain View – California
• Distribute fliers and handbills in strategic locations such as colleges and universities
• Broadcast our success rates on social media platforms such as LinkedIn, Facebook and Twitter

12. Our Pricing Strategy

Ensuring that the right prices are determined for a product or service is very important because using the wrong prices or rates without much research might lead to the business running at a loss and eventually failing. However, while it might be difficult determining the rates for an intangible product such as service, several factors have to be taken into consideration so as to ensure that the rates are fair to both the company as well as the client.

In determining the rates for our various services, we intend to ensure we take factors such as our overheads, what our competitors are offering as well as what kind of service our clients want into consideration. However, as we are just starting off the business, we would offer lower rates for all our clients so as to build a trust and achieve a level of success rate that will then lead to us increasing our prices.

• Payment Options

Because we would mostly be a virtual business incubator with one centralized location here in Mountain View – California, we intend to ensure that our clients have payment options that would be convenient for them as well as our company.

Therefore, the payment options we intend to make available to our different clients are;

• Payment via check
• Payment via cash
• Payment via bank draft
• Payment via equity
• Payment via credit card
• Payment via online payment portal

The above payment options were carefully chosen and will work for all our clients offering them a hitch-free transaction.

13. Startup Expenditure (Budget)

As with every business when starting up, there are several aspects of the business where one is expected to spend huge parts of the start-up capital. Creating a budget for our business is necessary so that we are able to determine what aspects would require huge money and which would require less. Therefore the key areas where we would spend our start-up capital on are;

• Fees for registering the business in the United States of America – $750
• Marketing expenses for general promotional activities as well as marketing expenses for the grand opening of Bulb Business Incubator Inc – $5,000
• Insurance coverage (General liability and Workers Compensation) – $2,250
• Obtaining of licenses and permits, as well as accounting software – $2,000
• Operational costs for the first 6 months (employee salaries, utility bills) – $100,000
• Cost of hiring business consultants – $2,500
• Leasing of office facility for a period of one year including renovations – $30,000
• Business program packaging expenses – $30,000
• Cost of purchasing stationeries, furniture, computers, printers, fax machines, phones – $12,000
• Cost of launching a website – $500
• Cost of our opening party – $5,000
• Miscellaneous – $10,000 

From the above budget breakdown, we would need the sum of $200,000 to be able to start and successfully run our business incubator business here in Mountain View – California. It should be noted that the above amount covers the salaries of our employees and payment of utilities for at least 6 months of operations. It also covers the leasing of an office facility for a period of one year.

Generating Funding / Startup Capital for Bulb Business Incubator Business

Bulb Business Incubator Inc is a business owned and operated by Brad Bradley and Steve Cowell. They know how necessary it is to have funds for this kind of business and so they intend to see for funds from some sources. The areas below are where we intend to see for funds in starting our business incubator business;

• Generate part of the start-up capital from sale of personal stock
• Approach the government for a donation to our business
• Approach several private investors
• Apply for loan from bank

N.B : in searching for start-up capital for our business incubator business, we were able to generate the sum of $30,000 from sale of our personal stock. We also have approached the government for a donation to our business and were given the sum of $50,000.

After approaching several successful service entrepreneurs who were looking to invest in service based ideas, we got the sum of $50,000.

Finally, as part of having a contingency plan, we approached the ban for a loan of $70,000. The loan has been approved and will repaid back in 5 years at the rate of 2%. We have signed all the necessary documents and have been told that we would receive the amount into our account within the week.

14. Sustainability and Expansion Strategy

We have established a business that is not only intended to make profit but also remain sustained and even expand at a pace that would be determined by us. Due to this, we are aware that if our business is to be sustained, we would need to ensure that we hire the right employees, have a high success rate and also have an investment strategy for the business.

To help achieve our intended corporate goals and objectives, we have sourced for and hired employees who are not only professionals and competent enough but also have identified with the company’s corporate goals and will ensure that it remains committed in ensuring that these goals and objectives are achieved.

On our part, we would ensure that our employees are well paid and that they will work in an environment that will not stifle their productivity and creativity. We would also ensure that they remain updated about industry trends and receive continuous training that will help our clients attain their own goals.

The only thing that can ensure that our business incubator program is sustained for a long time is our success rate. We have plans, processes and structures in place that are constantly being reviewed every now and then to ensure that we achieve a 90% success rates for clients that patronize our services.

This will lead to more referrals for our business as more new start-ups and growing businesses will prefer to use our services in order to reach the height they intend for themselves.

Finally, we intend to continually invest in our business, by ploughing a percentage of the profits made back into the business, to ensure its growth and sustainability. We know that if we focus on these three factors we are likely to successfully sustain and expand our business.

Check List / Milestone

• Business Name Availability Check: Completed
• Business Registration: Completed
• Opening of Corporate Bank Accounts: Completed
• Securing Point of Sales (POS) Machines: Completed
• Opening Mobile Money Accounts: Completed
• Opening Online Payment Platforms: Completed
• Application and Obtaining Tax Payer’s ID: In Progress
• Application for business license and permit: Completed
• Purchase of Insurance for the Business: Completed
• Conducting feasibility studies: Completed
• Generating capital from family members: Completed
• Applications for Loan from the bank: In Progress
• Writing of Business Plan: Completed
• Drafting of Employee’s Handbook: Completed
• Drafting of Contract Documents and other relevant Legal Documents: In Progress
• Design of The Company’s Logo: Completed
• Graphic Designs and Printing of Packaging Marketing / Promotional Materials: In Progress
• Recruitment of employees: In Progress
• Creating Official Website for the Company: In Progress
• Creating Awareness for the business both online and around the community: In Progress
• Health and Safety and Fire Safety Arrangement (License): Secured
• Opening party / launching party planning: In Progress
• Establishing business relationship with vendors – wholesale suppliers / merchants: In Progress
• Purchase of trucks: Completed

Related Posts:

• HVAC Business Plan [Sample Template]
• Business Coaching Center Business Plan [Sample Template]
• Business Development Business Plan [Sample Template]
• Mystery Shopping Business Plan [Sample Template]
• General Contractor Business Plan [Sample Template]

Retail Incubator

Apply today to the 2024 Retail Incubator-classes start early August

Floor--plan retail incubator, about the program.

Through collaboration with Breakfast Lunch & Dinner and reSET, the Floor–Plan Retail Incubator program supports entrepreneurs ready to sell their unique products in Hartford and beyond. Whether you have a passion-project that you think could become something bigger, or are already in business and looking to grow, you should apply!

This program focuses on what it takes to create a strong, agile business that can adapt to today’s ways of getting your products in the marketplace. We will be joined by expert guest mentors with experience in building and scaling retail enterprises.

May 30: Application opens

July 21: Application closes

July 31: Accepted Entrepreneurs notified*

August 14: Incubator classes start

October 23: Last class

October 30: Retail Incubator Culminating Event*

*Tentative Dates

What are the costs of this program?

The investment to participate in the 12 week program is $150 with an option for financial assistance.  Completion of the program and business registration enables participants to apply for $700 in grant funds from reSET to use for initiatives that will expand their small business.

What are the benefits?

reSET brings its human-centered programming expertise to the Floor–Plan Retail Incubator through 12 weeks of sessions designed to help early stage entrepreneurs access tools and expertise that further defines their retail business. During this program, entrepreneurs have access to a number of benefits as reSET coworking members:

• 40 hours monthly workday access to reSET’s coworking space in Hartford 
• Free admission to reSET workshops
• Reduced admission to reSET events
• Invitation to networking and social events
• Reduced rate meeting & event space rental
• Participate in peer-to-peer feedback with fellow entrepreneurs

In addition, completion of the program enables participants to apply for a $700 grant from reSET, funded by the CT DECD, to advance their small business!

The 2024 Floor-Plan Retail Incubator will be held from August 14 to October 23. During the 12-week program, participants will meet on Wednesday nights from 5:30 to 8 PM and on Saturdays for half-day sessions, tentatively scheduled for August 24, September 28, and October 19 The program covers the basics of business planning:

• Creating a business plan & elevator pitch
• Understanding your customer
• Developing an online presence
• Marketing & branding
• Pricing your products 
• Getting to market
• Understanding and accessing resources to grow

In addition, reSET + BLD will connect our entrepreneurs with experienced mentors, potential investors, and access to resources, such as popup markets in and around Hartford.

Who is it for?

The Floor–Plan Retail Incubator is for individuals and micro-enterprises (businesses of 5 people or fewer), based in Connecticut and looking to scale their product based business to the next level. The program prioritizes Hartford residents, Hartford-based businesses, businesses owned by women and people of color, and businesses that primarily serve Hartford residents.

In Partnership With BL&D

Breakfast Lunch & Dinner (BL&D) creates collective culture by building unique, diverse ventures that bring people together authentically. Breakfast Lunch & Dinner leverages the assets of the Connecticut region to bring the best of the community forward to showcase via projects of our partners and clients. Hartford, like many cities, is receiving revived interest from investors, and new foot traffic that will change the city. Breakfast Lunch & Dinner positions our work to make sure everyone is a part of that revival. 

Floor-Plan: A R etail Activation Initiative

Working with a broad array of community partners, including reSET,  BL&D’s Floor–Plan initiative creates large-scale retail activations throughout greater Hartford, such as the Winterfair Holiday Market, Know Good Markets, The CAF in downtown Hartford, and more. BL&D connects vacant storefronts and pedestrian areas with existing community events and live music programming to create new activities that drive foot traffic and help shift community consumer habits back to Hartford. In addition to the Retail  Incubator, Floor–Plan includes a full-time retail store program, an e-commerce platform, and a pop-up shop booking platform.

Participating Retail Incubator businesses have access to the following opportunities:

• Market events
• Art installations
• & more activities

1429 Park Street, Suite 114, Hartford, CT 06106

(860) 560-9120.

All Rights Reserved  |  reSET

Social Enterprise Trust, Inc is a not-for-profit organization recognized as tax-exempt under Internal Revenue Code section 501 (c)(3). .

Join Our Newsletter

Oops, there was an error joining our newsletter.

Please try again later.

Retail Business Plan Template

Written by Dave Lavinsky

Retail Business Plan

You’ve come to the right place to create your retail business plan.

We have helped over 10,000 entrepreneurs and business owners create business plans and many have used them to start or grow their retail companies.

Retail Business Plan Template & Sample

Below is a retail business plan template to help you create each section of your retail store business plan.

Executive Summary

Business overview.

Artisan Home & Decor is a startup retail shop located in Pasadena, California. The company is founded by Joyce Hernandez, a retailer who has worked as a store manager of a local home decor store for nearly a decade. Joyce has recently graduated from California University with a Bachelor’s degree in Business Management. Now that she has gained real-world experience managing a store and the education on how to run a retail business, she is inspired to start her own company, Artisan Home & Decor. Joyce is confident that her ability to effectively manage employees, customer relationships, and retail operations will help her establish a profitable retail store. Joyce plans on recruiting a team of highly qualified sales associates, accountants, and buyers to help manage the day to day complexities of retail – marketing, sales, budgeting, sourcing, and purchasing.

Artisan Home & Decor will provide uniquely curated home decor products created by local artisans. The home decor shop will be the ultimate choice for customers in Pasadena who value one-of-a-kind pieces for their homes. Artisan Home & Decor will provide its customers with a refreshingly personalized shopping experience they can’t get anywhere else. The shop’s sales associates will be able to help customers find the perfect pieces to suit their individual preferences and styles.

Product Offering

The following are the products that Artisan Home & Decor will provide:

• Lamps & Lighting
• Throw Blankets
• Photo Frames
• Cookware Sets
• Kitchen Gadgets
• Kitchen and Bathroom Fixtures
• Waste Baskets
• Soap Dispensers

Customer Focus

Artisan Home & Decor will target home decor shoppers looking for a personalized experience and unique pieces in Pasadena. The company will target boomer, millennial, and gen z  consumers looking for unique decor for their homes, apartments, or condos. They will also target businesses looking for special pieces to furnish their corporate offices, waiting rooms, and lobbies. No matter the client, Artisan Home & Decor will deliver the best communication, service, and high quality products.

Management Team

Artisan Home & Decor will be owned and operated by Joyce Hernandez, a retailer who has worked as a store manager of a local home decor store for nearly a decade. Joyce has recently graduated from California University with a Bachelor’s degree in Business Management. Now that she has gained real-world experience managing retail stores and the education on how to run a retail business, she is inspired to start her own company, Artisan Home & Decor.

Joyce Hernandez has recruited her former assistant manager, Melissa Jacobs to come on board to help her manage Artisan Home & Decor. While Joyce will oversee the employees, day-to-day operations, and client relationships, Melissa will be the Inventory Manager. She will be in charge of sourcing, purchasing, and pricing all inventory. Melissa will work directly with suppliers to stock the retail shop with unique artisan pieces.

Melissa is a graduate of the University of California with a Bachelor’s degree in Interior Design. She has been working at a local retail home decor company for over a decade as an assistant manager. Melissa has an eye for design and keen organizational skills that will allow her to effectively manage Artisan Home & Decor’s one-of-a-kind inventory. Her communication skills will enable her to establish and maintain working relationships with artisans and suppliers.

Success Factors

Artisan Home & Decor will be able to achieve success by offering the following competitive advantages:

• Friendly, knowledgeable, and highly qualified team of sales associates and interior design experts that are able to provide a personalized customer experience and help each client find the right home decor pieces to suit their preferences.
• Artisan Home & Decor will bring fresh inventory into their retail store on a regular basis so there will always be something new for customers to check out. In addition to in-store sales, the company will sell pieces online through its website.
• Artisan Home & Decor offers one-of-kind pieces created by local artisans to suit a wide variety of home decor styles and tastes. By purchasing from the shop, customers are supporting these local artisans and getting fresh decor that no one else will have.

Financial Highlights

Artisan Home & Decor is seeking $210,000 in debt financing to launch its retail business. The funding will be dedicated towards securing and building out the retail space and purchasing the initial inventory. Funds will also be dedicated towards three months of overhead costs to include payroll of the staff, rent, and marketing costs for print ads, website and SEO marketing initiatives, and association memberships. The breakout of the funding is below:

• Retail space build-out: $25,000
• Retail store shelving, displays, equipment, supplies, and materials: $40,000
• Three months of overhead expenses (payroll, rent, utilities): $120,000
• Marketing costs: $15,000
• Working capital: $10,000

The following graph below outlines the pro forma financial projections for Artisan Home & Decor.

Company Overview

Who is artisan home & decor.

Artisan Home & Decor is a newly established retail company in Pasadena, California. The new home decor shop will be the ultimate choice for people looking for uniquely curated one-of-a-kind furniture and other home products crafted by local artisans. Artisan Home & Decor will provide its customers with a refreshingly personalized shopping experience they can’t get anywhere else. The shop’s sales associates and experienced interior designers will be able to help customers find the right pieces to suit their preferences and styles.

