A feasibility study is almost always an essential pre-cursor to an incubator's establishment. This article sets out the multiuple uses a feasibility study has, from identifying and quantifying the type of services in demand from potential incubator client companies, to pinpointing weaknesses, to building support amongst public and private sector stakeholders.
Objectives
The initial planning stage for the incubator consists of the collection and preliminary study of information on the social, economic, political, business and cultural situation in the region. The influences of these factors on the incubator are considered. Awareness of these variables will help define the general strategies and objectives for the incubator.
Why conduct a feasibility study? According to Meeder in Forging the Incubator – How to Design and Implement a Feasibility Study for Business Incubation Program (1993), the major reasons for conducting a feasibility study are:
- To forge a consensus among key civic leaders and organizations regarding the definition of the type of incubator that best serves their community’s needs and to identify the proper stakeholders and managers for the program.
- The process can become the catalyst to motivate participation by a number of local resources that can provide facilities, equipment, human resources, funds, competitive offers that produce better prices, etc. that otherwise might not have contributed.
- The establishment of this process is the best method for generating creative ways to overcome obstacles. Someone once said, “Strategy is the springboard for creativity.”
- A proper feasibility study includes the completion of a facilities and service program business plan.
- Solicitation of most federal and state and local funds requires a feasibility study.
- After more than ten years of growth in the incubation industry, there are many examples of programs that have made critical errors in such areas as facility selection, governance structure, and formation of value-added management assistance service programs. These errors are numerous enough to demonstrate the importance of a feasibility study that identifies the best practices and avoids the patterns of error.
- Many political leaders, local business owners, and other civic leaders have just enough knowledge about business incubation to be “dangerous”. Conducting a feasibility study should include substantial community education. Otherwise, the project begins with hidden confusion as key people; attempting to do good things, base their decisions on an incorrect or incomplete concept of incubation that is out of sync with their colleagues’ concepts and with the informed practice of the incubation industry.
- Many incubation projects are conceived and developed by local leaders before the incubator manager is identified and/or employed. The feasibility study is a valuable document that records the early history and activities of the project enabling the succeeding staff and board to have a reference point from which to work.
- It is important to make contact with a number of successful incubator programs in communities that are similar to yours. There are enough programs with more than three years of operating experience to permit you to identify several from which to learn. Their experiences – good as well as bad – from development to operation, when combined with the wealth of information that the NBIA has accumulated on contacts, research, and recommended practices, should significantly reduce your margin for error and increase the productivity of time spent on the study.
- A proper feasibility study will help you avoid two “classic errors”: The temptation to accept the worst building in town and the temptation to treat your management assistance program as something that will take care of itself with a few referrals for business plan assistance and a few office practice services.
The main objectives of this study are:
- To identify institutions that could be partners of the incubator, i.e. the stakeholders;
- To ascertain acceptance of the program among the community;
- To survey sources of funds;
- To define the most appropriate model for the incubator;
- To analyze the main local requirements.
The Feasibility Study is essential for the success of the incubator because:
- It fosters consensus and encourages the leaders of local associations/societies to be involved in the planning process;
- It finds alternatives for dealing with barriers;
- It identifies important points in the business plan;
- It identifies weak points in other projects, in order to avoid making the same mistakes.
Key Issues
- Analysis of local conditions (See Guideline Analysis of Local Condition).
- Identification of availability of economic and financial resources (See Guideline Resources Identification).
- Identification of the stakeholders (See Guideline Stakeholder Identification);
- Identification of justifications, benefits and advantages of implementing the incubator (See Guideline Identification of Justifications, Benefits and Advantages of Implementing the Incubator).
Responsible Parties
- Leaders involved with the initial idea of an incubator.
Indicators
- Time and Costs for carrying out the Feasibility Study
- Funding brought in and political support built up through the Feasibility Study
Results
A clear straightforward document to be used with potential partners, the community and clients to prove the feasibility of implementing an incubator.