It can be a cold, harsh world out there--especially if you're just starting out in business. Luckily, business incubators can provide you with shelter from the storms of unfamiliarity.
Assistance programs established to help get your business off the ground, incubators nurture your company during its infancy--when it's most vulnerable to the perils of the start-up process. In addition to management advice, access to financing, technical and business support, and other services, incubators offer affordable rental rates for work space.
Incubators boast impressive success ratios: According to a recent study by the National Business Incubation Association (NBIA), an estimated 87 percent of companies that graduated from incubators since the 1970s are still in business. In addition, these companies report an average sales increase of more than 400 percent from the time they enter the incubators until they leave.
"Business incubation goes a long way toward taking the fear and loneliness out of your business," says Dinah Adkins, the NBIA's executive director. "[It] provides invaluable services to fledgling companies to ensure their success."
A small number of "niche incubators" also exist, which cater to new companies in specific industries, such as software or arts and crafts, as well as businesses run by women and minorities.
Because of its popularity, incubator tenancy is not offered to just any new business seeking assistance; most incubators have a stringent application process and even require prospective tenants to present a formal business plan. But once accepted, many businesses aren't quick to leave: On average, companies stay in incubators two to three years.
For a listing of incubators in your state, e-mail firstname.lastname@example.org or send a self-addressed, stamped envelope to National Business Incubation Association, 20 E. Circle Dr., #190, Athens, OH 45701.
We all make mistakes. Here's how to learn from yours.
Even the most successful business owners make mistakes. That's how they learn and grow. But what if you're just starting out in business and haven't had the chance to err yet? Never fear: You can learn about business blunders--and avoid making them yourself--by studying the mistakes of others.
Richard Z. Gooding, Ph.D., a strategic planning consultant in Phoenix who wanted to identify which pitfalls posed the greatest threats to new businesses, asked a group of 40 senior executives in 1995, "Why do new products or services fail?"
The skeletons in their collective corporate closet revealed that companies large and small suffer from many of the same ailments. Timing, they said, is crucial--especially when introducing a new product or service, because entering a saturated market can be as disastrous as entering the market too early.
Other problems responsible for failed business ventures include miscalculating market size, underestimating costs, failing to differentiate a product or service from its competition, overestimating sales volume and undercapitalization.
But the biggest problem, says Gooding, is not understanding the customer. "People have great business ideas all the time but don't consider what their customers' needs might be," he says. "But by going out and talking to customers, you can find out what they really need and what their problems are--and then you can find a solution to them."
To help new small-business owners identify and anticipate problems, Gooding has published a booklet called But What Could Possibly Go Wrong? that lists 56 of the most common reasons businesses fail. For a free copy, send a self-addressed, stamped envelope and your business card to Strategic Advantage Inc., 4321 E. Woodland Dr., Phoenix, AZ 85044.
Strategic Advantage Inc., (602) 759-7562