Artisan Home & Decor will be able to provide a personalized shopping experience for serving customers in-store and online. The team of professionals and sales associates are highly qualified and experienced in interior design, home decor, and the customer experience. Artisan Home & Decor removes all headaches and issues of the home decor shopper and ensures all issues are taken care off expeditiously while delivering the best customer service.

Artisan Home & Decor History

Artisan Home & Decor is owned and operated by Joyce Hernandez, a retailer who has worked as a store manager of a local home decor store for nearly a decade. Joyce has recently graduated from California University with a Bachelor’s degree in Business Management. Now that she has gained real-world experience managing retail stores and the education on how to run a retail business, she is ready to start her own company. Joyce is confident that her ability to effectively manage employees, customer relationships, and retail operations will help her establish a profitable retail store. Joyce has begun recruiting a team of highly qualified sales associates, accountants, and buyers to help manage the day to day complexities of retail – marketing, sales, budgeting, sourcing, and purchasing.

Since incorporation, Artisan Home & Decor has achieved the following milestones:

• Registered Artisan Home & Decor, LLC to transact business in the state of California.
• Has a contract in place to lease the retail space.
• Reached out to numerous local artisans to advise them on the upcoming retail shop in order to start getting supplier contracts.
• Began recruiting a staff of sales associates, interior designers, an accountant/bookkeeper, marketing director, and assistant manager to work at Artisan Home & Decor.

Artisan Home & Decor Services

Industry analysis.

The retail industry in the United States is valued at over $4T currently and is forecasted to reach $4.9T by the end of 2022. This is up from $3.8T in 2019. After a decade of retail decline between 2010 and 2020, the market is rebounding at a surprising rate. There were twice as many store openings as closings in 2021 alone. The number of brick-and-mortar retail establishments is increasing even as ecommerce shopping has grown by 70% in the last three years.

The role of retail stores is evolving and industry operators are discovering in-store experiences are still vital from the customer perspective. Successful brick-and-mortar industry operators are incorporating ecommerce into their business models. Trends include providing ship-from-store and buy online, pickup in store options to give customers more flexibility in the way they can shop. Key success factors include the level of customer satisfaction, product selection, prices, and convenience.

Customer Analysis

Demographic profile of target market.

The precise demographics for Pasadena, California are:

Customer Segmentation

Artisan Home & Decor will primarily target the following customer profiles:

• Millennial customers looking for one-of-a-kind home decor
• Boomer customers looking for one-of-a-kind home decor
• Gen z customers looking for one-of-a-kind home decor
• Businesses looking for unique decor for their offices, waiting rooms, or lobbies

Competitive Analysis

Direct and indirect competitors.

Artisan Home & Decor will face competition from other retailers with similar business profiles. A description of each competitor company is below.

Pasadena Home Decor

Pasadena Home Decor provides high-end home decor for the conscientious consumer. Located in Pasadena, California, the home decor retailer is able to provide a tailored shopping experience for its customers. The store’s list of products includes tables, chairs, wall hangings, rugs, vases, photo frames, candles, office decor, and paintings by local artists. Pasadena Home Decor sells online and in-store to give customers flexibility.

Pasadena Home Decor’s promise is to deliver high quality pieces that will stand out. Customers who purchase furniture and home decor from Pasadena Home Decor will be delighted with the customer service, cleanliness of the store, and personalized design services the company offers.

Home Shoppe

Home Shoppe is a California-based home decor retail store that provides outstanding pieces for discerning clientele. Home Shoppe stocks unique furniture and other decor items that are 100% hand-crafted. The owners of Home Shoppe are experienced craftsmen themselves, so they know how quality furniture and home decor pieces should be made. Clients can depend on their selection of products for durability, style, and eco-friendly materials. Choose Home Shoppe for your next home decor project and let the sales team take the stress out of the redecorating process by helping you select the best products for your home.

Redecorating For You

Redecorating For You is a trusted Pasadena retail company that provides superior home decor products for shoppers in Pasadena and the surrounding areas. The shop offers an extensive inventory of home decor items in a variety of styles so there is something for every taste. Redecorating For You is able to provide premium pieces that fill every space with elegance and style. The shop also eases the stress of redecorating by providing in-store pickup and delivery options for busy customers.

Competitive Advantage

Artisan Home & Decor will be able to offer the following advantages over their competition:

• Artisan Home & Decor will bring fresh inventory into the store on a regular basis so there will always be something new for customers to check out. In addition to in-store sales, the company will sell pieces online through its website.
• Artisan Home & Decor offers one-of-kind pieces created by local artisans to suit a wide variety of home decor styles and tastes.

Marketing Plan

Brand & value proposition.

Artisan Home & Decor will offer the unique value proposition to its clientele:

• Artisan Home & Decor will make redecorating easy for customers by providing in-store shopping, pickup, delivery, online shopping, ship-from-store, and buy online-pickup in store options.
• By purchasing from the shop, customers are supporting local artisans and getting fresh decor that no one else will have.

Promotions Strategy

The promotions strategy for Artisan Home & Decor is as follows:

Social Media Marketing

The company will use various social media platforms such as TikTok, Instagram, Facebook, LinkedIn, YouTube, and Snapchat to promote the shop, feature artisans, and show off new pieces. The marketing director will oversee the social media marketing activities to grow the customer base.

Professional Associations and Networking

Artisan Home & Decor will become a member of professional associations such as the National Retail Federation, California Retailers Association, and the Home Furnishings Association. The company will focus its networking efforts on expanding its network of clients, designers, and artisans.

Print Advertising

Artisan Home & Decor will invest in professionally designed print ads to display in programs or flyers at industry networking events, in home decor publications, and direct mailers.

Website/SEO Marketing

Artisan Home & Decor’s marketing director will be responsible for creating and maintaining the company website. The website will be well organized, informative, and list all of the products currently available for purchase online.

The marketing director will also manage Artisan Home & Decor’s website presence with SEO marketing tactics so that any time someone types in the Google or Bing search engine “Pasadena home decor retailer” or “home decor store near me”, Artisan Home & Decor will be listed at the top of the search results.

The pricing of Artisan Home & Decor will be premium and on par with competitors so customers feel they receive value when purchasing the one-of-a-kind products.

Operations Plan

The following will be the operations plan for Artisan Home & Decor.

Operation Functions:

• Joyce Hernandez will be the Owner and Manager of the store. She will oversee all staff and manage day-to-day operations. Joyce has spent the past year recruiting the following staff:
• Melissa Jacobs – Inventory Manager who will be responsible for sourcing, purchasing, pricing, and maintaining the inventory.
• Robert Brown – Staff Accountant/bookkeeper who will provide all store accounting, tax payments, and monthly financial reporting.
• Bill Johnson – Marketing Director who will provide all marketing and sales activities for Artisan Home & Decor including maintaining the website, social media, print advertising, and promotions.
• Julia Smith – Lead Sales Associate & Designer who will manage all sales associates and provide design services for customers.

Milestones:

Artisan Home & Decor will have the following milestones complete in the next six months.

9/1/2022 – Finalize contract to lease the retail space.

9/15/2022 – Finalize personnel and staff employment contracts for the management team.

10/1/2022 – Finalize contracts for suppliers.

10/15/2022 – Begin networking at industry events and implement the marketing plan.

10/22/2022 – Begin moving into the Artisan Home & Decor shop.

11/1/2022 – Artisan Home & Decor opens for business.

Artisan Home & Decor will be owned and operated by Joyce Hernandez, a retailer who has worked as a store manager of a local home decor store for nearly a decade. Joyce has recently graduated from California University with a Bachelor’s degree in Business Management. Now that she has gained real-world experience managing a store and the education on how to run a retail business, she is inspired to start her own company, Artisan Home & Decor.

Melissa is a graduate of the University of California with a Bachelor’s degree in Interior Design. She has been working at a local retail home decor company for over a decade as an assistant manager. Melissa has an eye for design and keen organizational skills that will allow her to effectively manage Artisan Home & Decor’s one-of-a-kind inventory. Her communication skills will enable her to establish and maintain working relationships with suppliers.

Financial Plan

Key revenue & costs.

The revenue drivers for Artisan Home & Decor are the retail fees they will charge to the customers in exchange for their products. The shop will charge a healthy margin to make sure artisans are paid well for their products while ensuring a solid profit for the business.

The cost drivers will be the overhead costs required in order to staff a retail store. The expenses will be the payroll cost, rent, utilities, store supplies, and marketing materials.

Funding Requirements and Use of Funds

• Store shelving, displays, equipment, supplies, and materials: $40,000

Key Assumptions

The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and in order to pay off the startup business loan.

• Average number of items sold per month: 300
• Average sales per month: $90,000
• Retail space lease per year: $100,000

Financial Projections

Income statement.

Balance Sheet

Cash Flow Statement

Retail Business Plan Template FAQs

What is a retail business plan.

A retail business plan is a plan to start and/or grow your retail business. Among other things, it outlines your business concept, identifies your target market, presents your marketing plan and details your financial projections.

You can  easily complete your retail business plan using our Retail Business Plan Template here .

What are the Main Types of Retail Businesses?

There are a number of different kinds of retail businesses, some examples include: Specialty Store, Off-Priced/Used Goods Store, Department Store, Convenience Store, Drug Store/Pharmacy, Discount Store, Hypermarket, and E-commerce.

How Do You Get Funding for Your Retail Business Plan?

Retail businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.

A solid retail business plan with comprehensive financial statements will help show investors your are well-prepared to start your own business.  A retail business plan template will help you quickly and easily get started.

What are the Steps To Start a Retail Business?

Starting a retail business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Develop A Retail Business Plan - The first step in starting a business is to create a detailed retail store business plan that outlines all aspects of the venture. This should include supporting market research, your potential market size and target customers, the services or products you will offer, marketing strategy, your competitive advantages and detailed financial projections.

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your retail business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your retail business is in compliance with local laws.

3. Register Your Retail Business - Once you have chosen a legal structure, the next step is to register your retail business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws. 

4. Identify Financing Options - It’s likely that you’ll need some capital to start your retail business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms. 

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations. 

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events. 

7. Acquire Necessary Retail Equipment & Supplies - In order to start your retail business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation. 

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your retail business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.

Where Can I Get a Retail Business Plan PDF?

You can download our free retail business plan template PDF here . This is a sample retail business plan template you can use in PDF format.

Other Helpful Business Plan Templates

Ecommerce Business Plan Template Clothing Store Business Plan Template Beauty Supply Store Business Plan Template T-Shirt Business Plan Template

• National Forums
• Research Foundation
• NAIOP Connect

• Research and Publications /
• Development Magazine /
• Development magazine Summer 2022 /
• Business/Trends /

Vacant Storefronts Can be Repurposed into Retail Incubators

• Current Issue
• Perspectives
• Marketing Leasing
• Development Ownership
• Business Trends

They can provide an immediate boost in shopping districts and grow future businesses into long-term tenants.

The COVID-19 pandemic has left America’s retail districts pockmarked with empty storefronts, but there is a creative solution. These vacant spaces, which often can be purchased or rented at reduced prices, are prime targets for conversion into retail incubators.

Retail incubators, like business incubators, nurture new or small-scale entrepreneurs during the startup phase. They mitigate some of the challenges of opening a business by providing financial and technical assistance, such as the basics of marketing and business plans. Tenants typically share space, ideas and operating expenses in locations that they could not otherwise afford. Many spaces have flexible or temporary lease terms. Some allow for small-scale manufacturing and hold community events, such as product demonstrations, fashion shows and art openings.

In addition to real estate, retail incubators provide fledgling businesses with valuable resources such as technical and financial assistance. Getty Images

According to the U.S. Chamber of Commerce, new business applications in the United States set an all-time record of 5.1 million in 2021. At the same time, the pandemic has led to consolidation of space and locations by major retail brands, which reduced the prospect of attracting businesses. The challenge for small businesses is they can’t immediately fill the footprints of major store closings. However, they can make temporary use of retail space to establish their businesses, and occupying formerly abandoned stores can help energize struggling downtowns.

Many entities can create retail incubators. They include the property owners, local government agencies — such as community development corporations — that could acquire or lease the space, and community foundations and other philanthropies that could underwrite the process by engaging nonprofit community organizations. For example, a property owner could set aside a portion of the ground floor for a retail incubator. The space could be made flexible — in size and cost — to suit the needs of emerging businesses.

Retail Incubators in Action

In downtown Washington, D.C., local property owners and a business improvement district recently partnered to form a retail incubator. Spurred by numerous ground-floor retail vacancies, the partnership came together to offer popup space to local entrepreneurs with a priority given to business owners of color. One successful tenant deal helped launch The DC PopUp , a collective of makers who are women of color, to create a shared downtown retail space where they can sell their products. The popup started as a holiday event but proved so successful that the collective extended its tenancy year-round.

In Atlanta, The Village Market launched in 2016 as a popup event to create more sales opportunities for Black-owned product businesses. The event grew into a permanent shared retail space in the Ponce City Center. It focuses on training and systems to help vendors grow from six-foot vendor tables to bricks-and-mortar locations, bringing more than $4.5 million in sales to these business owners in the first year. 

In some markets, small-scale manufacturers won’t be able to pay prime retail rents; in others, access to micro-retail space might enable an above-market rate. Property owners could consider percent-revenue leases, shared storefronts (like a food hall but for producers), or low- to no-cost seasonal popup spaces. Over time, growing businesses could scale to larger spaces.

The benefits to the community can be profound. Small-scale manufacturers, for instance, can energize business communities by creating a draw, which can bring foot traffic to nearby retail outlets. They diversify local employment and business ownership, as owners come from the full spectrum of the community — crossing racial, ethnic, income and other divides. Their unique products draw on the heritage and skills of a wide variety of individuals and communities. In addition, these businesses create jobs for people with a broad range of skills and generate community wealth through business ownership. 

The shared facilities attract residents and visitors alike, and downtowns are differentiated and distinguished by a collection of businesses that are unique and marketable. 

COVID-19 has devastated small retail businesses and local business districts, but the dynamics it has set in motion can provide hope. Retail incubators and other flexible concepts of shared retail space have the potential to help business districts flourish.

Ilana Preuss is founder and CEO of Recast City and author of “ Recast Your City: How to Save Your Downtown with Small-Scale Manufacturing ” (Island Press, 2021).

RELATED ARTICLES YOU MAY LIKE

Meet the visionaries: naiop research foundation names the 2023-2025 class.

• Perspectives,
• Research Foundation Governor,

From the Editor: Uncertainty Looms Over CRE Markets

As more cities eliminate parking minimums, what happens next.

• Development/Ownership,
• Property Management,
• Space Supply/Demand,
• Retail Property,
• Adaptive Reuse

• Become an Advisor
• Get started

A Comprehensive Guide to the Startup Incubator Business Model

Discover the ins and outs of the startup incubator business model with our comprehensive guide.

Are you an aspiring entrepreneur looking for the perfect environment to grow your business idea? Look no further than the startup incubator. In this comprehensive guide, we'll cover everything you need to know about the business model, including what exactly a startup incubator is, the key components of the model, and the benefits of joining, as well as types of incubators and the application and selection process.

