Money & Business

Creative Spark from Business Incubators

By Joe Rominiecki / Dec 10, 2012 (Nikifor Todorov/Shutterstock)

To be more than cheerleaders for innovation in their industries, associations can draw some inspiration from the successes of business incubators and coworking spaces.

If real-world success required nothing more than ideas, we’d all be rich.

Of course, that’s not how it works. Ideas need care and feeding. Innovation is less inspiration and more perspiration, as a famous inventor once said.

Tracy Kitts is acting CEO of the National Business Incubators Association (NBIA). His members run community business-development programs whose purpose is to help entrepreneurs turn innovative ideas into viable businesses. He knows what that requires: “Any damn thing that business needs to succeed.”

Elsewhere, young entrepreneurs are banding together to share offices, but it’s more than just a way to save on rent. The communities that are forming in these coworking spaces, as they’re called, are becoming breeding grounds for new connections and new ideas.

For associations that want to get serious about fostering innovation within their industries, business incubators and coworking spaces can show them what is possible, given the right level of commitment.

A Structure for Growth

A business incubator is exactly what it sounds like: a warm, cozy setting for a business in its infancy to grow into a healthy company. It usually entails affordable, multitenant office space with shared administrative services and direct assistance with early business planning.

The Lab has been very successful at knowing that the thing that they are selling the most is not office space or copiers—what we’re selling is people.

Most incubators are nonprofits and operate within a local community; a few run via for-profit models, and some are fully virtual, delivering services electronically. NBIA was founded in 1985 with about 40 members. Today, it estimates about 1,400 incubators are in operation in North America.

The brochure-friendly version of Kitts’ description of incubation is “comprehensive business assistance.” That assistance runs the gamut, as every new business idea and local market is unique, but incubator services positively linked to business success include

  • Entrepreneurial training
  • Increased access to investment capital
  • Relationships with local higher-education institutions
  • Production assistance
  • Mentorship programs.

“You’re either a consultant, a coach, or a counselor,” says Kitts, who was associate director of a business incubator for nine years before joining the NBIA staff. Running an incubator requires a skilled facilitator with keen business acumen to lend to clients, who may be sitting on a winning idea but little else.

“Entrepreneurs are risk takers by their very nature and they have to be, and they generally know the product incredibly well. They generally know the market really, really well, but they seldom have all the business skills that they need,” Kitts says.

The incubator’s philosophy might sound familiar to association professionals. “You have to be slightly ahead of your clients,” Kitts says. Successful incubators “are skilled enough in the business-creation process that they can anticipate what the next thing is that the client companies are going to need or want.”

Perhaps what sets business incubators apart most from other forms of innovation development—such as research and technology parks, small-business development centers, seed accelerators, coworking spaces, and various hybrids—is selectivity and progression. Incubators don’t hand out their core services to just any dreamer with a doodle on a napkin; clients must apply for acceptance into the program. Then, businesses are marshaled through stages of growth with a clear goal in mind: no longer needing the incubator’s assistance. When they’re ready, client businesses graduate and move out into the real world, making room for new startups behind them. That timeline varies widely but, on average, spans 28 months, and the average incubator serves 35 clients at any given time, according to NBIA.

Incubators also measure outcomes carefully. A 2011 study of business incubators, funded by the U.S. Department of Commerce Economic Development Administration, found that “high-achieving incubators collect client outcome data more often and for longer periods of time than their peers.” Some track graduate-firm survival rates, revenue, and employment for five years or longer.

In the long run, finding ways to support innovators can boost growth in your industry at large and, in turn, earn loyal association supporters. “Lots of clients are quite grateful for the help that they’ve received,” says Kitts, “so they come back in and they help the up-and-coming companies.”

An Environment for Growth

A community of entrepreneurs who support each other is built into the structure of the best incubators, but it is the hallmark of the incubator’s rambunctious younger cousin, the coworking space.

A prime example is Affinity Lab in Washington, DC’s U Street neighborhood. Created in 2001, Affinity Lab is among the older examples of a growing trend of open, shared work settings where solo entrepreneurs and small startups—often in the creative, technology, or social enterprise fields—trade the quiet, buttoned-up setting of the corporate office for a more relaxed, collaborative ethos. If you walk into a coworking space and are reminded of a coffee shop on a college campus, well, that’s no coincidence.

Affinity Lab occupies approximately 5,000 square feet of office space for its 60 to 65 member businesses. Only 12 desks are reserved by full or shared-desk members; remaining desks are first-come, first-serve. Others can spread out on couches or in meeting rooms. And there is not a cubicle wall in sight.

Greg Roth runs his content-strategy consulting firm, Percy Group Communications, from Affinity Lab, and he credits his fellow Lab members with helping him learn video shooting and production.

“When I got to the Lab, I started to pick up everything I could about new media stuff,” says Roth, who worked in associations for nine years before venturing out on his own in 2009.

“I learned video—how to shoot, edit, and produce video—which I found that I really liked.” Roth learned video from professionals at Goldenbear, a seven-person video production firm working at Affinity Lab. In turn, Roth has led public-speaking critiques for fellow “Labbies.”

While much of the day-to-day collaboration is organic, Affinity Lab’s pay-it-forward spirit is indeed purposeful. “The Lab has been very successful at knowing that the thing that they are selling the most is not office space or copiers—what we’re selling is people,” says Lab Manager Laurin Hodge. “We’re selling culture. We’re selling the fact that you can work at the Affinity Lab and feel confident that you don’t have to know everything because you work among really talented, really smart, really friendly people.”

While incubators utilize a structured process for growing businesses, the coworking space mostly relies on its culture to drive innovation on its own. “You have to put a certain amount into it to get a certain amount out of it—there’s no secret to that,” says Roth. “The network has to mean something to you. Otherwise, you’re just paying for office space.”

That organic culture at times results in inconsistency, but it can also be one that any association would love to emulate. Roth says being known as a member of Affinity Lab is now a part of his brand.

“If you work at a place with a lot of interesting folks that have a lot of ideas, that’s going to affect what you, as a product, are. So, it’s a natural extension to, when you talk about the Lab, have people understand immediately who you are or who are curious about who you are, and it frames a lot of conversations about yourself and about your business,” Roth says. “When I joined the Lab, one of the things [the previous manager] said to me was, ‘You’re not just joining as a member. You’re choosing a lifestyle for yourself.’ ”

Joe Rominiecki

Joe Rominiecki is a senior editor at Associations Now, a lifelong Phillies fan, and a proud alum of Ohio University. More »

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