In business, an incubator helps fledgling start-ups that were launched prematurity to land on their feet.
The concept of business incubation started more than three decades ago with entrepreneurs who sought help covering overhead costs. During those times, when the cost of technology was high, business owners would pool together to share the cost burden of fax machines, printers, computers and even office space.
Times, and technologies, have changed. In the current business environment, small business entrepreneurs are empowered by high-speed Internet and affordable technology to take an idea and jump into business ownership without a lot of upfront expense, said Bruce Mancinelli, director of INC.spire, a business incubation program fostered by the Greater Reston Chamber of Commerce.
“This is the best time ever to start a business because the upfront cost is so small and the ability to enter the market is so quick,” Mancinelli said.
Mancinelli said Fairfax County’s business community is on the second or third life cycle of incubation; meaning, small start-ups are looking for businesses to mentor, counsel and coach them. Incubation now goes beyond buying an “open for business sign,” setting up a website, writing a pricing model, and gaining market traction. The incubator concept now has evolved into INC.spire’s model of a mentor pool.
“[The incubator] operates a unique model to marry up the right team of mentors for an individual company,” he said, likening the business model to matchmaking services for businesses.
No matter what the business is in the incubator, INC.spire matches them with their needs. The organization offers help in industries ranging from information technology services and human resources or organizational development to sales and marketing help or legal and financial services. Once the mentor’s team is established, the whole team reacts to any one need that might come up for the incubating company, creating an overarching view that most companies seek. The individuals on the team focus on only one business at a time. This ensures they are knowledgeable in the space, understand the language and jargon of the industry, have their own contacts, and also have vested interest in the new technology or service the incubating companies will produce.
Most of the mentorship is conducted on a one-on-one basis and is focused on the founder’s unique needs.
“It’s going to be less of a physical thing, less of a long-term thing, because in today’s world we’re less patient to see an idea mature,” Mancinelli said.
Likewise, the goal of Springfield-based Community Business Partnership, a division of the George Mason University’s Mason Enterprise Center, is to assist start-ups by offering them shared office space, access to conference rooms, phones and fax and copying services. After the bare necessities, CBP then ties their physical service offerings with business training, mentoring and advisement to their low- to middle-income or disadvantaged clients.
It’s true that in today’s world the incubation period is shrinking. But at CBP, the model is to start small and build up through training, advising and mentorship.
One success story Director Charles McCaffrey points to is Strategy and Management Services, Inc., Founder Stacy Redmon started taking classes through CBP’s women’s business center three years ago before moving herself and one other employee into the incubator offices. As a woman- and veteran-owned government contractor, SAMS found itself initially winning small contracts. During the course of a couple of years, however, the company has earned multi-year, multimillion dollar service projects, boasts 35 employees, and now is looking to move into corporate office space.
“That’s really a great success story. It’s also the model that we like to follow. Start out small, they’re here for two to three years time and slowly building their business and at a certain point we know that they need to leave,” McCaffrey said.
Across CBP’s umbrella organization that spans several co-location offices in Springfield, Manassas and Leesburg, the partnership services 4,000 clients per year with its staff of six. Still, the organization hosted 235 training classes focused on simple items such as registering your business to developing a financial and marketing plan in 2011.
CBP currently is operating at full capacity with five, full-time incubator clients in addition to 100 virtual clients who use their in-house mailbox service and an additional 300 outside start-ups using their incubation services a la carte.
McCaffrey said the most common hindrance to most start-ups is the founder’s lack of a business plan. Start-ups and legacy companies alike have differing views of what a business plan is, he said, so CBP takes a hard look at their product service to help them survive.
“Our job is to take that task and make it less onerous,” he said. “The business plan needs to be living and breathing and allow the opportunity to focus on new opportunities as they arise.”
At INC.spire, businesses benefit from a whole group of people who are dedicated to their business and have a desire to see you succeed.
Since its founding in 1999, INC.spire has had a 96 percent success rate, graduating 45 of 47 businesses out of its program. The graduates have since generated $45 million in business value, leased 80,000 square feet of commercial office space in Fairfax County and created 450 new jobs. The incubator currently has nine companies actively using its services throughout its four offices around Northern Virginia. Business incubators have an 80 percent success rate nationwide.
“When you’re on your own, you’re more likely to fail,” Mancinelli said. “Business incubators decrease that percentage or at least enhance your ability to success.”