Understanding the Startup Incubator Business Model

Starting a business can be a daunting task, especially for first-time entrepreneurs. There are countless decisions to be made, from the initial concept to the final product, and everything in between. This is where startup incubators come in.

Definition and Purpose of Startup Incubators

A startup incubator is a program that provides mentorship, resources, and support to early-stage startups to help them grow and succeed. The primary goal of incubators is to help startups reach a point where they can stand on their own two feet and become profitable.

Incubators typically provide startups with a physical space to work, access to a network of experts, and the opportunity to connect with other entrepreneurs who are going through similar challenges. They also offer educational workshops, seminars, and networking events to help entrepreneurs grow their businesses.

Startup incubators can be found in many different forms, from university-affiliated programs to privately funded initiatives. They are often run by experienced entrepreneurs, investors, or business professionals who have a passion for helping others succeed.

Key Components of the Incubator Model

The key components of the incubator model are mentorship, resources, and a community of like-minded individuals. Mentorship is perhaps the most important component of an incubator, as it provides entrepreneurs with access to experienced professionals who can offer guidance and advice. Resources may include office space, equipment, funding, or other resources needed to help startups grow. The community aspect of an incubator is also essential, as it allows entrepreneurs to connect with and learn from their peers.

One of the benefits of being part of an incubator is the ability to access a wide range of resources that may not be available to individual entrepreneurs. These resources can include legal and accounting services, marketing and branding support, and access to funding through venture capitalists or angel investors.

Another key component of the incubator model is the focus on education and training. Incubators often offer workshops and seminars on topics such as business planning, financial management, and marketing strategies. These educational opportunities can be invaluable for entrepreneurs who are just starting out and may not have a background in business.

Differences Between Incubators, Accelerators, and Co-working Spaces

It's important to note the differences between incubators, accelerators, and co-working spaces. While all of these programs provide resources and support for entrepreneurs, incubators tend to focus on providing long-term support and mentorship, while accelerators offer a shorter-term program that focuses on fast-tracking startups to launch. Co-working spaces, on the other hand, simply provide a shared workspace and access to resources.

Incubators and accelerators are similar in many ways, but there are some key differences. Incubators tend to focus on providing support for early-stage startups, while accelerators are designed to help startups that are further along in the development process. Accelerators often provide funding, mentorship, and resources in exchange for equity in the company.

Co-working spaces are a popular option for entrepreneurs who are looking for a more flexible workspace. These spaces provide a shared office environment, which can be a great way to connect with other entrepreneurs and freelancers. However, co-working spaces may not offer the same level of support and resources as incubators or accelerators.

Overall, startup incubators are an important part of the entrepreneurial ecosystem. They provide a supportive environment for early-stage startups to grow and thrive, and offer a wide range of resources, mentorship, and educational opportunities to help entrepreneurs succeed.

The Benefits of Startup Incubators

Starting a business can be a daunting task, and many entrepreneurs struggle to get their ideas off the ground. Fortunately, startup incubators offer a range of benefits that can help early-stage startups succeed. In this article, we'll explore some of the most significant benefits of joining a startup incubator.

Access to Resources and Mentorship

One of the most significant benefits of joining a startup incubator is access to resources and mentorship. Entrepreneurs who are just starting out often lack experience and may not know where to turn for guidance. Incubators offer experienced mentors who can help entrepreneurs navigate challenges and make informed decisions. Additionally, startups may not have the resources they need to grow, such as office space or equipment. Incubators often provide these resources at a discounted rate or for free.

For example, some incubators provide access to co-working spaces, which can be a great way for startups to save money on rent and utilities. Others may offer access to specialized equipment or software that would be too expensive for startups to purchase on their own. By providing these resources, incubators can help startups grow and thrive.

Networking Opportunities

Another benefit of joining a startup incubator is the networking opportunities it provides. Incubators typically bring together a community of entrepreneurs, investors, and mentors, providing an excellent opportunity to meet potential partners, investors, or customers. Networking events and workshops can also help entrepreneurs gain valuable insights into their industry and learn from experts in their field.

Networking can be especially valuable for startups that are looking to raise capital. By connecting with investors and other entrepreneurs, startups can increase their chances of securing funding and growing their business.

Structured Support and Guidance

Incubators provide structured support and guidance to help entrepreneurs achieve their goals. They often have a curriculum in place to help entrepreneurs develop their business plan, build their team, and launch their product. They can also provide access to legal, accounting, and marketing services to help startups get off the ground.

For example, some incubators may offer workshops on how to pitch to investors or how to create a marketing plan. Others may provide one-on-one coaching sessions with experienced entrepreneurs or industry experts. By providing this structured support, incubators can help startups overcome common challenges and achieve their goals.

Increased Chances of Success

Perhaps the most significant benefit of joining a startup incubator is the increased chance of success. Incubators provide entrepreneurs with the support they need to grow their business and overcome challenges. They also provide access to resources that startups may not have been able to afford on their own. Overall, the resources, mentorship, and guidance provided by incubators can significantly increase the chances of success for early-stage startups.

In conclusion, joining a startup incubator can be an excellent way for entrepreneurs to get the support they need to succeed. From access to resources and mentorship to networking opportunities and structured support, incubators offer a range of benefits that can help startups grow and thrive.

Ready to join an advisory board?

Types of Startup Incubators

Startup incubators are organizations that provide resources, mentorship, and support to early-stage startups. They are designed to help entrepreneurs overcome the initial hurdles of starting a business and increase their chances of success. There are several types of startup incubators, each with its own unique focus and benefits.

Industry-Specific Incubators

Industry-specific incubators focus on providing support and resources to startups operating in a particular industry. For example, a biotech incubator may provide resources specifically designed to help biotech startups overcome unique challenges, such as regulatory hurdles and securing funding from investors. These incubators often have a network of industry experts and mentors who can provide guidance and advice to startups. They may also offer access to specialized equipment or facilities that are essential for startups in that industry.

University-Based Incubators

University-based incubators are run by colleges or universities and are often connected to the research or innovation departments. They typically provide mentoring, resources, and office space to startups, and may also offer educational programs or classes to help entrepreneurs develop their skills. These incubators are a great option for startups that are focused on developing new technologies or products, as they can provide access to cutting-edge research and development facilities. They also offer the opportunity to connect with academic experts and potential investors.

Corporate Incubators

Corporate incubators are run by corporations and are designed to foster innovation within a company. They often provide support and resources to both internal teams and external startups, with the goal of developing new products or services that can benefit the company. These incubators offer startups access to the resources and expertise of a large corporation, including funding, mentorship, and market insights. They also provide corporations with a way to stay competitive and innovative in their industry.

Non-Profit and Government-Sponsored Incubators

Non-profit and government-sponsored incubators are designed to support entrepreneurs who are working on social or environmental problems. They may provide access to funding, mentorship, resources, and events that focus on building a sustainable, socially responsible business. These incubators are a great option for startups that are focused on creating positive social or environmental impact, as they offer access to a network of like-minded individuals and organizations. They also provide startups with the opportunity to connect with potential investors who are interested in socially responsible investing.

Overall, startup incubators are a valuable resource for entrepreneurs who are looking to start and grow a successful business. By providing access to resources, mentorship, and support, these incubators can help startups overcome the initial challenges of starting a business and increase their chances of success.

The Application and Selection Process

Joining an incubator can be an exciting and transformative experience for startups. However, it can also be a competitive and rigorous process. To help you better understand what to expect, let's take a closer look at the application and selection process.

Eligibility Criteria for Startups

Each incubator has its own eligibility criteria for startups. While the criteria may vary from one incubator to another, there are some common factors that most incubators consider. In general, startups that are just getting started and have a high potential for growth are the most likely to be accepted. Some incubators may have specific industries or sectors that they focus on, while others may be open to startups working in any industry. Startups may also need to have a minimum viable product or a proof of concept to be considered.

Aside from these general requirements, some incubators may also have specific eligibility criteria. For example, some incubators may prefer startups that have a certain level of funding or revenue, while others may prioritize startups that have a strong social or environmental mission.

The Application Process

The application process for each incubator varies, but generally, startups are required to submit an application online. The application may include information about the product or service, the team, the business plan, and financial projections. Some incubators may require startups to go through an interview process or to give a pitch presentation to a panel of evaluators.

It's important to note that the application process can be very competitive, with many startups vying for a limited number of spots. Therefore, it's important to put your best foot forward and ensure that your application is as strong as possible.

Selection Criteria and Evaluation

The selection criteria and evaluation process also vary by incubator. Generally, startups are evaluated based on their potential for growth, the strength of their business plan, their team, and their market opportunity. Incubators may also consider factors like the level of innovation, the potential for social or environmental impact, and the compatibility of the startup with the incubator's mission and goals.

During the evaluation process, startups may be asked to provide additional information or to participate in interviews or pitch presentations. The evaluators may also conduct research on the industry and market to better understand the potential of the startup.

Ultimately, the goal of the selection process is to identify startups that have the highest potential for success and growth. Once a startup is accepted into an incubator, they can benefit from a range of resources and support, including mentorship, networking opportunities, and access to funding.

Startup incubators provide a valuable resource for entrepreneurs who are just getting started. By providing mentorship, resources, and a community of like-minded individuals, entrepreneurs can gain access to the guidance and support they need to grow their businesses. Whether you're operating in a specific industry, working on social or environmental problems, or simply looking to get your startup off the ground, there's an incubator out there that can help you succeed.

Join an Advisory Board

Connect with companies needing your expertise

See what boards you're qualified for

See what you qualify for with our 2-minute assessment

Similar Articles

Start an advisorycloud.

Join an advisory board

The Value of Retail Incubators

By Bill Shelton, CEcD

Increasing numbers of communities are realizing the importance of a healthy retail sector to the local economy, and many local governments are taking steps to nurture retail development in their communities. The idea that retail development can spur economic growth is fairly new in the field of economic development. Back in the late 1950s, an economic developer’s complete focus was manufacturing expansion. It was believed that retail development would naturally follow a strong local economy.

To a certain extent, this belief is true. A thriving economy brings in all sorts of development, including retail and other service businesses. But what many communities now understand is that retail development sometimes needs to be nurtured, coaxed and urged to secure success. That’s the idea behind a concept called “retail incubators.” But, to understand retail incubators, you must first understand the concept of a business incubator.

Business incubators are multi-tenant facilities with on-site management. These managers direct the business incubator program to produce successful firms that leave the program financially viable and freestanding. Business incubator programs usually provide clients with appropriate rental space and flexible leases, shared business services and equipment, technology support services, and assistance in financing for company growth.

The first business incubator program opened in 1959 to give new business owners access to the practices and assistance needed to grow successful companies. Since that time, funded and operated business incubators have become economic development strategies for many communities.

According to a 2012 report from the National Business Incubator Association (NBIA), there are 1,250 incubators in the U.S. and 7,000 worldwide. About 93 percent of the business incubators in the United States are nonprofit organizations that are focused on economic development.

Business incubator programs may also provide business assistant services for non-tenant clients, which are referred to as “without walls," affiliated or virtual clients.

According to the National Business Incubation Association (NBIA), the goals of business incubators are to:

• Create jobs in a community
• Enhance a community’s entrepreneurial climate
• Retain businesses in a community
• Build or accelerate growth in a local industry
• Diversify local economies

Retail incubators are a specialized type of business incubator. The goals associated with business incubators apply to retail incubators as well. Of the handful of retail incubators that belong to the NBIA, most are located in underserved sectors of a community. They provide a place for highly motivated entrepreneurs to learn retail skills relatively quickly.

Just as business incubators nurture the development of new businesses, retail incubators sustain new retail operations in their early phases. Like business incubators, retail incubators nurture new and small business owners, helping them to survive and grow during the critical start-up period.  

A good example of a successful retail incubator comes from the non-profit group SSDN. From its beginnings in 1886, the group’s mission has been to enhance the community by providing quality child care to working mothers. The idea for the retail incubator started when the organization’s leaders and visionary CEO realized the importance of a sound local economy to their mission. “We realized that a family can’t be healthy if the community isn’t healthy,” says Lynette Sledge Watson, Economic Development Director, SSDN. The SSDN’s incubator is housed in four buildings on the city’s south side. The anchor tenant, which provides about half the rental income collected by the group, is South Side Outlet, a clothing outlet offering new name brand clothing items at discount store prices. The other retail stores in the incubator include a convenience store, a shoe store and a boutique of imports from Africa. In addition to assisting retail start-ups, the incubator houses as many as 12 service businesses at a time and also offers assistance "outside" of the incubator walls to other business owners in the community interested in starting or expanding a small business. The incubator provides below market rent, business counseling services and access to computer systems. Watson says SSDN is pleased with the incubator’s success rate. “We have created more than 100 jobs in the community. Within the incubator, we have created 50 jobs.” 

If your community is looking for a strategy to stop retail leakage and encourage retail development, particularly in an underserved area, you may want to consider starting a retail incubator. For guidance on starting and operating a business incubator, go to the website of the NBIA and download the EDA-funded study “Incubating Success. Incubation Best Practices That Lead to Successful New Ventures.”

What Incentives Are Being Used to Attract and Keep Retailers?

Brownfields Offer Retail Site Opportunities

Downtown TC Hatches Retail Incubator Plan

By beth milligan | dec. 16, 2021.

The Traverse City Downtown Development Authority (DDA) has set aside $50,000 to launch a retail incubator space downtown in 2022 – a facility that could address the gap between pop-ups and permanent stores and offer a lower-cost option for start-up entrepreneurs to test out brick-and-mortar retail ideas downtown. DDA board members will vote to approve a business plan for the incubator at their 8:30am meeting Friday, with next steps to include securing a location and signing up tenants.

As part of a contract with the DDA to provide economic development services, Traverse Connect developed a business plan for the incubator space, a concept DDA CEO Jean Derenzy says has been successful in spurring start-up businesses in other communities. Traverse Connect President and CEO Warren Call will appear before DDA board members Friday to walk them through the business plan prior to a board vote to approve its adoption. The plan calls for the DDA to open a downtown facility approximately 1,500 to 3,000 square feet in size, divided up into approximately 10 tenant spaces of 100-500 square feet. Additional “micro” spaces could host kiosks or mobile cart proprietors, as well as displays from local photographers and artists. Tenants would pay a monthly membership fee – Traverse Connect recommended a range of $100 for kiosks up to $1,000 for a 500-square-foot space, with utilities and Internet included – in exchange for being able to sell their goods and have a physical retail presence downtown.

“Retail incubators are usually defined as physical facilities that provide new firms with the supportive network necessary to increase the probability of survival during the crucial startup period when young companies are more vulnerable,” Traverse Connect explained in the business plan. “Retail incubators accelerate the development of successful entrepreneurial companies by providing low-cost space, assistance, promotion, and technical support services during the early years of the business. Incubators provide space for a number of businesses under one roof with flexible leases, exposure to mentors and consultants, and supportive marketing and events.”

