Business incubators are centers of attention to entrepreneurs where they provide advice to make business ideas come true.
These centers help to consolidate business ideas from the beginning, evaluating the feasibility and technical, financial and commercial viability of the project or business plan.
An entrepreneur may have a magnificent idea and great enthusiasm, but if he does not resort to a professional instance, with a proven methodology, such as incubators, the chances are that he will not prosper.
Incubators support businesses that require support from the creation stage.
In the market there are incubators that are owned by educational institutions of higher education, civil society organizations, business organizations and civil associations, which have a business incubation model that must be accepted and recognized, in the case of Mexico, by the Ministry of Economy.
Government-certified incubators have subsidies that lower costs for entrepreneurs entering the incubation process.
Incubators and accelerators provide specialized advice in administration, marketing, sales, operation, logistics, financing, IT, legal, personnel, technical support, design, intellectual property, insurance and seed capital.
The SME seed capital program belongs to the national entrepreneurs program and aims to facilitate access to financing for ventures that are technically and financially viable.
They are ventures that cannot access the commercial banking system and are not attractive to venture capital and private equity funds.
The program provides temporary financial support for the start-up and initial stage of the business, to entrepreneurial projects that are incubated by one of the business incubators that are part of the National Business Incubation System (SNIE) of the Ministry of Economy.
This type of program aims to be an effective, efficient and timely instrument that contributes to raising the competitiveness of micro, small and medium-sized enterprises.
It is important that before starting an incubation process, you have the certainty that the incubator model that was selected to request your support, is the most appropriate for the type of business that you intend to undertake.
When a business ended the incubation process in one of the incubators recognized by the National Business Incubation System or the National Entrepreneur Institute (INADEM) and if it is considered feasible to be financed, it can be registered in the calls of the seed capital program, to see the possibility of obtaining resources.
The cost for advice and support is variable and depends on the rates and conditions of each incubator or accelerator. In most cases, the costs are low for entrepreneurs.
In some negotiations, a percentage of shares, sales or profits of the business must be assigned to the incubator or accelerator, to receive the different support that is required.
Before negotiating with the representatives of the incubator or accelerator, market analysis and financial projections should be made, considering different variables, to project the scenarios that may arise and have a basis to make good decisions regarding the assignment of a number of shares, a percentage of sales or profits.
Depending on the type of business, incubator supports can be divided as follows:
Traditional businesses
- They support entrepreneurs in traditional sectors in which the technological infrastructure and operating mechanisms are simple They provide some of the tools necessary to start the business They help find venture capital so that entrepreneurs can continue with the growth of the business outside the incubator. Their incubation time is variable, it depends on each particular venture. They generally do not provide money. They focus mainly on commerce, services and small industries.
Some examples of the money orders they support are: cafeterias, taquerías, restaurants, stationers, laundries, dry cleaners, groceries, outlets, others.
Intermediate technology businesses
- For these businesses, the requirements of physical and technological infrastructure and operating mechanisms are semi - specialized. The companies incubated under this design incorporate elements of innovation, so they must be linked to knowledge centers and institutes. Incubation time is approximately 12 to 18 months and depends on each company.
It is developed to support web applications, simple network development, food technology, information technology, design and others.
Hi-tech business
- For businesses based on state-of-the-art developments and the knowledge economy. They support businesses focused on specialized software, computing, communication technologies, multimedia, microprocessor design, biotechnology and others. They require a longer incubation time, extensive specialized physical and technological infrastructure. These projects can take more than 2 years to hatch.
Agribusiness and ecotourism
- They specialize in the creation and support of agribusiness and sustainable tourism companies such as ecotourism, rural and adventure tourism, among others. These businesses are intended to provide self-employment opportunities. They support projects to develop entrepreneurs within a community. Depending on the complexity of the business is the time of the advice.
Social ventures
They are incubators that support social enterprises. They are interested in social entrepreneurship projects that aim to solve a social or environmental problem through sustainable business.
They support entrepreneurs who have the determination to fight against a collective problem through the creation of a social enterprise, which can become economically self-sufficient.
Advantages of approaching business incubators
Business advantages
- They support and promote business projects of entrepreneurs Provide personalized business advice with expert consultants to develop business ideas They advise on the development of the business plan Access to information systems, market analysis and indicators of the sector of interest Access to workshops and training courses offered by the incubator. Access to networks of business tutors and collaboration agreements that the incubator has with business chambers, universities and others.
Financial advantages
- Based on the experience of the experts, fewer resources are wasted in starting the business Access to risk capital and government subsidies can be accessed, depending on the project Linking with credit institutions, funds and investment companies Support in the preparation of projections financial institutions to get seed capital.
