When a business incubator ISN’T useless

After I recommended a business incubator to an acquaintance, one of my co-founders protested,

“But I thought you said incubators were useless.”

I told her no, I didn’t say incubators were useless.  I said they were useless for US at this stage in our company. There are times when the right incubator can be extremely helpful. The wrong incubator is useless always.

I remember walking into one of the latter type years ago in a small town in North Dakota. The “business incubator” consisted of one bored staff member with no education or experience in starting or running a business. There were a few very old computers she pointed me to  that she said I could use to search the internet. When I asked her if she suggested any particular websites she just shrugged and said,

I don’t know. I’m just here to keep people from stealing the computers.

Other than the computers, the office had a few copies of a brochure on starting a business and that was it.

Useless.

When Erich, April and I started Spirit Lake Consulting, Inc., we used the services of a business incubator at the University of North Dakota. Erich was in the doctoral program there at the time and someone had mentioned it to him. They were extremely helpful. At this point, we all had some business experience – April was the controller for the tribe, Erich and I had both done consulting and Erich had been tribal college president. I had an MBA. Still, there was a lot we did not know about building and running a company. The UND incubator helped us in many ways.

First, they told us about a lot of resources of which we were unaware. The Small Business Innovation Research awards were one huge benefit to us that we learned about from them. They directed us to the Small Business Administration website that has lots of free resources for developing business plans.

Second, they provided us financial support. They gave us a $1,500 Phase 0 award that bought some of my time so that I could afford to take time away from clients and write our first SBIR proposal, which got funded. The set us up with two business consultants, paid for by the incubator. One was a graduate student, well meaning but pretty useless, who did something like a market analysis. The second was a very experienced and I am sure very well paid executive who gave us a lot of sound advice on business planning, writing SBIR proposals and marketing.

Third, they provided us contacts. When April was offered a job as General Manager of the casino, she was required to sell all of her interest in any other entity, including our company. We needed an accountant, since she had handled the payroll, taxes, and generally keeping the IRS from throwing us in jail. The incubator recommended our accountant, Donna Remer, who we still work with to this day on The Julia Group and 7 Generation Games.

An incubator is just like it sounds – for little baby companies just getting started. We’re not that any more. We have an accountant, a business plan, an SBIR award. We know enough about the GSA schedule to know it’s not for us. We have an office, computers, printer, server.

At this point, an incubator would not be very useful for us. At one point, though, it was extremely helpful, and it may be that its extremely helpful for you.