Early Coddling Can Ensure Your Fledgling Company Flies
Entrepreneurs know it's easier to hatch an idea than a company. Now, a Commerce Dept. study suggests that the odds of success improve for companies nourished in business incubators, which typically offer space plus support services. A random sampling of startups in incubators between 1990 and 1996 showed their sales expanded fourfold on average between the time they entered and the time they left (usually two to three years). Annual sales grew an average of $239,535. What's more, of the startups that "graduated" from incubators between 1980 and 1991 (less than 10% drop out), 87% are still in business.
By comparison, the Small Business Administration estimates that 62% of all new companies close within six years. There are now more than 600 U.S. business incubators, up from just 12 in 1980. Sponsored by nonprofits, universities, or private groups, each has its own acceptance criteria. Many incubators provide management advice, office services, and financial, legal, or tech help, too. Service companies lead the list of clients, at 40%, ahead of light manufacturing (23%) and technology firms (22%).
For more information about business incubators, see BW Enterprise, Dec. 15, 1997, "Startups Are Really Warming to Business Incubators".