Most start-up businesses are “short of everything except the founder’s energy,” according to Traverse Connect. “Establishing a retail incubator is one way to reduce the uncertainty and risk for early-stage entrepreneurs while cushioning the demands on limited resources, especially working capital.” The main goal of a retail incubator in downtown Traverse City would be to “produce successful graduate businesses that are financially viable within two to three years of entering the program and can go on to become longstanding contributors to the local economy,” according to Traverse Connect.

Derenzy calls the incubator a “responsive and proactive approach to address the uncertainty and difficulty of the post-COVID recovery” period for local small businesses. With high rents a recurring challenge for downtown Traverse City, the space could also offer an affordable way for new retail businesses to get their foot in the door in the city’s main shopping district and for the DDA to see what types of companies are resonating with visitors. “You hear a lot of, ‘What about this (for downtown)?’ or ‘What about that?’ or ‘What’s the makeup?’” says Derenzy. “This gives different opportunities for entrepreneurs to see what adds value there. I don’t think we want to dictate (who the tenants are)…we just know that having an opportunity for start-ups is important, particularly in retail.”

With DDA board approval of the business plan, Derenzy will begin meeting with downtown property owners to identify a location for the incubator. Though vacancies can be scarce downtown, she says she’s already identified potential sites and believes the DDA will be able to secure a suitable location. The $50,000 budgeted for the project wouldn’t be nearly enough to build a facility from the ground up or to purchase property, so the DDA will be seeking to lease existing building space, Derenzy says.

Next steps will also include determining the name and governance structure of the incubator. Traverse Connect suggested the name “TC Hatch Pad” as one possibility, with the accompanying tagline “Where ideas take flight.” Traverse Connect is recommending the incubator be operated as a DDA program with a separate advisory board to start, with the potential in the future to be converted into another model, such as an independent nonprofit or private for-profit corporation. The advisory board “should be made up of individuals and organizations that share the incubator’s goals and can help the incubator fulfill its objectives,” according to Traverse Connect, including four to six members with relevant private sector expertise and community representation as well as representatives from the DDA and a small business support organization like SCORE, SBDC, or Venture North. The incubator is proposed to be staffed initially with a volunteer part-time site administrator, such as a member of the advisory board or a team of mentor volunteers, with the long-term goal of hiring a dedicated property manager.

Traverse Connect also outlined several suggested performance metrics to gauge the success of the incubator space and to justify the DDA’s investment. Those include reaching a 50 percent occupancy rate within six months of opening and achieving and maintaining full occupancy of 10 businesses by the end of the first year. The program could strive to “graduate” at least two companies every three years and implement tenant criteria that would help ensure success, such as requiring a strong business plan. Incubators as a general concept already have precedence downtown: Tech incubator 20Fathoms operated successfully downtown for two years in the 101 North Park building and graduated several start-up companies before relocating to the Bayview Professional Centre.

While the retail incubator is expected to offer some supportive services to entrepreneurs initially, a long-term goal could be to expand those offerings, with “phase two” services to potentially include “technical assistance, consulting, and expert office hours to businesses across the DDA district in a ‘virtual incubator’ that extends beyond the physical facility,” according to the business plan. “Additionally, a future phase of the program could extend the incubator beyond a single location and allow a retailer to occupy any downtown space as long as the property owner agreed to the terms and conditions of the incubator program.”

Derenzy says she would love to get the incubator up and running by summer, but acknowledges that the preparation process – including the property search – could take longer than that. “I would hope it’s before summer 2022, but I know it’s going to take time to get the mechanics ready, figure out how we’re going to handle applications, and get the interest going (among potential tenants),” she says.

Mammoth Owners Plot Massive Distilling Operation, Agritourism Hub For Former Pugsley Site

By craig manning.

A giant manufacturing facility, a business park and technical education hub, a command-and-control center for satellite launches, and housing site for people experiencing homelessness. These are a few of the ...

TIF Ballot Proposal Violates Law But Must Still Go to Voters, Says State

By beth milligan.

A ballot proposal requiring a public vote on all tax increment financing (TIF) plans in Traverse City violates state law in both its content and its length, ...

What’s Happening with the Healthier Drinking Culture?

On the heels of approving Traverse City’s first social district and several liquor license applications this summer, city commissioners revisited the Healthier Drinking Culture Monday – the ...

TART Kicks Off Trail Construction Between 4 Mile And 5 Mile Roads

Attention trail users: TART Trails has officially begun construction on the stretch of trail between 4 Mile and 5 Mile roads. The project, called TART Transformation 2.0, will ...

NMC Names New International Affairs Forum Director

Key takeaways from city’s draft master plan, gt regional land conservancy plans $19.5m lake michigan project, next phase of grandview parkway construction starts monday, grand traverse band announce second round of revenue distribution grants for 2024, light up the sky: traverse city’s fourth of july fireworks show, by the numbers.

What's Next On The Dennos Museum's Long Journey Toward National Accreditation?

Car crash city: are vehicle accidents on the rise in northern michigan, first lady stops at gt commons, king orchards in tc visit, a path for inclusion: audio description debuts at cherry festival, featured local savings.

Advisory boards aren’t only for executives. Join the LogRocket Content Advisory Board today →

• Product Management
• Solve User-Reported Issues
• Find Issues Faster
• Optimize Conversion and Adoption

Business incubators: A guide for startups

Startups begin with an idea that founders can then formulate into a business plan. However, building and growing a viable business is difficult and requires help from others. To address this, entrepreneurs often look to incubators to help fill the gap between ideas and a real product.

To decide if a business incubator is right for you, let’s dive into what it is and how it helps startup development. The article also covers how to choose the best one for your startup needs.

What is a business incubator?

A business incubator is a workspace designed to give a startup company the resources it needs to succeed. The perks of a business incubator vary from each program, but it often includes mentorship and other professional services. The goal of a business incubator is to turn a promising idea into a developing startup with a strong chance of success.

What is the role of an incubator?

Business incubators are often sponsored by universities or non-profit organizations. Private ventures may also fund incubator programs. Startups can spend a few months or a few years in an incubator before they “graduate.”

Incubators play many roles in startup development. They aim to nurture early-stage companies into sustainable businesses. Incubators provide a range of support, depending on the program. They may help your startup company with:

• Office space — Incubators are frequently housed in a shared workspace with other startups in the program. The office space and equipment are either included or offered at below-market rates. Utilities like internet services are also part of the incubator
• Mentorship — One of the key benefits of an incubator is having top mentors available to you. They can provide guidance and share their expertise to help you navigate challenges
• Education and training — Incubators offer workshops and other programs to help a startup develop the skills it needs to succeed
• Access to investors — Some incubators may arrange pitch meetings with investors to help companies secure funding. Other incubators may offer funding in exchange for equity in the company. Some incubators are prestigious with a high reputation which can gain your company favor from investors
• Networking — Incubators provide a space for startups to meet potential partners, mentors, and investors. Through networking, startups gain a wider network of support and potential business opportunities
• Revenue growth — Achieving revenue growth is easier when your company participates in an incubator. It can lower overhead costs and help you connect with investors
• Professional services — Many incubators provide professional services like legal counseling or accounting. These services can help your company get started on a positive note
• Support from other entrepreneurs — Sharing your incubator experience with other startup companies means you can learn from each other. The inspiration may help you launch your company quicker and more smoothly

Why do startups need incubators?

As you begin to take the first steps to developing your business idea, you may wonder if applying for an incubator is the right choice. Your startup could indeed develop into a successful venture without an incubator. However, a business incubator can provide many opportunities that you wouldn’t get otherwise.

For starters, an incubator can provide tailored support for your startup. As your business plan evolves, your mentors are right there with you to provide guidance and structure. They can also provide advice on how to avoid common pitfalls in your industry. Mentorship is a valuable tool, and you shouldn’t overlook it.

What is the difference between incubators and accelerators?

Incubators and accelerators are often used interchangeably. To be fair, they both provide support to companies, but incubators and accelerators have different key characteristics. If you’re not sure if you should join an incubator or an accelerator, evaluate these factors:

• Venture stage — If you have a minimal viable product (MVP) and a business model, then an accelerator is a better fit for you. If you have an idea and a detailed business plan, then an incubator is ideal
• Founding team — Accelerators prefer a fully functioning team when evaluating companies. Meanwhile, an incubator is more willing to work with solo entrepreneurs or minimal team members
• Funding and equity — Accelerators often provide funding in exchange for capital. Incubators are less likely to have this arrangement and charge a fee instead
• Timeline — Accelerators are often intense programs that take a few months to complete. Incubators have longer timelines and it’s not uncommon for startups to stay for a couple of years or more. However, the timeline will vary from program to program
• Application process — Both incubator and accelerator programs need proof that your idea or product has high potential. For an incubator, you’ll need a strong business plan. An accelerator application will need you to prove product-market fit and a developed business model

The biggest difference between an incubator and an accelerator is the venture stage. Incubators are more willing to work with early-stage startups, even if all they have is an idea and a business plan. Meanwhile, accelerators expect you to have an MVP and already be operational on some level.

Successful startups from incubators

Incubators often give startups the resources they need to succeed. Here are some examples of startups that went through an incubator and are successful today:

Don’t think you need a fully developed product and business model to have success. Popular startup program Y Combinator says on average, 40 percent of the companies it funds are just an idea.

How to choose the right incubator

There are many incubators available to startups. The International Business Innovation Association (INBIA) estimates that 1,400 incubators are running in the U.S.

It’s not hard to find an incubator, but it’s difficult to get accepted. Top-tier competitive programs can have an acceptance rate of 1-2 percent . For comparison, the Harvard University acceptance rate for the Class of 2027 is 3.4 percent.

Beyond creating a competitive application, a startup needs to choose an incubator that fits its needs. Not all incubator programs are alike, so it’s essential to evaluate a program’s value before applying. Here are a few things to consider:

• Do extensive research — Make sure you have looked at an incubator’s resources, structure, and services. Is it what you need to succeed? If you are willing to relocate, you may also want to consider incubators in other areas. You’ll also want to consider the experience of the mentors and the weekly time commitment of the program
• Consult alumni — No one knows the value of an incubator better than the alumni. You may want to consider contacting companies that the incubator has helped
• Assemble your team — While incubators may consider a solo applicant, you may also want to consider finding a co-founder or other team members. It’s essential to prove to incubators that you have the skills necessary to build your idea
• Prepare a pitch — Incubators want to know why you think you can succeed. Prepare a well-researched pitch that shows why you are different and how you are a match for the program

Key takeaways

Incubators are a valuable resource for startups with a developed idea that need guidance on what to do next. You don’t need an MVP to apply for an incubator, but you should prepare a strong business plan and a solid pitch. Your goal is to show that your idea has potential.

Choose an incubator that has the resources that are best fit for your needs. The lessons, personalized feedback, and networking opportunities are crucial for building your company.

Featured image source: IconScout

LogRocket generates product insights that lead to meaningful action

Get your teams on the same page — try LogRocket today.

Share this:

• Click to share on Twitter (Opens in new window)
• Click to share on Reddit (Opens in new window)
• Click to share on LinkedIn (Opens in new window)
• Click to share on Facebook (Opens in new window)
• #collaboration and communication
• #project management

Stop guessing about your digital experience with LogRocket

Recent posts:.

An overview of cross-selling

By mastering cross-selling techniques you can build long-term customer relationships and increase your customer lifetime value (CLV).

Leader Spotlight: Ruthlessly iterating the product delivery process, with Jason Kirby

Jason Kirby, Chief Product & Technology Officer at Magic Memories, talks about how to instill a lightweight product delivery process.

A PM’s guide to working with data analysts (DAs)

A dedicated data analyst (DA) on a team can be a game-changer for the quality and speed of product discovery.

Leader Spotlight: How to tell a story using numbers, with Donna Foti

Donna Foti talks about her best practices for communicating data, including using the “granny test” and a storytelling narrative.

Leave a Reply Cancel reply

What Is an Incubator? A Complete Guide for Startups

If you’re an entrepreneur looking to get your startup off the ground, you have probably heard the word “incubator” thrown around. More than just a buzzword, incubators can be a vital tool in a startup's rise to stardom. But what is an incubator in business and how does it work?

Startup incubators are specialized hubs that can help early-stage ventures and startups navigate some of the most challenging aspects of running a business.

By the end of this comprehensive guide, you will know all about the different types of incubators, how they can help your business, and how you can get your business into an incubator.

In this article:

How does a startup incubator work?

The pros and cons of a startup incubator.

• What are the different types of startup incubators?

Could an incubator help my business?

• What do incubators want from a business?

How can I get my business into an incubator?

Startup incubators are unique organizations that function as a springboard for early-stage businesses and startups with the goal of providing specialized tools needed for startups to grow and innovate.

The resources and services they offer can vary, but often include access to office space, mentorship opportunities, business education classes, and community networking events. The structure of an incubator is much like a corporate office space and can include mandatory meetings, strict deadlines, and even a direct supervisor.

The idea for incubators began just over 60 years ago in Batavia, New York. With a family-owned factory at his disposal, Joseph Mancuso, an emerging entrepreneur, saw an opportunity to help other like-minded individuals get their small businesses off the ground. From there, he began recruiting emerging enterprises to operate in the low-cost office space located in his massive factory.

Today, there are over 7,000 incubators across the world , according to the International Business Incubation Association. This means that there’s an incubator for every type of business in practically every corner of the globe. All you need to do is find one that fits your needs and apply.

Startup incubator examples

Incubators can come in all shapes and sizes and meet all types of different needs a particular startup may have. Whether you’re looking for seed funding, networking opportunities, or mentorship, there is a startup incubator that can help.

Some examples of incubators you may or may not be familiar with include:

• Founder Institute is a global network that helps companies at every level, from startups at the idea stage to developed companies with a product and customer.
• Entrepreneurs' Organization is a peer-to-peer network of founders and builders from more than 60 countries.
• Harvard Innovation Labs is Harvard’s own entrepreneurial ecosystem of support for its students and alumni.
• Endeavor is a global organization that focuses on businesses and startups in emerging and underserved economies.
• LaunchVic’s The Good Incubator is a Melbourne-based nonprofit incubator helping people with disabilities create or grow their businesses.
• Communitech Hyperdrive is a Canadian incubator focused on technology, with a network of 28 regional innovation hubs across the country.
• MaRS is a Toronto-based hub that provides office space, advisory support, and even access to investors.
• Plug and Play is a global platform that connects blue-chip companies with startups to promote innovation.
• Station F is a Paris-based hub offering a number of perks, services, events and workshops.
• Capital Factory is an Austin-based co-working and event space dedicated to entrepreneurs, providing local founders access to mentoring and accelerator programs.

Are incubators and accelerators the same?

While they have a lot in common, incubators and accelerators have some key differences to be aware of before committing to a program.

The primary differences between incubators and accelerators are:

• Venture stage : Startup incubators generally cater to very early-stage businesses, often without a product or team. Accelerators, on the other hand, look for companies that are more built out. They generally require a business to have a minimum viable product and a team of their own.
• Funding : Incubators come with a lot of perks, but they don't always invest directly into a business. For accelerators, however, seed funding is their bread and butter.
• Time frame : Incubators offer fairly flexible timelines, typically ending only once a company has a product pitch ready for investors. Accelerators operate on a much shorter timeline. The entire goal of an accelerator is rapid growth and a fast turnaround on their investment in a company.

