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New Business Trends  Internet Business
Incubators
"Never before in history has innovation offered promise of so much to so many in so short a time." - Bill Gates
BENEFITS OF BUSINESS INCUBATORS
- Shared costs
- Affordable technology
- Excellent networking opportunities
- Access to funding and resources
- Support from other start-ups
- Flexible lease agreements
- Accelerated growth
- Instant infrastructure
- Administrative support
- Advice and mentorship
- Financial assistance
- Knowledge sharing
- Professional services at discount rates
- Entrepreneurial environment
Research conducted by the European Union has concluded that
- one of the leading strategies to enhancing the overall survival
rates of SMMEs (Small Medium and Micro Enterprises) is business incubation;
- the public cost of creating jobs inside incubators is low, compared with other public means and programmes;
- the survival rate of SMMEs can be up to 80 percent in developing
countries, with strong support from the government and solid links with the University or tertiary education systems. The challenge, however, is surviving a second year.
Business incubators are not a new concept, and have steadily become
entrenched as successful aids to small businesses and entrepreneurs. The concept of the business incubator primarily eradicates the headaches associated with the practicalities and cost implications of starting a business.
Moreover, entrepreneurial hubs or incubators centralise a knowledge base into which entrepreneurs can tap. Networking with fellow incubator tenants can yield effective and lucrative partnerships and experience, and many incubators also offer networking or funding opportunities outside of their direct scope.
Business incubators are organisations that support the entrepreneurial process, helping to increase survival rates for innovative start-up companies. They provide resources and services to entrepreneurs, including:
physical office or working space, management coaching, help in making an effective business plan, administrative services, technical support, business networking, advice on intellectual property and sources of financing.
An incubator can provide, for example, a receptionist to greet visitors and answer calls and shared copiers, fax machines and audio-visual equipment. There are various types of incubator models, some operate on a profit basis and others are run as non-profit organisations.
Either way, the operators of the incubator usually recoup costs by charging very reasonable rates for rent, PC networks, internet connections and other specialised services and equipment.
So, if you are thinking of upgrading from a home office, incubators are an excellent next step. Not only do they provide all the professional benefits of personal office space, but operating costs are kept to a minimum whilst the support structure and networking opportunities on offer can transform a business into a fully operational enterprise.
Why should a new business want to place itself in a business incubator?
Most new businesses start with a particular strength in a specific area, plus a great deal of passion. The typical entrepreneur has ideas, innovation and, most importantly, a wealth of enthusiasm. What is usually lacking, though, is experience in the basics of running a business, and incubators give these courageous new companies structure, credibility, access to knowledge, infrastructure and invaluable contacts, all of which are vital
for these businesses to take root.
According to Odette Potter, General Manager of Bandwidth Barn - South
Africa's first and oldest ICT incubator =96 what makes the incubator situation so suited to ICT companies is the cost and aggregation of bandwidth.
"Small IT companies need stable, reliable, fast and affordable bandwidth, which is a service an incubator can offer together with the normal administrative and organisational services."
Furthermore, being in an entrepreneurial environment motivates SME owners to achieve their goals. Successes achieved by fellow incubator tenants inspire and encourage achievement and the attainment goals.
Proximity to markets is also a major incentive to operate from an incubator. Most hubs or incubators are centrally located, and interaction between tenants leads to the discovery of previously unknown markets.Partnerships between incubator tenants are common, and an excellent way to obtain and sustain bigger clients. Pooling of resources and skills gives start-ups an advantage, and makes larger, high profile clients easier to reach.
Moreover, research shows that business owners trade and share services, technical expertise and equipment on a regular basis; besides this obvious cutting of expenses, owners learn from each other and offer mutual professional and personal support.
All of these factors help new businesses stay alive and prosper in
incubation.
How do incubators support the growth of the SME sector?
The role of SMEs in growth development is recognised by both developed and developing countries. The Small And Medium-Sized Enterprise (SME) sector is one of the key areas for job creation and economic growth in South Africa.
However, with the widely accepted estimate that 9 in 10 SMEs in South Africa fail within the first two years of operation, it is no surprise that government is establishing support structures to promote the sustainability of small businesses.
One example of this is the GODISA Trust, now SEDA, which was created by the South African government to provide technology and business development support to small enterprises. The mission of the Trust was to identify, design, establish and fund Technology Business Centres for the effective creation, development and support of SMMEs.
To encourage the success of start-up companies and entrepreneurs, incubators have been established all over the country as an effective means of increasing the emergence and sustainability of innovative small businesses. The main goal is to produce successful businesses that will leave the programme in a timely manner as financially stable and free-standing enterprises.
This does a great deal to promote the economic development of the community around the incubator and, in turn, the local and national economies. Job creation is obviously a primary aim in South Africa, where unemployment is high.
The overall statistics are difficult to ascertain because there are various types of business incubators, but, according to the United Kingdom Incubator Association, 75% of businesses starting in incubators stay in business five years after inception - only 33% of businesses without incubator support survive that long.
The benefits of joining an incubator or hub to start your new venture or expand your home business are endless; to quote the great Albert Einstein, "Innovation is not the product of logical thought, although the result is tied to logical structure".
Here is a list of some of the incubators in South Africa.
WESTERN CAPE
Acorn Technologies
Biomedical, bio-engineering and biotechnology start-up business incubator.
Tel: (021) 442 5380
Fax: (021) 442 5381
Website: www.acorn.org.za
Bandwidth Barn
A networked business incubator, part of the Cape Information Technology Initiative (CITI). CITI is an industry body which acts as a regional trade association, networking body and promotion agency for the information and communication technology (ICT) industry in the Western Cape.
Tel: (021) 409 7000
Fax: (021) 409 7050
Website: www.citi.org.za
The South African Business and Technology Incubation Association (SABTIA)
Co-ordinates and promotes business incubation in South Africa. Their
website is a good information source for South African incubators.
Website: www.sabtia.org.za
GAUTENG
BTISoftstart Incubator
BTISoftstart supports high-tech entrepreneurs starting and growing
businesses by offering innovative products and services.
Tel: (011) 695 4800
Fax: (011) 695 4811
Website: www.sbti.co.za
E-mail: fimphiwe@sbti.co.za or info@bti.co.
Blue Catalyst
A development initiative by the Gauteng Provincial Government,
involved incatalysingnew businesses into sustainable commercial
entities and aiming to increase the number of sustainable start-up technology and knowledge-intensive businesses in Gauteng.
Fax: (011) 401 7057
Website: www.bluecatalyst.co.za
Email: info@bluecatalyst.co.za
Raizcorp
Raizcorp is a privately-run business incubator designed to assist
entrepreneurs establish and grow businesses in a nurturing and supportive environment.
Tel: (011) 802-7415
Fax: (011) 656-1754
Website: www.raizcorp.co.za
The Innovation Hub
Focuses on incubation programmes which provide an enabling environment for start-ups from knowledge-intensive sectors: information and communication technology (ICT), biosciences, electronics and advanced materials and manufacturing.
Tel: (012) 844 0000
Fax: (012) 844 1107
Website: www.maxum.co.za
Embizeni Innovation Support Centre
A secure environment in which technologies can be evaluated, developed,optimised and commercialised. It focuses on the electronics and information and communication technology (ICT) sectors.
Tel: (031) 273 1500
Fax: (031) 273 1510
Website: www.innovation.org.za
Email: info@innovation.org.za
by Mandy Schreiber
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