Business Incubation

Many entrepreneurs don't have the space or desire to start a business out of their home, yet find renting space and setting up essential support functions is overwhelming financially and energy draining just at a time when their financial resources and energy are most needed for development of the business itself. A business incubator can be the perfect solution for such a person.

Business incubators are designed specifically to help start-up firms. They usually provide:

• flexible space and leases, many times at very low rates
• fee-based business support services, such as telephone answering, bookkeeping, secretarial, fax and copy machine access, libraries and meeting rooms
• group rates for health, life and other insurance plans
• business and technical assistance either on site or through a community referral system
• assistance in obtaining funding
• networking with other entrepreneurs

The primary goal of a business incubator is to produce successful businesses that are able to operate independently and financially viable.

The first identifiable business incubator was launched in Batavia, New York in 1959. More followed on a limited scale until 1984 when the U.S. Small Business Administration (SBA) began strongly promoting incubator development. At that time there were 20 incubators in operation. Over the next few years that number rose rapidly. The National Business Incubation Association, a private membership organization of incubator developers and managers, was launched in 1985 by industry leaders. From an initial membership of 40, it has grown to almost 800 members today.

According to the National Business Association (NBIA) Survey of Business Incubators, by 1997 the number of business incubators had expanded to 550 in the United States alone. New incubators have been opening at the rate of about one a week since 1986. It is estimated that there are more than 8,000 startup firms housed in incubators and another 4,500 entrepreneurial ventures currently operating on their own were originally launched through incubators, including a number of the Inc. 500. Over 80 percent of firms that were started through an incubator are still in operation.

Business incubation is on the rise on a global scale. The United Nations Industrial Development Organization (UNIDO) actively monitors and promotes the development of business incubators worldwide. They estimate that there are at 500 incubators in developing and transition countries with an annual growth rate for new incubators being about 20 percent annually.

There are a wide variety of reasons for operating an incubator. There may be a need for job creation in the community, promotion of economic self-sufficiency for a selected population group, diversification of the local economy, transfer of technology from universities and corporations, or sharing venture experiences with new companies by successful entrepreneurs and investors. There is no question that whatever the motivation behind the incubator, it is an economic boon for the community, providing jobs and an expanded business base.

Business incubators have a wide variety of structures and supportive mechanisms. Some of the most common are:

Sponsor Arrangement	%
Nonprofit, public or private	51
Academic related	27
Hybrid: joint effort among government, nonprofit agencies and/or private developers	16
Private, for profit	8
Other sources such as art organizations, private industry councils, church group, and chambers of commerce	5

Globally there is less private sector involvement in the incubation process, but that is expected to change as private enterprise realizes the reduction in risk of early-stage failure for incubator initiated businesses.

The most common types of firms using business incubators are light manufacturing, technology and service firms and those developing new products or engaged in research and development. There are a limited number of construction-related, sales and marketing, or wholesale and distribution firms using incubators. A retail operation is considered a poor fit for incubation.

Choosing the Right Incubator

In deciding to use a business incubator, the NBIA suggests exploring the following items before making a commitment:

A. Space and Service-related Issues:

1. What are the charges for space and services at the incubator?
2. How do those rates compare to market rates locally?
3. What services does the incubator provide?
4. What are the lease requirements?
5. Is there room for your business to grow?

B. Quality:

1. What information does the incubator provide about the extent and quality of the services the incubator provides?
2. Does the incubator management seem to understand your business needs and can they offer on-site assistance and access to valuable contacts and community business services needed by your firm?

C. Success Rates

1. If the incubator has been open long enough to have a track record, what is the experience of firms who made use of the incubator for a few years and have now moved to other space?
2. How do the current tenants feel about the incubator?
3. Ask for references and check them.

D. Policies and Procedures

1. What are the policies and procedures of the incubator?
2. Are some services provided free of charge?
3. How long can you remain a tenant?
4. Is there a graduated rent structure as your firm matures or does the incubator want to take royalties or an ownership right in its tenants' businesses in return for reduced charges?
5. Can you leave easily if your business turns bust?
6. Does the incubator provide seminar or training programs in addition to other business assistance services?

E. Management

1. Does the incubator appear to be managed well?
2. Does the management appear to have good ties with and knowledge of the business community?
3. Does the incubator have the continuing support and commitment of sponsoring organizations? Who are these sponsors and what are their goals and reasons for supporting the incubator?

