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Photo: USDA - Wikimedia Commons
Boise State opened a business incubator in in Nampa six years ago. Mark Rivers opened the WaterCooler last year. Mayor Bieter announced that Boise will be opening a green tech incubator in his state of the city address last week. Now Meridian has announced its plans to follow suit. Both cities see their new endeavors as essential to kick-starting a sluggist economy.
It would seem there's never been a better time to be an entrepreneur in the Treasure Valley. Incubators provide office space, clerical help, and infrastructure for a low monthly fee. Some even offer on-site business mentoring, group insurance, and other benefits. They can even offer such intangibles as networking and collaboration opportunities.
But do businesses that get their start in incubators do better than if they had not? What little research there is inconclusive. Certainly many incubated businesses go on to be successful. But is the proportion any higher than the number of successful businesses not starting from an incubator program? No one seems to know.
For one thing, business incubators, while cheaper than funding facilities and infrastructure on your own, do cost money to join. The new facility planned for Meridian can cost as much as $300 per month. It can be argued that new businesses that have the funding to be able to afford an incubator would probably have sufficient funding to succeed regardless.
Meanwhile, during these current economic times, many of the new businesses starting up are doing so out of necessity following a layoff. They are not likely to have much startup capital. Incubators would be out of reach for the vast majority of new businesses until they are already at least moderately successful--at which point the $300 would be better spent growing the business or putting food on the table.
Furthermore, business incubators usually have a mission to encourage specific types of business. BSU's TECenter only helps technology startups. Boise's planned facility will only help green energy companies. Their very nature favors "white collar" companies. If not discriminatory, it is at least disappointing for "blue collar" companies that could also use help getting going. Blue collar companies may not be "sexy", but they are every bit as vital to our local economy, as evidenced by the difficulties brought on by the construction slump.
Perhaps the main value for a city in starting an incubator is in the image boost that goes with it. Cities that start and/or encourage incubator programs are seen as being "business friendly" and actively engaged in the economic success of their residents. Concerned citizens see that their government is "doing something". And in an recession that is caused as much by perception as by reality, image may be everything.
Business Incubation (Small Business Notes)
Do Business Incubators Work? (Paul Kedrosky)
Can Business Incubators Justify Their Existence? (Business Week)
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Comments
I'm here to encourage all kinds of business. I don't think it really matters where you trepeneur (a new word I just made up meaning the verb form of entrepreneur ), as long as a company is filling a hole in the needs of the market. For many, a home office is just fine, but if you don't have the space to have a cloistered place to work away from the distractions of the home, a low cost incubator is an excellent solution. Either way you get a tax write-off (for the time being anyway). Being surrounded by businesses in the same category, yet filling a different niche might just culturally add that element of accountability a company needs to make the leap to greatness. I'd like to do a long term study to see how it all turns out. Perhaps incubator owners would like to fund such a venture. Ooo looky, there I go, trepeneuring again. *smile*
Perhaps I could have dug deeper, but I couldn't find much in the way of current studies. I did notice that these days incubators tend to be more private enterprises rather than city/state gov't. operations. In any case, I certainly agree. More research needs to be done. I don't know if the individual incubators would be interested, as they already have "conventional wisdom" on their side, and therefore no image problem to correct.
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