Did you know that only 51% of businesses survive past the fifth year ? That’s a pretty surprising statistic and can be a jarring realization for many ambitious entrepreneurs.

Businesses fail for a number of reasons. Whether they’re lacking funding, struggling to keep up with rising costs, or the managers lack the necessary experience, keeping the doors open can be a tricky feat. But this is exactly the kind of help startup incubators provide.

There are many benefits that come with joining a startup incubator, though there are some downsides as well. Let’s have a look.

What are the benefits of a startup incubator?

Startup incubators can provide startups with a number of valuable tools, from workspaces to seed funding and more.

Here is a quick look at some of the tools a startup incubator can provide and how they can help your business:

• Office space can help small companies save on rent and create unique networking opportunities with other enterprises.
• Seed funding can assist startups in tackling bigger goals and taking their businesses to the next level.
• Mentors can guide owners and managers to become more confident and efficient leaders.
• Equipment and software vouchers can provide some extra financial relief for tech startups in particular.

What are the downsides of a startup incubator?

While the benefits of startup incubators are plenty, there are some downsides to consider before committing to an incubator.

Top startup incubators can be extremely selective. Incubators can provide great financial benefits, so making sure their investments are going to pay off is a top priority.

It’s estimated that there are as many as 305 million startups created every year , while there are only 7,000 incubators. That means you’re going to have a lot of competition.

Some incubators may require a commitment of up to two years, or even until you have a product that is ready to launch.

When joining a startup incubator, you’re committing to more than just the perks — you’re committing to a culture and way of doing things with which your company may or may not align.

What are the types of startup incubators?

There are a number of different types of startup incubators all specializing in different fields, offering different perks, and with different funding models. Rest assured, however, knowing that no matter what kind of incubator you choose, they all have one common goal: to help you grow your business.

Whether you’re looking for a nonprofit organization or a VC-run incubator, it's important to understand what each type of incubator does and what they might expect from you to ensure you’re choosing the right hub for your project.

The most common categories for incubators include:

University startup incubators

Nonprofit startup incubators, corporate startup incubators.

Now, more than any other time in history, students no longer have to decide between pursuing higher education and kick-starting a business. University startup incubators (UBIs) can help with both.

University incubators are usually university- or student-run and can receive funding from donations or venture capital support. They may also invest in students’ projects and use the proceeds to fund new endeavors. These programs can provide pupils with all types of assistance and mentorship, from access to costly technology to logistical solutions.

UBIs provide students with an opportunity to chase their dreams in a financially secure and safe environment. These startup incubators are rethinking the businesses of the future.

One of the top academic incubators in the world, University of California, Berkeley’s Berkeley SkyDeck , offers students’ companies up to $200,000 after being accepted. It also provides support with logistics, customer development, and even marketing and advertising.

Some startups set out to change the world without taking a profit. For this reason, nonprofit startup incubators are just as valuable as other incubators.

Nonprofit incubators are programs and work spaces that cater exclusively to — you guessed it — nonprofit businesses. These incubators leverage their networks, know-how, and resources to provide nonprofit startups with the tools they need to grow and accomplish their goals.

Resources can include things like office space or technology, which can prove to be a major benefit for nonprofit businesses that often struggle to secure these costly tools.

An example of a top nonprofit startup incubator is MassChallenge , a global organization helping early-stage companies solve some of the world’s most pressing challenges. Their program covers industries such as health and financial tech, sustainable food, and even space commercialization, just to name a few.

Corporate incubators are typically in-house programs or independent business units built to curate and develop ideas within their own company. These incubators, like others, focus on early-stage ideas, sometimes with the goal of creating an entirely new business or product. Corporate startup incubators have the advantage of leveraging business assets to create brand-new revenue streams and create a hub for innovation within their own company, all while helping employees feel like they’re part of something bigger. One of the most notable corporate incubators is Google’s Area 120 —a radical idea built to help employees pursue their own radical ideas. Google’s in-house incubator features over 120 teams working on all kinds of projects, from AI customer support agents to a new tool that helps creators easily dub their content to expand their audience.

Starting a business is hard work and incubators come with a lot of perks, though it is important to remember that not all incubators are the same and not all businesses are a good fit for an incubator. Determining if an incubator is good for a startup can be a tricky task. Before diving headfirst into a time-consuming and competitive incubator application process, you may want to ask yourself a few questions:

• Am I ready to give up equity in my business?
• Does the incubator I’ve chosen align with my business’s core values?
• Can I commit to a rigorous schedule set by someone else?
• Do I really want to answer to someone else?

By asking yourself these questions, you make a more informed decision as to whether or not the perks of a startup incubator are worth the cost.

No first-time entrepreneur has the business network of contacts needed to succeed. An incubator should be well integrated into the local business community and have a steady source of contacts and introductions.

It should come as no surprise that the resources startup incubators provide are highly sought after, and that entry to a startup incubator is a complicated and competitive process. But that doesn’t mean you can’t be prepared.

Here are a few tips that can help you in your application process:

• Explore your options . The world is a big place, and with over 7,000 incubators scattered across the globe, it’s worth checking out different options.
• Find the right fit . Think about your goals and what exactly you’d like from an incubator. Every incubator is different and finding the right match is imperative.
• Be aware of the required milestones . Incubators typically help individuals create something from the ground up, but that doesn’t mean you’re applying to a program empty-handed. You should have an idea of what milestones you hope to achieve and a time frame in which you plan to meet your goals.
• Create a killer business plan . Doing a deep dive into your business, your value proposition, and your projections will help you better understand what you’re looking for from an incubator. Additionally, it will help an incubator better understand exactly why they should accept your business.
• Brace yourself for a grueling application process . Patience is the name of the game when applying for a startup incubator. The interview can be exhausting and time-consuming, so it’s important to remember why you’re there in the first place.

Startup incubators are some of the most sought-after programs in the startup universe. They can help build a business from the ground up, offering a number of huge benefits, especially for early-stage ventures.

Deciding which startup incubator is best suited for your startup can be a difficult task, but now you’ve got a better understanding of some of the ins and outs of the process.

It’s on you to make the next move, but we’re here to help. Building a business is a daunting task, and your tech stack shouldn’t make it harder. Apply to HubSpot for Startups today and gain access to all the tools you need to increase leads, accelerate sales, and streamline your startup.

Header image by Brooke Cagle on Unsplash

Your go-to destination for education, inspiration, and resources for startup founders.

Startup Resources

What Is a Business Accelerator? Everything You Need To Know - HubSpot for Startups

How to Conduct Market Research for Startups

6 Steps to Managing Remote Teams: A Guide for Startups

28 Startup Trends to Watch in 2023 - HubSpot for Startups

Student Corner: Retail Incubators and Main Street Revitalization: Part 1

By CED Program Interns & Students

Like tech and entrepreneurial incubators, the retail-focused model is “ designed to accelerate the growth and success of entrepreneurial companies through an array of business support resources and services that could include physical space, capital, coaching, common services, and networking connections. ” Local governments, non-profits and private businesses across the country are developing programs and spaces “ to seed downtown buildings with locally formed new businesses. ”

Any retailer interested in opening a shop faces high costs. Capital is needed to cover a lease, inventory, location improvements, IT, staffing and marketing, among other expenses .  Equally challenging can be maneuvering state and local requirements and building a customer base while managing the day-to-day of a business.

Program-based retail incubators help by providing technical assistance and mentorship as well as capital. These incubators are led primarily by downtown organizations focused on nurturing and sustaining retail businesses for the overall economic health of the downtown core. There are various types of incubators and we will cover the space-based models in Part II.

In 2009, downtown Kalamazoo, MI was fighting a battle to recruit and retain retailers.  In a story familiar to many towns, the vibrancy of downtown was being challenged by recession and growing competition from big box retailers and lower-rent strip malls. Unable to convince established retailers to take the risk of opening an additional store in the evolving downtown, economic development officials turned to the promise of retail start-ups. But these start-ups, lacking the necessary resources and expertise, needed help.

The State of Michigan had passed an amendment to the Downtown Development Authority (DDA) Act in 2008 allowing DDAs to create, operate and fund retail business incubators. Downtown Kalamazoo Inc. (DKI) was the first to take advantage of the legislation that “targeted tenants who will provide goods or services that are not available or that are underserved in the downtown nearby” by establishing the Retail Incubation Program.

DKI’s Business Recruitment & Retention Committee managed the program which provided the following support to retail start-ups in downtown:

• 18 months of subsidized rent, incrementally reduced from a maximum of 50% or up to $830 a month. (This might not be permissible under North Carolina law. See discussion later in the post.)
• Training in Merchandise Management, Marketing, Human Resources, Financial Management and Customer Service.
• Business mentoring from a successful downtown business.

Returns to the community were maximized by requiring that participants:

• Attend all of the training sessions.
• Obtain a bookkeeper or CPA deemed acceptable by the program.
• Provide sales, inventory and expense information to the program for macro tracking of downtown retail.
• Be open for business 6 days a week or 50 hours a week.

The program was not tied to a single location but allowed a retailer to occupy any downtown space as long as the property owner agreed to the terms and conditions. “Before store owners started out in one of the spaces they got the types of assistance that have been proven to grow businesses — training, mentors and money.”

In four years, the street-level vacancy rate in Kalamazoo’s downtown dropped from 20-percent to 2-percent. As the program filled key locations with interesting, new retail concepts, business attitudes towards downtown changed. Retail, however, cannot sustain an entire local economy and the city was struggling elsewhere. The tax base continued to decline and the program was ultimately cut in 2013, after all of the participants had graduated.

Similar programs followed suit around Michigan and throughout the country and are still active today, including through the Midland Michigan DDA and the Cudahy Wisconsin DDA .

The Downtown Sioux Falls Retail Incubator Program replicated the model piloted in Kalamazoo (making small adjustments such as requiring retailers to stay open until 8pm) and continues to assist retail businesses eager to launch their business in the central business district. Reallocating funds from an obsolete small business loan program, the program received $100,000 to assist 10 businesses . While any business could benefit from investment capital in the form of a loan or equity, the training and mentorship has proven to be a critical component in stabilizing and growing businesses while integrating them into the fabric of the community. The criteria for selection into the program are simple: Is this business adding something new to downtown that’s going to generate foot traffic and do they have a solid business plan? Five stores have opened in the last two years, with products including running gear, regional crafts , high-end groceries and even beer.

The Sioux Falls program is relatively new, and although natural turnover will continue to occur, the vacancy rate has dropped by 2-percentage points since its launch. Property owners are happy because they’re bringing in rents and gaining the relative stability of a program-supported business. Neighboring retailers are happy because the draw of new destinations and increased visual interest are bringing more foot traffic their way.

North Carolina non-profits such as the NC Retail Merchants Associations provide training and support and Business Link North Carolina connects start-ups with mentors.  Subsidies for retail businesses are probably not legally permissible in North Carolina, as Tyler Mulligan explains in his blog post, When May NC Local Governments Pay an Economic Development Incentive? Loans are a more acceptable alternative as explained in another blog post here . Possible exceptions might be officially designated urban redevelopment areas (URAs) where the municipality is fighting blight, or retail facilities in underserved areas that will primarily serve low-income persons.

Program-based retail incubators have been effective, not necessarily because of specific subsidies, but because they coordinate financial support for new retailers with actions to address knowledge and networking gaps. Further study is required to assess the long term efficacy of the programs, which fortunately have been designed with the future in mind and are already collecting the data.

In Part II, we introduce the space-based approach to retail incubation, and how it reimagines the potential of tiny and shared spaces. 

  Sarah Odio is a Master’s candidate specializing in Economic Development in the UNC-Chapel Hill Department of City and Regional Planning. She is currently a Community Revitalization Fellow with the Development Finance Initiative.

Tagged Under

This blog post is published and posted online by the School of Government to address issues of interest to government officials. This blog post is for educational and informational Copyright ©️ 2009 to present School of Government at the University of North Carolina. All rights reserved. use and may be used for those purposes without permission by providing acknowledgment of its source. Use of this blog post for commercial purposes is prohibited. To browse a complete catalog of School of Government publications, please visit the School’s website at www.sog.unc.edu or contact the Bookstore, School of Government, CB# 3330 Knapp-Sanders Building, UNC Chapel Hill, Chapel Hill, NC 27599-3330; e-mail [email protected]; telephone 919.966.4119; or fax 919.962.2707.

Oct 3, 2023

Startup Incubator

Go-To-Market

If you’re in the process of launching a startup, you’ve probably thought about applying for a startup incubator. In this guide, we cover all the basics: what they are, what they cost, what the requirements are and so much more. We also cover how they compare to other startup resources, such as accelerators, and we provide an overview of the top startup incubators. Finally, we provide tips on how to select the right incubator for you—let’s dive in!

What is a startup incubator?

A startup incubator, also known as a ‘business incubator’, is a program that provides resources and support to new small businesses and first-time founders. Incubators typically provide access to mentorship, discounted technology, physical workspaces, and networking opportunities. It is designed to help startups test their ideas, hone their business plans, and secure their first customers—which is helpful for getting a new initiative off the ground and securing funding from venture capitalists down the line.

How do startup incubators work?

Startup incubators typically have an application process that entrepreneurs must complete to be considered. Once accepted, entrepreneurs are typically required to participate in a program that lasts anywhere from a few months to a year. During said time, founders are provided with a ton of resources including mentorship, office space, and networking opportunities to help hone their business plan and grow their business. At the end of the program, entrepreneurs present their businesses to potential investors to secure funding.

What are the requirements to get into a startup incubator?

The requirements to get into a startup incubator vary from program to program. Most incubators require founders to have an idea for a startup, a business plan, and a team of at least two people. In addition, some incubators also require that entrepreneurs meet a minimum funding threshold before applying. Outside of the basic requirements, some incubators focus on specific niches, like med tech startups or health tech startups, some have specific requirements for the types of businesses they accept, and some only focus on startups in a particular area, like Silicon Valley.

Why do founders use startup incubators?

Startup incubators are a great way for first-time founders and early-stage startups to get their businesses off the ground quickly and find product market fit. As mentioned above, they provide a ton of key resources to ensure the highest possibility of success. In addition to the resources, incubators may also provide founders with introductions to mentors, investors, and industry experts to help scale their ideas. Finally, startup incubators typically provide entrepreneurs with exposure to investors during the final phase of the program: demo day.

What are the types of startup incubators?

Startup incubators come in a variety of shapes and sizes. They can either be for-profit or non-profit, and they can be focused on specific industries or they can be open to all kinds of businesses. Here are some of the common types of startup incubators:

• For-profit incubators : These incubators make money by taking equity in the businesses they help launch.
• Non-profit incubators : These incubators are typically funded by grants or donations, and they don’t take equity in the businesses they help launch.
• Industry-specific incubators : These incubators are focused on a specific industry such as healthcare, technology, or fashion.
• Geographic incubators : These incubators are focused on a specific geographic area, and they typically offer access to local resources and networking opportunities.