One other area to consider carefully is whether your business is really ready for this step. The business must be entrepreneurially sound, able to function on its own, if needed. The incubator cannot replace business initiative, personal effort and resourcefulness. There is a term used called "incubator syndrome" in which the entrepreneur allows their initiative and judgment to be replaced by those of the consultants in the center. While the consultants may give superb advice, it is the entrepreneur's responsibility to make the business succeed.

A growing trend in incubators is for the incubator to receive a piece of the action in exchange for office space, cash and lots of business support. They are essentially becoming venture capitalists with the benefit of being on site to help get the business off the ground. The usual amount such incubators ask is about a 20 percent equity stake. Many of the incubators that operate this way style themselves as "startup junkies." They know a lot about what gets a company off the ground right and are enormously helpful in getting a business off on the right foot. For an investment of anywhere between $100,000 to $300,000 plus office space and services, they receive the vicarious thrill of being part of a startup and substantial returns if the business succeeds. For each spot available there are at least 20 applicants so this new type of venture definitely is appealing to all. So far results have been impressive if you are one of the lucky ones to win a place in these incubators.

Finding incubators can be challenging. The National Business Incubation Association lists their members globally, but that is a small fraction of what is available. Local business directories and business schools can be a helpful resource.

Bad credit start up business loan

A bad credit start up business loan may seem an impossible place to start your own business. But that is not always true. Banks are out. No bank is going to touch your business loan if you have personal credit scores less than 640. But there is a lot more to business lending than just banks.

First, you have to separate your personal credit from your business credit. Until you have accomplished that there will be almost no business financing available to you with bad personal credit. Smaller community lenders, equipment leasing companies, specialty lenders tend to focus on a combination of business and personal credit scores.

Therefore your business credit scores will become the most important factors. Your business credit score is very similar to your personal score with the exception that it is in no way connected to your Social Security number. This single very important difference can help you get your business that all important financing you need.

When you have bad personal credit the only left to do is to build your business's credit score. After you have obtained a tax ID number and a legal entity for your business, you are ready to start building your business's credit. Then you can become qualified for vendor and supplier small credit lines.

These small credit lines can then be used as favorable credit history and leveraged into larger loans. You must make certain that you build a good business credit history with all three business credit bureaus (Experian, Equifax and Dun &Bradstreet).

1 Minute Guide to Getting A Loan

Getting a small business loan is not as easy as saying you have a great idea and holding out your hand. While it is difficult to get a start-up business loan without a proven track record, it’s not impossible.

In just 60-seconds, we’ll show you how to improve your odds for getting a small business loan.


0:60  Get Help Before You Start Bank Shopping
Community small business resources like SCORE and the Small Business Development Center (SBDC) can be invaluable when you are ready to seek funding for your business. Not only do they know the ins and outs of approaching lenders, having done it all before, they can steer you to the small business-friendly banks in your area to help tip the scales in your favor right from the beginning.


0:48  Know What Lenders Are Looking For
You’ve got to be prepared with the information your lender needs to make a decision in your favor. Lenders typically evaluate four key factors: previous business experience; ability to repay the loan; collateral and personal guarantee; and character. Prepare your documents thoroughly—they include your business plan, balance sheet, cash-flow statement, income statement, personal financial statements, personal and business tax returns, and a description of the terms and loan amount, including how it will be used, secured and repaid.


0:30  Give Them Your Business
Show your lender that you are a good risk. Move all of your personal and business accounts to the bank, so that they can evaluate how you manage your money. This will also give you a chance to check out the bank’s loan policies and gather up the forms before you get started.


0:24  Bankers are People, Too
Get to know your bank’s staff including the tellers, loan officers and other employees. Developing a personal relationship with your bank is essential not only to help you get a loan, but also if you should fall on hard times. Taking the time to get to know your bankers is an important ingredient in demonstrating your “character” to your lender.


0:18  Don’t Go it Alone
After all of your research and preparation is completed, it’s time to make your pitch. Be sure to practice your presentation and take one of your mentors with you, be it your SCORE business counselor or SBDC advocate. Either or both can be invaluable as you meet with your loan officer and negotiate the loan. And, your lender will feel more confident if you have a trusted community business leader with you.


