Over the past several years we've seen the steady growth and popularity of business incubators such as Lightbank and Sandbox Industries and startup accelerators such as Y Combinator and Tech Stars. AngelList currently lists 467 startup accelerators and Forbes recently noted that the U.S. has over 300 business incubators alone.
Why the increase in these business model concepts? The answer is simple. They offer lasting solutions that are often faced by a budding entrepreneur in starting and launching a successful business. They build confidence and provide tools for the entrepreneur to solve real problems faced in the early days of operation and allow real-time access to industry experts that mentor the entrepreneur through many start-up challenges. And as the business grows, the relationships and growth learned in the incubator, increases the chances for critical funding.
Business incubators are often associated with tech start-ups. However, incubators are emerging in many industries such as manufacturing, fashion, culinary, and some all-purpose incubators regardless of industry.
Let's look at the beauty industry as an example. Regardless of the number of years a salon professional has been in the business of making others beautiful, going out on their own can be terrifying, not to mention the risk and exposure from signing long-term retail lease. All of their hard-earned money and precious time will be channeled into this new venture with very little room for error being granted from the landlord, the bank, and their new customers.
A business incubator in this industry provides a solution that will truly disrupt the traditional salon industry, as we know it. With the right space, mentoring and shared learning, a salon studio incubator includes everything needed for a salon professional to launch and operate their own salon. Beauty industry entrepreneurs bring their clientele and professional tools, and within days, they are up and running in no time, ready to focus on growing their business.
By sub-dividing large retail space into smaller, more affordable studios, the incubator business model shares resources across an entire group of professionals and allows them to spread their business wings safely so they can focus on serving their clients and not fret about the details of creating and managing a brick and mortar space. Typical startup costs are minimal and tools such as an arsenal of ready-to-use marketing materials (business cards, menus, postcards, rewards cards, gift cards, etc.), and ongoing business training is provided as the entrepreneur's confidence is nurtured. Training and mentoring is focused on areas such as marketing and retention, break-even analysis; market pricing, tax preparation, selling retail and social media marketing strategies.
Business incubators are an innovative model that is continuing to prove value to the entrepreneurial community and the country's economic engine. Incubators are not a fad, but rather a lasting change in securing sound business sustainability.
This blogger graduated from Goldman Sachs' 10,000 Small Businesses program. Goldman Sachs is a partner of the What Is Working: Small Businesses section.