Business Incubators

By Dace Koenigsknecht
Economic Restructuring Specialist
Michigan Main Street Center
Michigan State Housing Development Authority

Within the Economic Restructuring realm, there is plenty of conversation around business retention and recruitment. In this piece, I would like to briefly touch upon the home-grown option. We at the Center are hearing buzz on Main Streets across the state, primarily containing the following two words – business incubator. Everyone seems interested in having one, but what exactly is an incubator? I’ve done a little digging, and here’s the scoop from my perspective…

A business incubator is an environment, a form of mentorship, for selected small or start-up businesses that can benefit from lower rents and services provided by the incubator. These small business owners benefit from low rent, office help, counseling on business and financial plans, marketing, bookkeeping, sharing of office systems and equipment, and other services. An incubator is intended to provide a firm foundation for development of a new product, or service; enabling the cash-poor entrepreneur to expand from concept to market in a timely manner.

There is one clear undertone I wish to stress; an incubator is an active partnership between its management and their small-business clients. Incubators provide a plethora of client development opportunities: feasibility studies and entrance screenings for prospects; advisory boards and mentors; and professional coaching / instruction in business plans, marketing strategies, accounting, finance, personal selling skills, entrepreneurship, and entrepreneurial development training programs and manuals. If there is no active participation in the development process, then the arrangement is merely a landlord with small-business tenants. To spin it more philosophically: a landlord gives a man a fish, whereas an incubator teaches him to fish.

The last factor that I see revolves around proximity; that within the community, and that within the incubator. Entrepreneurs are inherently risk-takers; seeking both support and camaraderie from their environment. Take that bright high school student that starts a business in his hometown, where the support of family and social history are strongest. Or, take that college kid and his buddies that start a company in their cozy dorm room, where risk in numbers is somehow more palatable. Just as the social history of a community can create a psychological net for a budding entrepreneur, so can the daily interactions with like-minded people within an incubator. It is the close proximity of these less formal relationships, versus the mentorship of the incubator itself, that offer valuable moral and spiritual support.

How about your downtown? Your historic commercial district already functions as an informal incubator, and I hope that it embraces that role. Each business owner is a risk-taker with the bruises and scars of knowledge that can be shared. The built-in proximity along Main Street creates camaraderie and ‘safety in numbers’ – if not in the wallet, at least in the psyche. It doesn’t require the owner of the white elephant to utter those two words, for any one with under-utilized space (i.e. upper floors) and a desire to teach can be an incubator that makes a difference.

We at the Center recognize the importance of the entrepreneur within our communities, and have teamed with MSU Extension to offer their Energizing Entrepreneurs training to our Selected-level communities. The next session occurs in May.