What are the benefits of going through a startup incubator?

There are many benefits to going through a startup incubator. Here are some of the top benefits:

• Access to resources : Incubators typically provide access to resources including physical workspace, discounted software, and potentially even raw materials.
• Guidance and support : Incubators typically provide founders with the guidance and support they need to launch their businesses through introductions to mentors and industry experts.
• Exposure : Incubators typically provide founders with the opportunity to gain exposure to investors to potentially secure funding.

What are the drawbacks of going through a startup incubator?

While there are many benefits to going through a startup incubator, there are a few drawbacks to consider, here are some of the most common:

• Equity : Some incubators charge a percentage of equity in exchange for the resources, guidance, and exposure they provide.
• Time commitment : Incubators typically require founders to participate in a program that lasts anywhere from a few months to a year, which may not work for everyone.
• Restrictions : Some incubators have restrictions such as specific industries or geographic areas they focus on.

What is the difference between startup incubators and startup accelerators?

Startup incubators and accelerator programs are similar in that they both provide resources and support to entrepreneurs. However, there are some key differences between the two.

Startup incubators typically have a longer program that lasts anywhere from a few months to a year. They provide access to resources such as mentorship, workspaces, and networking opportunities. They also provide guidance and support to entrepreneurs to help them develop their business ideas and launch their startups.

Startup accelerators, like YCombinator or 500 startups , on the other hand, are typically shorter programs that last anywhere from a few weeks to a few months. They provide access to similar resources such as mentorship, funding, workspace, and networking opportunities, but they are designed to help founders scale their startups, not launch them, and help prepare them to take on seed funding or venture capital.

What does participating in a startup incubator cost?

The cost of participating in a startup incubator varies depending on the program. Some incubators are free, while others may charge fees or require you to give them equity.

Do startup incubators provide capital to startups?

Some incubators provide access to funding and grants to help startups get off the ground, others do not. It depends on how large the incubator is and what type of incubator it is (for-profit vs not-for-profit).

What are the top startup incubators in the United States?

There are many great startup incubators out there, but some of the top ones include Idealab, The Batchery , Upward , SteelBridge Laboratories , and Invenshure .

• Idealab is a technological incubator out of Pasadena, CA that gives start-ups the resources they need to launch new products and services quickly. 
• The Batchery is a global incubator situated in Berkeley, CA that focuses on seed-stage firms that are primed for rapid growth.
• Upward is a global incubator based out of New York City that is dedicated to reviving second-tier towns through innovation.
• SteelBridge Laboratories is an incubator based out of Pittsburg, PA for FinTech startups.
• Invenshure is a medical device and imaging incubator based out of Minneapolis, MN that invests in medicines, developing platform technologies, and medical device and imaging startups.

What to look for and how to select a startup incubator?

When selecting a startup incubator, it’s important to do your research and talk to other founders who have graduated from the program. Here are some of the things to look for when deciding between multiple startup incubators:

• Resources : What resources does the incubator provide? Does it provide access to mentors, investors, and industry experts? What about workspace, funding, and other resources?
• Equity : Does the incubator take equity in the businesses they help launch? Am I okay with giving up equity in my business in exchange for the services it provides?
• Time commitment : What is the length of the program? Am I committed to putting in the time required to make the program successful?
• Reviews : What did other founders say about the program, did they think it was worth it? What are some of the critiques other founders had and are you okay with that?
• Track record : What is the historical performance of the companies that have graduated from the program? Are there only one or two stand-out successes or many successes?

Final thoughts on startup incubators

Startup incubators are a great way for founders to initially get their startups off the ground quickly. They provide access to a ton of resources which can be invaluable to founders that are strapped for cash. Before deciding to participate in an incubator, make sure to do your research so you understand exactly what is required of you to graduate. Also, make sure to talk to other founders to ensure the program fits your needs and what you are looking to get out of it.

Stay up to date

Get the latest from Arc in your inbox:

Share this post

Inc. Power Partner Awards Application Deadline This Friday, July 12 Apply Now

• Newsletters
• Best Industries
• Business Plans
• Home-Based Business
• The UPS Store
• Customer Service
• Black in Business
• Your Next Move
• Female Founders
• Best Workplaces
• Company Culture
• Public Speaking
• HR/Benefits
• Productivity
• All the Hats
• Digital Transformation
• Artificial Intelligence
• Bringing Innovation to Market
• Cloud Computing
• Social Media
• Data Detectives
• Exit Interview
• Bootstrapping
• Crowdfunding
• Venture Capital
• Business Models
• Personal Finance
• Founder-Friendly Investors
• Upcoming Events
• Inc. 5000 Vision Conference
• Become a Sponsor
• Cox Business
• Verizon Business
• Branded Content
• Apply Inc. 5000 US

Inc. Premium

How Businesses Plan to Drive Serious Sales This Prime Day

Prime day 2023 was a record-setting event for amazon sales, and businesses are preparing their strategies for this year..

Amazon Prime Day -- the retail giant's two-day sale event -- is coming up next week, on July 16 and 17, and businesses are prepared.

Expectations are high following 2023's Prime Day success. According to Statista, sales reached an all-time high of $12.7 billion in the U.S. last year, an increase of $800 million from the previous year. Per Amazon, the first day of last year's event was the largest sales day in the retailer's history.

This year, businesses are gearing up with new strategies to tap into the shopping frenzy and engage with more consumers . Here's how these companies are approaching the event:

Driving traffic to Amazon

Rather than promoting sales on its own website during Prime Day, ceramic cookware brand Caraway is encouraging customers to shop via its Amazon storefront, says Jordan Nathan, the company's founder and CEO.

Prime Day, dubbed by Nathan as Caraway's "mid-year holiday," has proven successful for the brand. The New York City-based company reported a 300 percent sales growth between Prime Day 2022 and 2023, and its average daily sales surged more than 18 times on the first day of Prime Day 2023 compared to the period leading up to it.

This Prime Day, Caraway is extending a 20 percent   markdown on all products, mirroring last year's promotion. Additionally, it's introducing Prime Day-specific bundles and featuring flash deals during the event for consumers to get additional savings on select products. 

"If you're signed up to our SMS list, there's going to be like five to 10 flash deals that happen that have 'X' amount of inventory at a certain price," Nathan says. "We'll have 10 to 20 new bundles on Amazon that will be evergreen but launching just in time for Prime Day."

Nathan says this aligns with Caraway's goal to drive traffic to Amazon during the event through email, SMS, and paid advertisements. Unlike last year, when Caraway offered a 10 percent discount on its website from late June into Prime Day, this year the brand is not running any pre-Prime Day sales. 

"We felt like the 10-percent-off pulled demand forward, and Prime Day was still super successful, but we want the sale focused in that two-day period versus Caraway being on sale for two-plus weeks," Nathan says.

Leaning into AI 

Since Prime Day 2023, Logan England, head of e-commerce at Provo, Utah-based   accessories brand Thread, says the company has leaned into the power of AI for marketing. 

Thread uses the marketing platform Attentive to optimize and personalize its SMS and email campaigns with AI tools. England notes that this data-driven approach helps mitigate human error: "One of my biggest struggles with the email and SMS program was I always felt like we were testing and guessing, and that is so hard to get right," England says. "I can't pick the right send time, I can't pick the right audience all the time, but data can." 

Instead of offering a fixed discount rate this Prime Day, Thread products on Amazon will start at 20 percent off, with some discounts increasing to 50 percent off. England says the company frequently uses this sales strategy because it creates a competitive offer and enables better inventory control by facilitating the liquidation of slower-moving items.

"It gives us a lot of flexibility," England says. "It's nice because you don't have to have a discount code, you don't have any of that friction. Brands love it, consumers love it, so until it stops working, I think we're going to stick with it."

Leverage traffic with inclusive discounts 

Cleanlogic, a bath and skin care company dedicated to advancing the lives of individuals with disabilities, is maintaining its value of inclusivity when it comes to its Prime Day strategy. Rather than offering member-exclusive deals, Nelson says the company is using Amazon's "click to save" coupon option, providing discounts between $1 to $5 on its products that will be eligible to all consumers shopping on the site. 

"We use those click-to-save coupons to really increase our conversion rate, to get more eyeballs on our founding story, on the mission of the brand," says Brenna Nelson, Cleanlogic's senior manager of e-commerce. 

According to Nelson, Cleanlogic saw a 162 percent increase in average daily sales during the Prime Day 2023 window, and its products see a three to six times increase in traffic on and leading into Prime Day. 

Cleanlogic is planning to run a brand-tailored promotion after Prime Day targeting cart abandoners and page visitors who didn't purchase during the Amazon event. Nelson says the company hopes that consumers who missed the main Prime Day deal will return to their purchase if incentivized with a partial discount.

A refreshed look at leadership from the desk of CEO and chief content officer Stephanie Mehta

Privacy Policy

• Arts & Events
• Great Reads
• Atlanta 500 – 2025 Nominations
• Atlanta 500 – 2024
• Block by Block: Stories from the streets that connect us
• Women Making a Mark
• Restaurant Reviews
• 75 Best Restaurants in Atlanta
• Best Barbecue
• 50 Best Tacos
• 123 Things to Eat on Buford Highway
• 50 Best Bars
• Best Breakfast
• Atlanta Magazine’s HOME Digital Editions
• Artists & Galleries
• Design Advice
• Design News
• Real Estate
• Neighborhoods
• Real Estate All-Stars
• Kitchens for a Cause
• Georgia Design Awards 2024
• School Guide
• Health & Wellness
• Top Doctors
• Top Dentists
• Sponsored: Physician & Dentist Profiles
• Buckhead Guidebook
• Southbound Magazine
• Southbound Digital Editions
• Southbound Newsletter
• 50 Best Things to Do in Georgia
• Hidden Georgia
• North Georgia Mountains
• Great Georgia Hikes
• Gilmer: Ellijay Visitors Guide 2022
• Alabama Vacation Guide 2023
• Readers’ Choice
• Subscription Center
• Purchase Single Issues
• Newsletters
• Digital Editions
• Custom Media
• Give Atlanta
• Internships
• Where to Find
• GrillFest 2024
• Indulge 2024
• Whiskey Festival 2024
• Upcoming Events
• Atlanta Magazine Whiskey Festival 2022
• 2020 Atlanta Symphony Orchestra Designer Showhouse
• Atlanta Baby and Beyond
• Atlanta Magazine Whiskey Festival 2019
• DINES: A Taste of the City’s Best Restaurants
• 2019 Modern Style Showhome
• Best Burger Battle
• Pinewood Forest Idea Home
• 2018 Modern Style Showhouses
• Event Photos
• About GaBiz
• GaBiz Magazine Digital Editions
• Issue Archive
• Atlanta 500
• Submit Your Entry for Georgia Design Awards 2024

4 Atlanta-based retail incubators you need to visit

Organizers say stores need to offer an experience in order to compete with online convenience—making them destinations rather than just places to run errands.

Photograph by Cori Carter

There’s no denying the way we shop was throttled by the pandemic. But while online sales continue to grow, we’re not ready to give up shopping in person. “People love to touch and feel and experience things,” says Tori Frericks, founder of the Landing Lab, one of several new retail incubators in Atlanta.

However, organizers say stores need to offer an experience in order to compete with online convenience—making them destinations rather than just places to run errands. That could mean staging events, from product demonstrations to book clubs, or just offering shoppers a glass of wine. And it means filling developments with experiential—and sometimes experimental—collectives, where visitors can meet the makers and discover new products. Says Kia Perry, cofounder of HerMarket at Village Supply, “We want to make it exciting, where it’s like, Oh my gosh, I’m having so much fun while I shop .”

Many of these incubators, like the just-opened New Black Wall Street Market in Stonecrest, make opportunities for Black- or brown-owned businesses.

And, while revenue is of course important, so are the communities built around these entrepreneurs. The pandemic taught customers not to take neighborhood vendors for granted. Lakeysha Hallmon, founder of the Village Retail at Ponce City Market, says, “What we’re learning is that we need to get back to building local businesses. Community is what keeps local businesses open.”

Here are four markets to try. Stop by and maybe you’ll help launch a national brand.

The Village Retail Hallmon, who has been featured by Today , Forbes , and other national media, launched the Village Market ATL in 2016. Her quarterly evening markets featured minority-owned businesses that produce socially conscious and all-natural apparel, products, and food—which have generated some $5.3 million in economic impact (sales, market contractors, etc.) over the last five years. In 2020, Hallmon added a brick-and-mortar space at PCM called the Village Retail. “It’s very hard for up-and-coming brands to get a site at a prime retail location, especially Black and brown businesses,” she says. Her operation gives many of them their first forays into retail, providing knowledge, skills, and resources they might otherwise not have access to. “We consider ourselves as the launchpad for thriving businesses,” she says. Her 40-plus brands—from 38 states and four countries—include Made Leather Co., Play Pits, and the Honey Pot (a feminine products line that is available at Target, CVS, and other major retailers). Her slogan? “Support Is a Verb.”

Look for the Bailey Circle Crossbody Bag by P. Sherrod & Co. ($169)

The Landing Lab Frericks founded the Landing Lab at the end of 2021 because she believes that brick-and-mortar shopping isn’t dead. She had also noticed that tens of thousands of direct-to-consumer products were launched online during the pandemic. “There are all these brands being featured on Instagram, but there’s no way to experience them and see them in person [in Atlanta],” she says. The Landing Lab hosts such entrepreneurs in its Buckhead space, providing professional merchandising and retail expertise. Apparel and accessory lines, such as Soli & Sun, Faherty, and Sh*t That I Knit, rotate by season and are mostly owned or heavily staffed by women. Frericks stocks a small inventory and can be nimble with her assortment thanks to consignment agreements. She also plans to start hosting events that promote women in business.

Look for the Willa top by Faherty Brand ($158)

Underground Atlanta Underground Atlanta’s latest incarnation is as a public-art space-cum-incubator. The district was purchased by Lalani Ventures in 2020. Last October, while also hosting the Art of Banksy: Without Limits exhibition, it launched a rotation of 70 artists and entrepreneurs including retail, art studios, and galleries as part of its Roots Pop-Up program. Rent is free to those who are accepted. “We’re taking on about a quarter-million dollars of an obligation in rent,” says Kris Pilcher, creative director. “We wanted to maximize the potential of this district and reestablish it as a center of gravity.” That includes vendors like KroyKorn Gourmet Popkorn, founded by eight-year-old Kroy Richardson, and Crown Me Collection, a hat company that claims Migos and 2 Chainz as fans.

