Business Incubators: Success Criteria
Business Incubators: Success Criteria
he incubator at Western Colorado Business Development Corporation is one of
550 in North America, according to industry facts and figures from the National Business Incubation Association (NBIA).
Like 49 percent of those incubators, WCBDC is a public or not-for-profit center, sponsored
by government and nonprofit organizations primarily for economic development, job
creation, economic diversification and/or expansion of the tax base.
The incubator at Western Colorado Business
Development Corporation is one of
550 in North America . . .
With its involvement of successful entrepreneurs, lawyers,
accountants, bankers and many others to provide expertise and financing, however, WCBDC
can also fit into the "hybrid" category, along with 18 percent of other
incubators. These partnerships offer incubators access to government as well as private
sector funding and resources. 
Twelve percent of North American incubator facilities are completely
private, run by investment groups or by real estate development partnerships. Their
interest is in economic reward for investment in tenant firms, new technology applications
and transfers, and added value through development of commercial and industrial real
estate.
As WCBDC develops a working relationship with Mesa College, it joins 13
percent of incubators that are affiliated with universities and colleges. In addition to
sharing other objectives, such affiliations provide research opportunities and start-up
business opportunities for alumni, faculty and associated groups.
Another 8 percent of North American incubator facilities are sponsored
by a variety of non-conventional sources such as art organizations, Indian tribes, church
groups, chambers of commerce, etc.
Other Incubator Perspectives
Robert J. Sherwood is former president of a hybrid incubator, the
Center for Business Innovation (CBI) in Kansas City, Missouri. CBI won the Incubator of
the Year award from the National Small Business Incubator Association in 1993, and in 1996
they won recognition for the Innovative Program of the Year.
"A business incubator needs to be about supporting innovation, not just about renting space."
Sherwood has been active nationally in the incubator movement, and
has been described as one of the people "on the leading edge of thinking about how to
support small business development." He spoke about new paradigms for business
incubators at a recent conference on technology and community development sponsored by the
Council on Urban Economic Development. Sherwood emphasized that business incubators need
to move beyond old ideas and assumptions to effective new approaches.
"A business incubator needs to be about supporting innovation, not
just about renting space," Sherwood said. "It should focus on creating wealth,
not on supporting itself and others in a permanent nonprofit status. Our purpose is to
build self sufficiency, not to maintain dependency."
Sherwood believes those involved in incubators should have a financial
stake in its success, and that they should be stakeholders more than partners. He believes
an incubator's capital should be primarily from investors who expect a return on their
investment, rather than from funders who provide money without concrete expectations of
returns with added value. 
"A successful incubator is likely to be headed by a president who
earns a salary and commissions based on his or her effectiveness," said Sherwood.
"They need a passionate commitment to what they're doing, and a personal stake in
it." That president may earn $150,000 or more per year, in contrast to an incubator
"manager" who may make closer to $30,000 per year. Sherwood said that incubators
and the businesses they are designed to support fail when they have no vision, no
performance measures, and no rewards commensurate with investment.
When Sherwood screens potential businesses for CBI, he looks for people
with businesses that are market driven, not idea driven. He wants clients who are focused
on goals of high business growth, not people whose goals are primarily to change
lifestyles by becoming their own boss.
Although CBI serves a range of clients, their emphasis is on high
technology businesses, not retail or service businesses. Sherwood believes that it's the
innovation and the expanded networks that are key to CBI's success in supporting business
growth, and renting space to tenants is incidental to his vision of businesses that
operate effectively in a global marketplace.
. . . rural and urban incubators differ in important ways.
Sherwood emphasized that we need to move beyond the concept of
economic development, with its assumption that government must provide ongoing support for
business development. "We need sustainable development," he said, "and
while initial assistance from public and nonprofit sources may be needed, those resources
must be allocated to leverage long-term solutions, not to create permanent dependency. Our
goal," he said, "is to create healthy and wealthy businesses in the
community."
The Western Colorado Business Development Corporation in Grand Junction
shares many of the characteristics of the Center for Business Innovation in Kansas City,
and both have been recognized nationally for their effectiveness.
Thea Chase said she agreed with Robert Sherwood on many of his
statements, but that rural and urban incubators differ in important ways. "In western
Colorado, there is no university to provide technology-based degrees," she said.
"The critical mass to establish a high technology incubator does not exist, and as a
rural incubator, we must be prepared to serve many industries."
"Any new project presented to my board is always greeted with 'Will it pay for itself?'"
Chase does strongly agree with Sherwood's comments on
innovation and self sufficiency. "Any new project presented to my board is always
greeted with 'Will it pay for itself?'"