What is a Startup Incubator?

You can think of a startup incubator as a program designed to be the training wheels to help your fledgling business get off the ground.

Incubators are most commonly run by private and public non-profits, generally universities and business schools to support their student body and alumni. They might also be created by civic groups, startup organizations, the government, or even successful entrepreneurs who want to support the next generation.

The services startup incubators provide vary, but in general, they give new businesses a place to work that’s either free or very low cost, access to mentors who are experts in the field you want to get into, introductions to investors, and, in some cases, loans or capital. They also provide a community in the form of your fellow entrepreneurs who generally will be in the same field as you.

Startup incubators can be a massive boon to your business as long as you consider all the positives and negatives and choose the right incubator for you.

Pros of Joining a Startup Incubator

Not all incubators are right for all businesses. As you begin your search, it’s important to know precisely what an incubator should provide you.

Support

First and foremost, your incubator should be there as a support system for your business, providing access to seasoned mentors and experts.

Having an experienced eye looking over your shoulder and giving you helpful advice as you begin your journey as a business owner is invaluable. Your mentors can help you hone your skills in presentation and etiquette you would otherwise have to learn the hard way, plus give you training in general business practices.

Prestige

As startups have proliferated in the last decade, it is more common to see more fail than succeed due to being half-baked businesses. With such a poor reputation, it can be difficult for you to be taken seriously by investors.

By being accepted into an incubator, you show that you can market yourself and people in the industry already think you have what it takes. It also means that your business will have a support system during its most vulnerable years.

Financial Support

Beginning a business is a substantial financial investment. Unless you have unlimited resources, anything that relieves financial burden is hugely helpful. A workspace is a cost with no return, so the free or reduced price of an office can take some of the strain off of you.

Benefit of Outsourcing

A recent Deloitte survey found that 70 percent of businesses list cost savings as their primary reason for outsourcing. Outsourcing costs far less than hiring someone in-house. When you outsource a task or project, you don’t need to worry about overhead costs, payroll taxes, benefits, or any of the other added expenses that come with a direct hire.

Another benefit of outsourcing is flexibility. When you outsource, you have more room to change your mind or go in a new direction. If you need to cut a project due to costs or time constraints, you can do so easily without needing to layoff an employee. You can also quickly ramp up a project more easily.

Finally, outsourcing gives you access to experts. Because they work with several clients, outsourcing companies have a broad range of experience they can draw on to find solutions to your problems.

Downside of Outsourcing

As with all things, there are two sides to outsourcing. The main downside is losing managerial control over the work being outsourced. You have to rely on your outsourced team to manage deadlines and deliver quality work. Because they work with several clients at a time, you might have to wait or go through several layers of people to make new requests.

Another downside of outsourcing is the risk to your company’s security, especially if your outsourced team will have access to confidential information. Get a lawyer to review contracts before you or the outsourcing company sign anything.