Look for Artist Eugene Byrd’s sweatshirts ($35)

HerMarket What began as a series of pop-up sidewalk markets has evolved into a yearlong partnership with Buckhead Village District. Village Supply at HerMarket provides opportunities for brands that wouldn’t otherwise get exposure at such a high-profile venue. Perry and co-owner Jazlin Pitts manage the store and curate the offerings, which must be visually powerful and at least half-owned by women. Products range from books and technology to handbags. They’ve helped launch brands like Gilded Body, a skincare line now sold online by Saks, and Semaine, an herbal supplement for women now available at Target. “For a lot of brands, we were their first market experiences,” says Pitts. “They’re now in these big-box retailers, which was our goal from the beginning. It’s beautiful to see them reaching their potential.” The duo also has a long-standing pop-up at the Lola, a women-only coworking and gathering space in Old Fourth Ward.

Look for Body Balmie by Nude Coco ($20)

This article appears in our February 2022 issue.

RELATED ARTICLES MORE FROM AUTHOR

10 fun things to do for the Fourth of July in metro Atlanta

5 Atlanta events you won’t want to miss: May 31-June 6

5 Atlanta events you won’t want to miss: May 16-22

Newsletters.

Most recent

Editor’s Journal: The greatest pitching performance I’ve ever seen came from a 9-year-old

The Goat Farm returns with a historic renovation

Emerald City Bagels is now open on the BeltLine

Great reads.

What happened to the Georgia Music Hall of Fame?

Ronald Acuña Jr. takes flight

The Dining Diva: Christiane Lauterbach dishes on her 40 years as Atlanta magazine’s dining critic

• Business Forum
• Privacy and Cookies Policy
• Terms of Use
• General Contest Rules

Case Studies

Resource Hub

Featured post

What is a Pitch Deck? Tips, Examples, & Effective Templates

Explore our latest posts

Pitch Deck Funding Stages: How to Personalize Your Pitch Deck by the Stage

Building a Resilient Startup Culture in a Hybrid Work Environment

Innovative Revenue Models for Startups: Exploring New Ways to Monetize

Leveraging Business Incubators for Startup Success: A Comprehensive Guide

Unlock the power of business incubators: From seed funding to mentorship, discover how incubators propel startups to success in a dynamic ecosystem.

March 22, 2024

In the fast-paced and ever-evolving world of startups, the journey from concept to market leader is filled with hurdles. Challenges like securing essential funding, understanding market dynamics, and crafting a niche can be daunting. That's where the magic of business incubators comes into the picture, offering a ray of hope and a robust support system for emerging ventures. 

A business incubator isn't merely a concept; it's a dynamic ecosystem meticulously crafted to nurture innovation and expedite startups' growth trajectory. These incubators are a powerhouse of critical resources—think of seed funding as the initial fuel for your engine, mentorship as your navigation system, office space as your base camp, and networking opportunities as your gateway to the world. 

This guide serves as your compass in the wilderness of business incubation. We are here to assist you in understanding the selection process of the right incubator, comprehend the numerous benefits available to you, and effectively utilize these resources. Our goal is simple: to equip you, the entrepreneur, with valuable insights and knowledge to confidently navigate these waters, make informed choices, and propel your startup toward the success it deserves.

Understanding Business Incubators

The foundation of every thriving startup is a great idea . However, turning this concept into a successful business requires more than just enthusiasm - it requires a supportive environment that can only be provided by a business incubator. Imagine a place where your budding idea is warmly welcomed and encouraged, with all the necessary resources, mentorship, and community support to help you reach new heights.

What Exactly Are Business Incubators?

Business incubators can be compared to guardian angels for startups. Whether nonprofit or profit-driven, these organisations offer a wealth of resources and services to serve as a springboard for your venture. They work closely with universities, government bodies, and corporations to help bring your dream to life.

Core Functions and Offerings

The essence of a business incubator is to be the wind beneath the wings of startups. Here's how they do it:

• Collaborative Workspaces: Incubators provide more than just a desk. They offer a community where shared labs, workspaces, and facilities foster innovation and significantly reduce operational costs.
• Expert Guidance: With access to seasoned entrepreneurs and industry mavens, mentorship within an incubator can pivot your journey toward success.
• Networking: The adage "It's not what you know, but who you know" rings especially true here. Incubators open doors to potential customers, partners, and investors, broadening your horizon beyond measure.
• Funding Assistance: While not direct benefactors, many incubators play a crucial role in connecting startups with seed funding, grants, or the right investors to fuel their growth.

For insights on amplifying your startup's potential, explore our guide on Maximizing Incubator Opportunities.

Diverse Incubator Landscapes

Finding the perfect incubator is akin to matchmaking for your startup. Here's what the landscape looks like:

• University-Based Incubators: Leveraging academia's rich resources and networks to support ventures birthed within their corridors.
• Nonprofit and Community Incubators: Focused on uplifting startups with a mission towards social or community impact.
• Corporate Incubators: Where innovation meets enterprise, these incubators seek to nurture startups that can synergize with their core business.
• Regional and Sector-Specific Incubators: Offering specialized support tailored to your industry or geographic location.

The Incubation Journey

Joining an incubator isn't just about signing up; it's a journey that starts with:

• Application: Articulating your vision, team, and goals is step one.
• Interview: A deep dive into your startup's ethos, viability, and team spirit.
• Selection: The right fit is crucial, with incubators seeking startups that show promise and align with their mission and industry focus.

Your relationship with an incubator should be symbiotic. Choosing one that elevates your strengths and addresses your weaknesses lays a solid foundation for growth and success. 

Benefits of Joining a Startup Incubator

Starting a new business can be like exploring uncharted waters. It's exciting, but it can be difficult, especially for new entrepreneurs. In the early stages, startup incubators can be very helpful by providing resources to guide new companies toward success. In this article, we'll take a closer look at how these incubators can help your startup.

Comprehensive Support and Resources

Imagine having everything you need to grow your startup without the high costs . Incubators provide essential resources like modern office spaces, advanced technical infrastructure, and specialized equipment. This reduces your expenses and creates an environment that nourishes your business. With all the tools at your disposal, your business will thrive.

Mentorship from Industry Veterans

The startup landscape can be overwhelming and confusing. However, receiving guidance and mentorship from experienced individuals who have already navigated through such terrains can act as a beacon of hope and steer you away from potential missteps. Incubators can introduce you to industry experts with invaluable wisdom on strategic planning, leadership skills, and operational efficiencies. This knowledge can be instrumental in helping you avoid any pitfalls and make calculated decisions, making it worth its weight in gold.

Networking and Collaborative Opportunities

Joining an incubator offers many benefits, one of which is becoming part of a lively and diverse community. This network is a hub for potential investors, business partners, and customers and provides opportunities for collaboration that can help propel your startup to success.

Enhanced Credibility and Visibility

Choosing a trustworthy business incubator is like getting a stamp of approval on your startup. This helps attract investors and customers and also brings opportunities for media exposure and positive public relations, which can significantly enhance your startup's reputation in the market.

Access to Funding and Increased Survival Rates

Incubators provide startups with a tremendous financial boost. They offer seed funding and connections to venture capitalists. Incubated startups tend to have a higher survival rate, which shows that these ecosystems are effective. Incubators are support systems and launchpads that can propel startups to success. 

They are vital to the entrepreneurial world and can help turn your ideas into successful businesses. If you need help finding your way in the startup world, consider looking into an incubator. They can guide you and provide the support you need to make your dreams a reality. And remember, you're not alone on this journey.

Choosing the Right Incubator for Your Startup

For any entrepreneur dreaming big, finding the right startup incubator is a step you must take. This guide is about helping you match your startup's unique needs with what the best incubators out there offer.

Identifying What Your Startup Needs  

Before you enter the vast world of incubators, consider what your startup needs to soar. Is it expert mentorship , access to the latest technology, or connections to potential investors? Pinpointing your needs will help you filter through incubators to find one that's just right for your business's stage, industry, and specific hurdles.

Doing Your Homework on Incubators  

Start researching incubators that cater to your sector and are highly recommended. Look for those with solid track records, successful alumni, and a vast network. Dive into what they offer regarding mentorship, funding, and day-to-day support.

Understanding What's Expected of You  

Remember, incubators are all about give-and-take. They're looking for startups ready to engage fully with their programs. This means being prepared for a fair share of networking, mentoring sessions, and giving back to the community. Ensuring your startup's culture jibes with the incubator's vibe is key to a fruitful relationship.

Navigating the Application Jungle  

Getting into an incubator can be a walk in the park. The application process usually involves detailing your business plan, going through interviews, and sometimes presenting your idea in front of a selection panel. It's a chance to sharpen your pitch and gain invaluable feedback, so embrace it.

Learning from Those Who've Been There  

Don't just take the incubator's word for it. Chat with alumni and current participants to get the inside scoop on what it's like. Their experiences can offer you a clearer picture of the benefits and hurdles of joining. Investigating the incubator's financial health, leadership, and strategic partners is smart.

Making Your Choice  

Choosing the right incubator could be the catalyst your startup needs. It's about more than just resources: mentorship, community, and support. By thoroughly evaluating both your needs and what potential incubators offer, you can find the perfect partner to help launch your startup into the stratosphere.

Maximizing the Benefits of Incubation

Joining a startup incubator can be a game-changer for entrepreneurs looking to jumpstart their ventures. Incubators provide many resources, including access to seasoned mentors, networking opportunities, and essential business tools. To truly benefit from an incubator, it's important to actively seek advice and absorb wisdom in key areas like strategic planning, leadership, and personal development. 

Being receptive to feedback and ready to adapt based on expert advice can significantly enhance your venture's prospects. Engaging in an incubator program opens the door to a unique ecosystem where entrepreneurs , investors, and industry veterans gather. By diving into networking events, workshops, and seminars, you can build a strong network that could lead to valuable partnerships, customer leads, and even financial backing. 

Incubators also offer tangible assets like office space, technical support, and seed funding, which are crucial for speeding up product development, refining your business model, and boosting operational efficiency. Making the most of these resources is critical to hitting your business milestones. A crucial aspect of being in an incubator is using the available resources to confirm that your product meets market needs. As you prepare to graduate from the incubator, it's vital to have a solid growth strategy in place. 

This plan should cover scaling your operations and broadening your market presence. Taking a proactive and thoughtful approach to your incubation period is essential. Focus on gaining from mentorship, expanding your network, leveraging resources to their fullest, validating your product and market fit, and planning for life after the incubator. Contributing to the community and establishing your startup as an active and valuable member will lay a strong foundation for long-term success and growth.

Challenges and Considerations

For startups contemplating joining a business incubator, it's vital to consider a few challenges and make informed decisions. This strategic approach can significantly boost their journey towards success.

• Understanding Selectivity and Competition: Getting into a renowned incubator is a challenging walk in the park. Thanks to their strict selection criteria, these institutions look for businesses that show promise and can scale up. Prepare to demonstrate what makes your startup stand out and its growth potential.
• Finding a Cultural Fit: A startup's values and work ethic must resonate with those of the incubator. A mismatch can lead to disagreements and hinder the benefits you might gain. Take the time to learn about the incubator's environment and decide if it fits you.
• Considering Equity and Ownership: Joining an incubator might mean giving up a slice of your company's equity. Think carefully about this exchange and ensure it aligns with your long-term objectives. It's about finding a balance that works for both parties.
• Preserving Independence: While incubators offer invaluable resources, startups should strive to maintain their autonomy. Developing the ability to operate and grow independently ensures long-term sustainability, even after graduating from the incubator.
• Managing Time Wisely: Participating in an incubator program requires a significant time investment. Startups must juggle this commitment with the need to run their daily operations. Prioritizing and balancing these aspects is key to leveraging the incubator's full advantages while maintaining your business fundamentals.

Startups eyeing incubator opportunities should tread carefully, ensuring a good fit with the incubator's culture, expectations, and agreement terms. This careful consideration is the cornerstone of reaping maximum benefits and laying a solid groundwork for future success.

Success Stories and Case Studies

Startup incubators have a track record of turning small ideas into industry-leading companies. A startup's journey from its early days in an incubator to becoming a household name offers invaluable insights into these programs' potential.

Tech Giants Beginnings  

Take Dropbox, for example, which started in the Y Combinator program in 2007. With the help of Y Combinator's mentorship, seed funding, and networking, Dropbox honed its product and strategy to become the cloud storage giant we know today. This journey underscores the significant role incubators play in a startup's development.

Industry Transformers  

Airbnb's story is another testament to the power of a good incubator. Also a Y Combinator graduate, Airbnb disrupted the traditional hotel industry with its unique home-sharing model. The early support from Y Combinator was crucial for Airbnb to navigate its entry into the market, setting it on the path to becoming a global powerhouse in the vacation rental space.

Pioneers in Sustainability  

Beyond Meat's journey began in the UCLA Anderson School of Management incubator, highlighting the incubator's emphasis on sustainable and innovative solutions. This support system helped Beyond Meat fine-tune its groundbreaking plant-based meat products, leading to its successful public offering and widespread adoption.

Healthcare Revolutionaries  

PillPack, which has redefined pharmacy services, benefited greatly from its time with Techstars Boston. The incubator's resources and mentorship were instrumental in helping PillPack navigate the healthcare industry's complexities, culminating in its acquisition by Amazon and revolutionizing prescription delivery.

A Super App's Rise  

Grab, Southeast Asia's leading super app started in a government-backed Malaysian incubator. The incubator's resources were vital in expanding Grab's offerings beyond ride-hailing to include food delivery, digital payments, and more, significantly impacting the region's digital landscape.

These stories show a common thread: incubators provide more than a workplace space. They offer a nurturing environment where startups can access vital resources , mentorship, and networks. This foundational support is crucial for startups to refine their products, strategize their business models, and ultimately secure funding or acquisitions. These success stories celebrate the startups' achievements and highlight incubators' pivotal role in fostering innovation and market fit.

In conclusion, business incubators serve as crucial catalysts in the startup ecosystem, propelling small ideas into industry giants through comprehensive support, resources, and mentorship. From tech pioneers like Dropbox and Airbnb to innovators in sustainability like Beyond Meat, the stories of startups nurtured by incubators showcase the transformative power of these environments. Incubators provide the tools and networks necessary for growth and instill a culture of innovation and resilience vital for success. 

For entrepreneurs embarking on the startup journey, selecting the right incubator is a strategic step that can significantly influence their path. By understanding the unique offerings of each incubator and aligning them with their startup's needs, founders can leverage these platforms for maximum benefit, turning their visions into viable, thriving businesses. This guide underscores the importance of incubators in the startup landscape, illustrating how they are indispensable in shaping the success stories of tomorrow.

Key Takeaways

Incubator Diversity and Selection: Startups must choose incubators that align with their industry, growth stage, and specific needs, ranging from mentorship to investor connections, to maximize growth potential.

Comprehensive Resource Access: Incubators provide startups with essential resources like office space, mentorship, and networking opportunities, significantly reducing overhead costs and fostering growth.

Mentorship and Strategic Guidance: The guidance from experienced mentors within incubators is invaluable, offering insights into strategic planning, leadership, and overcoming business challenges.

Networking for Opportunities: Incubators facilitate vital connections with investors, partners, and customers, expanding startups' networks and opening doors to new business opportunities and collaborations.