Other advantages
- Access to different equipment and systems Access to qualified employees Have management and messaging services Have contacts for the rapid introduction of products or services in the market Have quality suppliers under favorable conditions.
Requirements to have access to an incubator
- Be clear about the objectives that are intended with the business idea Have a comprehensive business plan, so that the incubator advisors have enough elements to make an analysis of the business feasibility If the business idea is accepted, the entrepreneur You must deliver the requested documents to begin the procedures and start the incubation process If you have a business diagnosis that indicates that there is little chance of success, the advisors make recommendations to change the business plan or think of another idea business that is feasible.
Aspects that are evaluated by incubators
- That the project is located within the scope of the incubator's activities That the business plan is objective, innovative and has growth potential The feasibility and profitability of the business plan That it is capable of generating quality jobs That the objective of the business idea is the solution of specific problems and can generate benefits for society That the entrepreneurs have passion, dedication, ethics, values and principles Knowledge, capacities and abilities of the entrepreneur and his staff to determine the individual training needs.
Procedure for entering an incubator
1. Start of the incubation process
- The entrepreneur must investigate on the network which incubators exist in the geographical area where the business is to be carried out. The most appropriate one for the needs of the project is selected from the network of incubators. Contact is made with the incubator representatives to raise the business idea and see the feasibility of having the necessary support to carry it out. You can also contact the National Business Incubation System (SNIE), to have access to its network of incubators.
Each incubator requests the information it needs to analyze, to determine the feasibility of the business and decide whether it is convenient to provide different support.
2. Pre-incubation stage
- The entrepreneur presents the business plan to the representatives of the incubator. The incubator, after the presentation of the entrepreneur, is in a position to complete its diagnosis and accept or reject the business plan. If it is accepted, the incubator provides advice to adapt the business plan and determine the needs to carry out the business.
This stage can last from 6 to 12 months, depending on each project
3. Incubation stage
- The necessary support is obtained to enter an incubation stage. Human, material, technical and financial resources are sought to promote the project. The business plan is implemented.
Four.
Incubators and accelerators have very similar characteristics and functions.
Incubation is a process that helps transform a business idea into a company.
Acceleration is a process that is offered to a company that has already been operating for more than 2 years and can consolidate and grow.
Accelerating is giving a boost to businesses that are being developed by their entrepreneurs and that require support during the maturation stage.
Accelerators offer entrepreneurs a physical space, resources, knowledge, mentors, specialist advisers, investment in the seed stage, and acceleration methodologies and programs that allow them to obtain the maximum potential of the companies that go through the programs.
Accelerators offer different programs that entrepreneurs can apply to and they have to pass some filters to be accepted. The projects with the greatest development potential and the teams with the greatest capacity to carry out are selected.
The support time depends on the magnitude and complexity of each company.
A company that approaches an accelerator, after having participated in an incubator and having received its benefits, may have other advantages such as the following:
- Receive advice to establish corporate governance to institutionalize the company Receive recommendations to make improvement modifications to the business model Plan new activities for the growth of the company Establish a structure and financial strategy that will provide greater stability to the company Establish Strategies to increase income and reduce expenses Develop comprehensive marketing and commercialization plans Develop strategies to have a better online presence Have shared workspaces with other entrepreneurs Have permanent contact with consultants specialized in different areas On some occasions, have financing from the same accelerator.
To decide which accelerator can best support the business, you must know the following:
- The vision and mission of the accelerator to evaluate if it is appropriate for the business. It should be investigated in which successful projects it has collaborated and that they are the same or similar to the line of business of the company that is requesting the support. The methodology and the structure of the acceleration program The CVs of the advisers involved in the project The alliances that the accelerator has with different investors The results of entrepreneurs and companies previously supported by the accelerator Share profits or participation in sales or profits that you want to get the accelerator for the supports it is going to provide.
The Internet is one of the best ways to find a professional business accelerator.
For entrepreneurs, having the support of incubators or accelerators increases the possibility of carrying out, consolidating and developing the business, by receiving professional business advice and assistance.
The experience of the experts reduces the chances of making the same mistakes that other entrepreneurs have already made.
Currently in the portal http://www.mexicoemprende.org.mx/.mx, from the Ministry of Economy you can have access to the network of 500 incubators and their contacts at the national level or at the INADEM, which offers support to Entrepreneurs and MIPYMES through the Entrepreneur Support Network.
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Jack Fleitman:
www.ciemsa.mx professional consultants
@jackkmex
