Objectives

During implementation of an incubator, those managing the institution have to cope with the challenges caused by the building in which it is sited. A business incubator is a program rather than just a building, however, constructing or refurbishing the right building plays an important role in the incubator’s daily operations and services.

According to the European Commission – in their Final Report Benchmarking of Business Incubators (2002), “the provision of workspace is central to the incubator model. Standard good practices now exist with regard to the most appropriate configuration of incubator space”.

Based on the type of company to be incubated, the building characteristics of the incubator may vary in terms of the size of the workspace and services offered. To help determine the size of the incubator structure, try to identify the profile of the companies that will be incubated and attempt to identify the infrastructure they need. See (iDISC Paper Incubator Infrastructure and Services).

Once the targeted market niche has been identified, a key step is to visit already operating incubators with similar characteristics to those of the project in mind. These visits give the advantage of learning from the experience of other incubators in order and avoiding any problems they may have had. This helps to:

• Determine the size of the incubator
• Establish the architecture of the incubator workspaces
• Find out how many workspaces there are
• Work out the size of each workspace
• Decide on the basic infrastructure (telephone outlet, Internet connection outlet, water outlet, electric outlets, etc.)

The next step is planning the operations of the incubator, particularly the services provided. This should not only indicate the facilities considered ideal but importantly those that can feasibly be made available by the incubator.

Rice & Matthews in Growing New Ventures, Creating New Jobs (1995) emphasize: “the right building can provide the basis for the financial self-sustainability of the incubator and an environment in which the entrepreneurs and incubator staff can work together to grow new businesses. The wrong building can lead to failure – and wrong buildings are one reason incubators have not met expectations”. They also suggest a set of questions that can be of help when choosing the right facility:

• Does it meet the size requirements of the financial model to enable the incubator to achieve self-sustainability?
• Does it require minimal renovation?
• Are there any environmental hazards that will come back to preoccupy the incubator later?
• Can the facility be easily maintained?
• How much will it cost to operate the facility?
• Are the acquisition terms favorable or will the long-term costs cripple the incubator?
• Can walls be moved and spaces reconfigured as companies grow?
• Are there enough common areas that can be shared, for example: conference rooms, a library, a kitchen and a business service center?
• Is the incubator building and surrounding area safe/secure so that entrepreneurs can work day or night?
• Is there adequate parking?

Key Issues

• Renovation/Construction: there are advantages and disadvantages in choosing to adjust a building to the needs of the incubator or constructing a building specifically for the project. Sometimes refurbishing an unsuitable building is more expensive than the cost of acquiring a suitable one. Independently of whether the incubator building is built or adapted; the core aim is to create an atmosphere favorable to the development of business.
• Size: What should the size of the incubator be? The decision about the ideal size of the incubator is essential to ensure its independence from external resources and its further self-sustainability. Sometimes a small building can make the incubator unfeasible, since costs could be high and there will be little to attract public and private investments. Disadvantages can also be found in large buildings, since a low occupancy rate could be viewed as a sign of project failure. The right incubator size is a challenge that a well developed business plan can help overcome.
• Surrounding Areas: the location of the building is important. The area surrounding the incubator must be assessed for transport facilities, parking space, the existence of postal and banking services and even the right type of neighborhood to avoid future problems.
• Companies/Incubator Interaction: One of the useful benefits offered to incubated companies is the opportunity for contacts with other businesses. Interaction among different companies and with the incubator management team results in an enriching learning process.

Responsible Parties

• Party responsible for managing the incubator and the architect

Indicators

• Satisfaction rate of companies towards infrastructure and services

Results

• Self-sustainability of the incubator through fees charged for the use of infrastructure and services provided.
• Rise of capacity to attract entrepreneurs to the incubator.

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