0:03  When at First You Don’t Succeed . . . 
Many entrepreneurs get turned down for funding—some more than once before they succeed. But, don’t give up. Meet again with your SCORE business counselor to discuss your strategy and talk with your banker about amending your approach. Meet with other banks until you find the right fit. In the end, banks want your business and will work with you to find a solution. The U.S. Small Business Administration has a variety of small business guaranteed loan programs that may fit your business. Be sure to check them out. And, above all, be persistent.

Creative Business Grants

How to Obtain Creative Business Grants

Summary: With the millions of people around the world today who want to run and administer their own business, the number one challenge is getting loans and grants to be used for the initial start-up costs.

If you would like to know how to get your creative business grants, this article would be a very great help to you.

Many people of today think that getting a grant is really an impossible. This is not true because billions of dollars have been allotted by the corporations and by the government in business loans and grants. In order for you to succeed in the step by step process of getting a creative business grant, you need to equip yourself with persistence to succeed. You also need to conduct an extensive research for you to get familiar with the tips and techniques that you should employ for you to convince the lenders successfully.

How to Get Creative Business Grants

The best place where you can start your grant search is in Catalog of Federal Domestic Assistance or CFDA. The grants that they provide are given in an annual basis because of various reasons. So, to know the grants that are provided you always need to be on the lookout. Bear in mind that the early bird catches the worm.

The good thing about these grants is that they don’t require co-signer, security deposit, collateral or credit check because they don’t need to be paid back. No matter what business field you plan to start off with, you don’t have anything to worry about because of the fact that they always have something in store for everyone in different fields such as entertainment, photography, food and restaurants, decorating, construction and accounting.

These grants also offer several money-generating systems for women. So, a certain full-time housewife can still have the chance to pursue her career in business.

Now, to make sure that your grant application will be a success, you need to impress the lenders or the grantors through providing them with paperwork, appeals and business plan. Among these three, what you need to concentrate on the most is the business plan because it will be the one to make or break you. In drafting the business plan, you need to state well the mission, vision, goals and objectives of your business. If you are not sure if the three major aspects of business such as financial, operational and advertising had been sorted out well, you can ask help from an accountant or a lawyer. When the day of the business plan presentation arrived, you need to be able to explain the grantors its contents. To show that you know what you want, you also need to answer their questions well.

If you want to succeed in running your own small business, having a grant is the answer. So, just always be on the lookout for you to come first in line.

How to Get a No Credit Check Business Loan

Summary: No Credit Check Business Loan is something that business owner should check out especially for poor credit rating. There are a lot of things to consider about this matter.

In the long run, this could benefit you and your business. There are safety measures that you need to consider when applying for this kind of loan.

Credit rating can go poor due to many reasons – which in turn make you illegible to get any type of business loans. Poor credit rating is not only a fear for the businessman but also a shock to its growing business. But still there are some organizations from where a person with poor credit rating can obtain loans for his growing business. There are many private lenders giving you a good sum of money as a loan for your business. But unfortunately the markup rates on such loans are too high and requires mortgage. But you do not have to worry if you have got a poor credit rating. A good market research can yield some really nice lenders offering loans at reasonable markup rates.

Critical Opportunity

These types of loans are considered as the best option for poor credit rating entrepreneurs. These loans provide a critical opportunity to entrepreneurs to revive back and stand on their own financing methods. ‘Critical opportunity’ refers to the serious risk which is involved with such type of loans. If the entrepreneur fails to revive back with that borrowed money, he can be totally ruined.

Lose Privacy

When you finally choose private lenders to give you money with poor credit rating, you are still required to show some sort of credit rating. But this time, the lender does not have to take anything with your credit rating. Instead all the business activities and steps are taken into account by the lender. Though you lose a little bit privacy of your business, but you will have to compromise in order to get the loan. Some lenders are really interested in the business plans which you will be expecting after borrowing the loan. They also suggest and advice their ideas in your business.

Be Patient

Neither had you attained poor credit rating overnight, nor can you achieve a great credit rating overnight. Therefore, you should also not expect to be rich overnight. Everything requires to deliberately studied and emphasized. A proper and intelligent plan is required to be implemented to best allocate the borrowed money. These are the ‘No Credit Check Business Loans’ which can make or ruin a poor credit rating business.

Safety Measures

There are a number of steps that you should take as safety measures. First of all you should register your business with IRS and business credit agencies. They also help you from time to time in assisting your work and minimizing the tax loads from your business.