What is a business incubator

The first business incubators appeared in the United States in the 1960s, when designers and architects united into creative communes, creating an optimal environment for business and interaction. Nowadays, the main objective of a business incubator is to help people who do not have start-up capital to open their own businesses.

A business incubator is a structure specializing in creating favorable conditions for the creation and development of small venture (investment) companies involved in the implementation of original scientific and technical projects. Such firms are provided with a wide range of consulting, information, material and other services, which helps novice entrepreneurs to fully concentrate on their tasks and reduce the cost of maintaining the managerial staff.

Business incubators can act as independent structures, or be created on the basis of universities and large research centers. As an aid to entrepreneurs in overcoming the difficulties of the initial stage, business incubators rent out premises for office or production facilities on flexible terms. Lease agreements, as a rule, are concluded for a period of no more than 2-3 years, since it is believed that during this time an entrepreneur should already learn to develop his own business and give way to a beginner in an incubator.

The rent in the first year is usually 50-70% of the market price and includes the provision of communication and secretarial services, the use of photocopying services and daily postal service. Since several novice entrepreneurs are located in one room at once, the lease agreement provides for the joint use of the kitchen, meeting rooms and recreation. The rental of technological equipment and machines is paid extra, and the cost of utilities is calculated based on individual consumption in proportion to the occupied area.

In addition to preferential rental conditions, the business incubator assists in the preparation of constituent documents and the procedure for registering legal entities, conducting bookkeeping, conducting market research and business planning. Start-up entrepreneurs are helped to find investors, provide mediation in contacts with potential business partners and help in solving legal and administrative problems, provide an opportunity to improve their educational level in the framework of ongoing entrepreneurial activities.

The selection of future members of the business incubator is based on certain criteria. In particular, the applicant must prove that his company has a real chance of success, and the goods, work or services offered by him are competitive. Applicants are also required to provide documents such as a questionnaire and a description of entrepreneurial activities carried out earlier, the financing concept, investment and business plan.