Business Incubators: Success Criteria
he incubator at Western Colorado Business Development
Corporation is one of 550 in North America, according to industry
facts and figures from the National Business
Incubation Association (NBIA). Like 49 percent of those
incubators, WCBDC is a public or not-for-profit center, sponsored by
government and nonprofit organizations primarily for economic
development, job creation, economic diversification and/or expansion
of the tax base.
The incubator at Western
Colorado Business Development Corporation is one of
550 in North America . . .
With its involvement of successful entrepreneurs, lawyers,
accountants, bankers and many others to provide expertise and
financing, however, WCBDC can also fit into the "hybrid" category,
along with 18 percent of other incubators. These partnerships offer
incubators access to government as well as private sector funding
and resources. 
Twelve percent of North American incubator facilities are
completely private, run by investment groups or by real estate
development partnerships. Their interest is in economic reward for
investment in tenant firms, new technology applications and
transfers, and added value through development of commercial and
industrial real estate.
As WCBDC develops a working relationship with Mesa College, it
joins 13 percent of incubators that are affiliated with universities
and colleges. In addition to sharing other objectives, such
affiliations provide research opportunities and start-up business
opportunities for alumni, faculty and associated groups.
Another 8 percent of North American incubator facilities are
sponsored by a variety of non-conventional sources such as art
organizations, Indian tribes, church groups, chambers of commerce,
etc.
Other Incubator Perspectives
Robert J. Sherwood is
former president of a hybrid incubator, the Center for
Business Innovation (CBI) in Kansas City, Missouri. CBI won the
Incubator of the Year award from the National Small Business
Incubator Association in 1993, and in 1996 they won recognition for
the Innovative Program of the Year.
"A business incubator needs
to be about supporting innovation, not just about renting space."
Sherwood has been active nationally in the incubator
movement, and has been described as one of the people "on the
leading edge of thinking about how to support small business
development." He spoke about new paradigms for business incubators
at a recent conference on technology and community development
sponsored by the Council on Urban Economic Development. Sherwood
emphasized that business incubators need to move beyond old ideas
and assumptions to effective new approaches.
"A business incubator needs to be about supporting innovation,
not just about renting space," Sherwood said. "It should focus on
creating wealth, not on supporting itself and others in a permanent
nonprofit status. Our purpose is to build self sufficiency, not to
maintain dependency."
Sherwood believes those involved in incubators should have a
financial stake in its success, and that they should be stakeholders
more than partners. He believes an incubator's capital should be
primarily from investors who expect a return on their investment,
rather than from funders who provide money without concrete
expectations of returns with added value. 
"A successful incubator is likely to be headed by a president
who earns a salary and commissions based on his or her
effectiveness," said Sherwood. "They need a passionate commitment to
what they're doing, and a personal stake in it." That president may
earn $150,000 or more per year, in contrast to an incubator
"manager" who may make closer to $30,000 per year. Sherwood said that
incubators and the businesses they are designed to support fail when
they have no vision, no performance measures, and no rewards
commensurate with investment.
When Sherwood screens potential businesses for CBI, he looks for
people with businesses that are market driven, not idea driven. He
wants clients who are focused on goals of high business growth, not
people whose goals are primarily to change lifestyles by becoming
their own boss.
Although CBI serves a range of clients, their emphasis is on
high technology businesses, not retail or service businesses.
Sherwood believes that it's the innovation and the expanded networks
that are key to CBI's success in supporting business growth, and
renting space to tenants is incidental to his vision of businesses
that operate effectively in a global marketplace.
. . . rural and urban
incubators differ in important ways.
Sherwood emphasized
that we need to move beyond the concept of economic development,
with its assumption that government must provide ongoing support for
business development. "We need sustainable development," he
said, "and while initial assistance from public and nonprofit
sources may be needed, those resources must be allocated to leverage
long-term solutions, not to create permanent dependency. Our goal,"
he said, "is to create healthy and wealthy businesses in the
community."
The Western Colorado Business Development Corporation in Grand
Junction shares many of the characteristics of the Center for
Business Innovation in Kansas City, and both have been recognized
nationally for their effectiveness.
Thea Chase said she agreed with Robert Sherwood on many of his
statements, but that rural and urban incubators differ in important
ways. "In western Colorado, there is no university to provide
technology-based degrees," she said. "The critical mass to establish
a high technology incubator does not exist, and as a rural
incubator, we must be prepared to serve many industries."
"Any new project presented
to my board is always greeted with 'Will it pay for itself?'"
Chase does strongly agree with Sherwood's
comments on innovation and self sufficiency. "Any new project
presented to my board is always greeted with 'Will it pay for
itself?'"
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