How Business Incubators Can Benefit Startups

How Business Incubators Can Benefit Startups

At their core, business incubators are exactly what they sound like—an organization that aims to empower and support the growth and success of an early stage startup by giving them access to resources and opportunities that those young companies otherwise wouldn't necessarily have. In an era where roughly 543,000 new businesses get started each month, many of these entrepreneurs would agree that they need all the help they can get. A business incubator, by its design, aims to support those early stage companies in a way that gives them a solid foundation on which to build from in the future, too. In terms of the actionable, tangible impact that business incubators bring to the table, they've been known to significantly benefit startups in a wide range of different ways that are certainly worth exploring.

What Are Business Incubators and How Do They Work?

The actual strategy of an incubator can vary wildly depending on which one you're talking about. Some use an actual, physical space that is designed to help create networking opportunities among entrepreneurs and people who are able to coach them. Others operate from a virtual perspective, offering similar resources (sans physical space) over the Internet.

The key thing to understand is that, for the most part, business incubators are not necessarily focused on helping a startup develop a business model from scratch. They are instead trying to "jumpstart" a business model that already exists.

This is contrary to entities like the United States Small Business Administration, which goes about supporting small businesses (and, by association, the nation's economy) in more general ways. The USBAA offers grants for both small organizations and those that operate within specific niches, with one example being small businesses and other startups that were founded and are operated by women.

Technology parks are also dedicated to early stage businesses, but from a slightly different perspective. Tech parks tend to be larger scale enterprises that can offer their services to everything from very small businesses to giant corporations to government or university labs and more. However, it is possible for a technology park to house a smaller, more startup-focused incubation program depending on the specifics of the situation.

The Major Impact of Business Incubators

One of the most immediate impacts that business incubators can have on startup companies has to do with the physical space that they provide, and all of the services that are contained within. Most business incubators offer office supplies and other resources to companies— essentially everything they need to get their organization up and running in an efficient way. These resources are often shared—but they are also available in a far more cost-effective way than if the startup in question was operating entirely on their own. Because of this factor alone, it is estimated that a business incubator can help reduce the overall costs of both launching and operating a startup by between 40 and 50% in some situations.

Another one of the major ways that business incubators can benefit startups has to do with the wider range of funding and investment opportunities that they bring with them. The staff at a business incubator often has access to more opportunities—and from a wider range of outlets—than an entrepreneur will have on his or her own.

This gives those entrepreneurs a chance to meet a larger volume of potential private investors within a community that has already been built to foster innovation in the way that they need. By giving those startup founders immediate access to a strong network of potential business partners and investors, it allows them to take the most productive and proactive approach to networking that they can. This alone can mean the difference between success and failure in a lot of cases.

But perhaps the most important benefit that business incubators bring to startup organizations can be summed up in a single word: focus. By giving entrepreneurs access to an infrastructure that is A) already in place, B) readily available, and C) proven to work, it allows them to focus less on the administration and infrastructure side of getting a startup off the ground and can allow them to devote more of their attention to actually running that business and developing a product or service.

Essentially, a business incubator can help those companies cut through all the noise, giving them a unique opportunity to focus as much of their energy as possible on creating products and services, evolving those products and services in the right ways and testing them before taking them to market. Rest assured, this is an excellent position to be in.


Expanding Out of the Startup Stage? We're Here to Help When You're Ready

As a leading provider of global employment solutions with unrivaled expertise in over 185 countries around the globe, Velocity Global offers a full suite of global expansion services and best-in-class support to early stage (and established) companies when they need it the most. To find out more about how Velocity Global can assist your own small business in expanding its operations, or to get answers to any other critical questions that you may have, contact us today.

Share via:

Related resources

Executives negotiate a merger and acquisition around a conference table.

7 Types of Mergers and Acquisitions + Examples

‘Mergers and acquisitions’ (M&A) refers to any business transaction in which two or more entities
Read this Blog
Sunset reflecting off a skyrise building in a city downtown

Understanding Organic vs. Inorganic Growth: A Guide for Growing Businesses

Business leaders use a combination of two overarching strategies when expanding an organization
Read this Blog
View of Shanghai’s World Financial Center in Shanghai, China.

VAT Compliance: Complete Guide for Global Businesses

A key part of global compliance involves navigating value-added tax (VAT) regulations in foreign
Read this Blog