Success and Growth Trajectory: Successful incubator alumni like Dropbox and Airbnb illustrate the transformative impact of incubators on startups, leading to industry revolution and substantial growth.

Table Of Content

Explore Our Services

Explore our top-notch pitch deck service

We help discerning startups and growing businesses create powerful pitch decks that attract investors and secure big deals.

Subscribe to our newsletter and keep in touch with us

An error has occurred somewhere and it is not possible to submit the form. Please try again later.

Only available to newsletter subscribers!

Answers, To The Most Asked Questions

What is a business incubator, how do i choose the right incubator for my startup, can joining an incubator increase my startup's chances of success, what are the benefits of joining a startup incubator, are there any challenges or considerations i should know before joining an incubator, you may like.

10 Best Cyber Security Startup Ideas

Discover the most promising cybersecurity startup ideas for 2023. Drive innovation, meet market demands, and elevate digital safety. Start your journey now!

Read Article

10 Best Software Startup Ideas

Discover the hottest software startup ideas for 2023. Dive into trends, market potentials, and launch strategies to kickstart your entrepreneurial journey!

10 Pros and Cons of Venture Capital You Should Know

Explore the dynamics of venture capital. Dive into its benefits, potential pitfalls, and learn how it can shape startup trajectories. Make informed decisions with our guide.

10 Unique Clothing Business Ideas

Discover groundbreaking fashion business concepts for 2023! From sustainability to tech trends, master the art of differentiating your brand. Dive in now!

discover the menu

Get Ready For Funding

Pitch Deck Service

Pitch Training

Financial Modeling

Investor Outreach

Fundraising Consultant

We normally respond within 24 hours

View all our blog articles

Review finds Lake Wales business incubator BizLinc fell short of some goals in contract

A city-funded business incubator in Lake Wales fell short of meeting some requirements in its contract during its first year, according to a long-awaited independent analysis.

The City Commission in February ordered an audit of BizLinc , a nonprofit business-support hub that opened two years ago in Lake Wales’ Northwest neighborhood. The city hired the Orlando accounting firm Carr, Riggs & Ingram to conduct a review of BizLinc, which is operated by Florida Development Corp.

The company completed its report on June 26, and Lake Wales shared it last week.

The Lake Wales Community Redevelopment Agency signed an operational agreement with Florida Development Corp. in 2022, offering a potential $1.2 million over three years to manage the facility. In a four-page report, Carr, Riggs & Ingram reviewed BizLinc’s performance in six categories, covering the first year of the contract, a period ending July 24, 2023.

The consultants found that BizLinc failed to meet its goals in three areas.

What benchmarks did it miss?

Under the agreement, the BizLinc management promised to hold at least 10 training seminars for local business owners during the first year. The auditors could verify that only five such seminars took place.

Carr, Riggs & Ingram obtained sign-up sheets for seminars and selected 50% of the scheduled participants to confirm their attendance. The report indicates that only six people signed up to take part in the seminars.

The contract specified that FDC would provide at least 2,000 hours of technical assistance for BizLinc members. Based on logs provided by FDC, the auditors calculated that the incubator had offered 1,365 hours of technical assistance, a shortfall of 32%.

The consultants confirmed the services provided by selecting a sample of assistance hours recorded and inspecting sign-in sheets and signatures of members, the report said.

In the third shortcoming, Florida Development Corp. submitted only one quarterly report to the city during the one-year period, the auditors reported.

The operational agreement specified that business owners using BizLinc’s services were expected to create 10 jobs in the first year and 20 in each of the next two years. The report from Carr, Riggs & Ingram did not address that variable.

Under the agreement, Lake Wales paid FDC $500,000 for the first year and $400,000 for the second year to cover operating costs and salaries for full-time staff “during initial program stabilization.” The agreement has an option for a third-year payment of $300,000, contingent upon FDC meeting “deliverables” listed in a chart included with the contract.

The payment for the third year was due to be paid this month.

'Great stuff happening'

Derrick Blue, director of BizLinc, said that FDC got a late start in establishing the incubator.

“But we’ve kind of since made up what we needed to make up,” Blue said. “And I don't have a doubt that that'll be demonstrated during this during the second half (of the contract). We’ve been seeing some great stuff happening. I want to kind of get this behind us and start focusing on working with a new group that's coming in.”

Blue said that BizLinc has seen an “influx” of local business owners seeking to take advantage of its services.

Blue, FDC’s co-founder and chief operating officer, said Friday that he had not yet discussed the report with any Lake Wales officials. The board of the CRA, which consists of the City Commission, will hold a regularly scheduled meeting Tuesday at 2 p.m. The City Commission meets for a work session on Wednesday.

BizLinc has faced scrutiny since the Lake Wales News published an article in February questioning how many of its client businesses were based in Lake Wales and had obtained business tax receipts required by Polk County. The City Commission invited Blue and his FDC business partner, Frank Cornier, to speak during the Feb. 20 meeting, at which several business owners angrily defended BizLinc.

The Lake Wales News article also exposed fake testimonials on the BizLinc website. Blue later said that those were used as generic placeholders when the website was created, and profiles of actual BizLinc clients have since been posted to a new website.

Further questions arose when Charles Young Jr., FDC’s former chief financial officer, was arrested in April on accusations of embezzling more than $250,000 from the company. Young faces one felony charge of grand theft of more than $100,000 and another of property fraud.

'Elated': Lake Wales captures $23 million federal grant to move road projects forward

Blue said that Young’s alleged embezzlement had not affected the finances or operations of BizLinc.

Lake Wales paid Carr, Riggs & Ingram $10,500 to conduct the review of BizLinc’s performance.

No comment from Lake Wales officials yet

Lake Wales Mayor Jack Hilligoss did not respond to a voicemail left Friday. Deputy Mayor Robin Gibson and Commissioner Keith Thompson said they thought it would be premature to comment on the report until after the City Commission discusses it.

The creation of a business incubator in the Northwest neighborhood was one of many suggestions in Lake Wales Connected , a comprehensive and open-ended strategy for revitalization adopted by the City Commission in 2021. The framework, developed by the consulting firm Dover, Kohl & Partners, derives from a city plan created in 1931 by Frederic Law Olmsted Jr., the designer of Bok Tower Gardens, and his brother, John Charles Olmsted.

In 2022, FDC bought a vacant, 3,570-square-foot office building at 225 W. Lincoln Ave. to house the incubator. The Northwest Neighborhood, predominantly Black, has endured declines in recent decades, and former retail buildings sit vacant along Lincoln Avenue.

BizLinc does not charge clients for training and other services, but some businesses opt to rent office space at the building on Lincoln Avenue.

Gary White can be reached at [email protected] or 863-802-7518. Follow on X @garywhite13 .

Agenda-setting intelligence, analysis and advice for the global fashion community.

News & Analysis

• Professional Exclusives
• The News in Brief
• Sustainability
• Direct-to-Consumer
• Global Markets
• Fashion Week
• Workplace & Talent
• Entrepreneurship
• Financial Markets
• Newsletters
• Case Studies
• Masterclasses
• Special Editions
• The State of Fashion
• Read Careers Advice
• BoF Professional
• BoF Careers
• BoF Insights
• Our Journalism
• Work With Us
• Read daily fashion news
• Download special reports
• Sign up for essential email briefings
• Follow topics of interest
• Receive event invitations
• Create job alerts

Have Incubators Outlived Their Purpose?

A few days ago, our intrepid beauty correspondent Daniela Morosini broke the news that Luxury Brand Partners was exploring the sales of two of its six portfolio brands, Patrick Starrr’s One/Size and IGK Hair , via investment bank The Sage Group.

One/Size, launched in 2020, and IGK, created in partnership with salon professionals Chase Kusero, Aaron Grenia, and brothers Leo and Franck Izquierdo in 2015, join a competitive group of brands jockeying for acquirers’ attention.

While not as splashy as some of the other labels in the market, like Rare Beauty, Summer Fridays and Glossier, One/Size and IGK boast sound financial profiles. IGK is expected to hit $80 million in revenue, buoyed by strong specialty retail partners and its direct-to-consumer business. Its adjusted earnings before interest, tax, depreciation and amortisation is expected to be close to 20 percent of net sales for 2024. One/Size, meanwhile, is projected to reach $115 million in revenue and adjusted EBITDA is 40 percent of net sales. That’s incredible given that chief executive Tev Finger said Luxury Brand Partners would invest just $10 million in One/Size over three years when it debuted in 2020.

Luxury Brand Partners, who had its pick of conglomerates in its heyday, might struggle to find homes for One/Size and IGK. Though smaller, IGK could find a buyer first, given the glut of colour brands for sale. Starrr’s One/Size has formidable numbers and sell-out SKUs like its On ‘Til Dawn mattifying waterproof setting spray, but only few buyers could afford its price tag.

ADVERTISEMENT

Why is it so hard for incubated brands to find success today?

When Miami-based Luxury Brand Partners was established in 2012, it quickly became one of the most prominent beauty incubators in the business. The established player in the field was Maesa, which was founded in 1997 in Paris. However, while Maesa preferred to own the lines it built for the long term (it still co-owns Drew Barrymore’s Flower Beauty, which was founded in 2013), LBP perfected the art of building desirable, one-of-a-kind assets and selling them to beauty’s biggest players.

LBP was filling a market need; the biggest conglomerates had for a long time struggled to build successful brands in house, and were on the hunt for acquisitions. Between 2016 and 2018, the incubator created and sold Becca, Oribe and Pulp Riot to the Estée Lauder Companies, Kao and L’Oréal, respectively.

Since those transactions, it became much easier to launch a beauty brand and attract a big player’s attention. There were independent and venture capital-backed upstarts, enabled by low customer acquisition costs and the DTC-beauty boom, as well as competing incubators . A-Frame and Beach House Group have created many influencer- and celebrity-led lines like John Legend’s Loved01 and Tracee Ellis Ross’ Pattern Beauty, respectively. Smaller firms like Slate Brands have focussed squarely on Gen-Z. Oftentimes, if a celebrity or influencer doesn’t find a home with one incubator, they can easily hop to another.

Few of these ventures have had the creation-to-sale success that LBP did in its heyday. There are too many brands on the market, and customers have become more sceptical of build-a-box beauty lines.

Amyris , which was fast and furious in its incubation process with lines as far flung as Rosie Huntington-Whiteley’s colour cosmetics line, Naomi Watts’ Stripes and “Queer Eye” star Jonathan Van Ness’ hair care brand JVN, imploded last August. Forma Brands , the incubator behind Morphe, Jaclyn Cosmetics and Ariana Grande’s R.e.m. Beauty filed for bankruptcy months earlier. One exception to the recent carnage is The Center, which sold masstige skincare line Naturium, created with Susan Yara, to E.l.f Beauty for $355 million last year.

The biggest threat to incubators is replicating a tired formula and the talent they work with, who have watched their predecessors run into trouble, are determined not to make the same mistakes.

Kristin Ess of Kristin Ess Hair and Shelby Wild of Playa sued Maesa and Morphe , the beauty incubators that own their respective businesses, at the end of 2022. Van Ness said only now, post-Amyris, does he own a chunk of his business. More recently, Andrew Fitzsimons bought back his two-year-old, namesake brand from Maesa in a bid for full creative control.

Fitzsimons told The Business of Beauty he doesn’t regret working with an incubator like Maesa. But said he would advise creators to insist on owning their lines from the outset.

“Beauty incubators are like old school record labels, where they will see people who already have an established career, they just market them,” he said. “A record label has a lot of artists; they’re splitting their resources. When an artist is independent, they can actually do their own thing.”

Since officially parting with Maesa last month, Fitzsimons has hired a six-person, all-female team based in Ireland; he is in the process of hiring executives in all territories where the line operates. While arguably more difficult, the founder hopes to find this iteration of the line more creatively fulfilling.

Referencing Taylor Swift’s blockbuster rerecorded albums, “Fearless,” “Red,” “Speak Now” and “1989,” he said. “This is Andrew Fitzsimons Haircare, Andrew’s version.”

Here are my top picks from our insight and analysis on beauty and wellness this week:

1. Patrick Starrr’s One/Size and IGK Hair Explore Exit Options

Beauty brand incubator Luxury Brand Partners, owner of the premium cosmetics and hair care lines, has tapped The Sage Group to suss out their options. By getting to this stage, they’ve reached a tier many incubated brands don’t.

2. The ‘Unbookable’ Beauticians With Years-Long Waiting Lists

Practitioners like Iván Pol, known for his ‘Beauty Sandwich’ technique, Joanna Czech and Harriet Westmoreland are so oversubscribed, to get an appointment, you might need a private concierge.

3. Bobbi Brown Is Now the Host of This Zoom Meeting

Jones Road, the makeup artist-backed beauty label, is built on feedback, insights and suggestions from its community. But sometimes, its founder has to push back.

THE BUSINESS OF BEAUTY NEWS IN BRIEF

Shiseido Wins Max Mara Fragrance License . The Japanese beauty conglomerate will develop, produce and manufacture fragrances for Max Mara , which has not sold perfume since it discontinued a line of scents launched in the mid 2000s.

Celine extends bath and body range. Created by artistic director Hedi Slimane, the products feature some of the house’s signature scents . A more robust selection of cosmetic products will debut in January 2025.

Glossier partners with USA Women’s Basketball for the Olympics. The partnership will see Glossier get its products on some of the contemporary greats of American basketball, who will be in action at the Olympics. The brand will be the women’s team’s first dedicated sponsor since Tampax in 1996 , CEO Kyle Leahy told BoF.

Boots chief quits after Walgreens’ sale plan stalls. Sebastian James, who has run Boots since 2018, will remain in the post until November before taking up a new role elsewhere. A successor has yet to be named. Walgreens warned on its profit outlook and said it had no plans to sell Boots, having decided to continue to invest in it.

Priya Rao is Executive Editor at The Business of Beauty at BoF. She is based in New York and oversees BoF’s beauty and wellness coverage.

© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions

At Inglot, Leveraging Local Production Amid Global Expansion

Makeup and skincare brand Inglot is ramping up its distribution strategy as it leans into its core value of delivering scientific, research-driven skincare and makeup products. BoF sits down with its newly-appointed CEO to learn more.

The Biggest Summer Beauty Trends to Watch

Seasonal staples like SPF and beachy scents are getting an update, while new product innovations have taken off thanks to influencers.

What’s Hot in Sunscreen Now

Years into SPF’s beauty-fuelled reinvention, new trends are still emerging, from the growing popularity of foreign formulas to innovations in texture.

Scentbird’s CEO Is Also a Spiritual Guru. Not All Customers Are Pleased.

The co-founder of the “Netflix for fragrance,” Mariya Nurislamova, has been moonlighting as a spirituality influencer. Comments on extraterrestrials, the “Matrix” and Hitler have recently attracted negative attention.

Subscribe to the BoF Daily Digest

The essential daily round-up of fashion news, analysis, and breaking news alerts.

Our newsletters may include 3rd-party advertising, by subscribing you agree to the Terms and Conditions & Privacy Policy .

The Business of Fashion

Our products.

• BoF Insights Opens in new window