Most small businesses don’t make it to their fifth anniversary. In fact, according to the U.S. Small Business Administration, only 44 percent make it past four years. Business incubators work to help businesses do better than that by offering specialized services and mentoring.

Many people associate the term “incubator” with the dot-com era, however, according to the National Business Incubator Association (NBIA), business incubation programs trace their beginnings back to 1959, when the first program opened in Batavia, New York. Nearly half of the incubators in North America are mixed-use programs that work with a variety of early-stage companies, while more than one-third focus specifically on technology companies. In recent years, some incubators have developed programs to work with specific industry clusters, such as specialty food producers, biotechnology and biomedical, environmental, and information technology.

Unlike many of the incubators that emerged during the dot-com period in the late 1990s to generate quick wealth for investors, the majority of incubation programs aim to create jobs, diversify economies, revitalize neighborhoods, or commercialize new technologies. Business incubators are usually started and funded by governments, universities, or other groups that are designed to catalyze the process of starting and growing companies by providing entrepreneurs with the expertise, networks, and tools they need to make their ventures successful. By providing low cost space, reduced overhead, administrative services, legal aid, business acumen, general guidance, and other areas of expertise that the new business may need, a business incubator strives to get new businesses off on the right foot.

The NBIA states that more than 950 incubator programs operate in North America; 47 percent of which are non-profit and 14 percent are academic related centers. eHow.com offers the following tips for deciding if an incubator is right for you (and your business) and how to go about finding one:

• Decide whether your business is appropriate for an incubator. Anywhere from 10 to 40 small businesses might reside in one incubator, most using office space of 1,000 square feet or less. Most likely, a manufacturing business probably wouldn't fit in an incubator. To find the nearest incubator, call your local Chamber of Commerce or Small Business Administration office.



• Find an incubator that suits your business. Some incubators cater to specific industries such as software.



• Assess the other businesses currently residing in the incubator. You may want to avoid one with a company that could be a competitor.



• Determine what is included in the tenant fees and confirm the terms of the lease. In some cases, this includes office furnishings, janitorial service, shared use of the fax and copy machine and a parking space. Many incubators expect fledgling businesses to move out after two or three years.



• Plan in advance for your departure from the incubator. Have enough money for the higher rent you will need to pay and the office equipment you'll need to buy once you leave.

If you’re interested in taking the next step or learning more about business incubators, access this issue's Useful links or visit e-Coach’s check list for evaluating the services a business incubator provides.

SOURCES:
National Business Incubator Association
eHow.com
Small Business Association