Significant progress has been made with the launch of new business incubators since the Department of Trade and Industry’s announcement of its ambitious plan of rolling out 250 business incubators, three years ago. The department’s Incubator Support Programme incentive has specifically been used as a lever to unlock private sector appetite for SMME incubation and an Enterprise Development strategy.
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Research on mainstream business incubation, which has been around for over 60 years, shows that business incubators are:
- Entities that aim to help new enterprises start up, survive and grow.
- They provide a combination of office/workspace, business development services, coaching and mentoring and access to funding and networks.
They have diverse goals, business models, host/funding institutions and use a wide range of direct or virtual methods to support the enterprises they target.
Promoting broader economic participation
The government regards business incubation as one of the best platforms a country can use to promote broader economic participation, to encourage start-up activities and to uplift the country’s entrepreneurial base.
It is also viewed as a viable tool to help small enterprises grow and become successful and globally competitive with the potential to create jobs, alleviate poverty, empower previously marginalised groups and thus contribute to the broader economic development.
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The approach – quality versus quantity
Unfortunately many incubator models have been developed with a primary focus on quantitative outputs – the number of SMMEs being channelled through often mediocre incubation support programmes - versus qualitative deliverables.
SMMEs with growth potential normally have common developmental needs. These include access to affordable office/workspace, to business development support (generic, specialised or technical), to markets and access to finance.
This is more than a tick box exercise. The specific needs of every SMME entering incubation should be evaluated and a tailor-made solution be developed for each one. This is opposed to the current supply driven SMME development programmes seen in many incubators around the country.
Tips for nurturing growth oriented enterprises Worldwide, the most successful incubators are located in a strong enterprise development ecosystem. This is characterised by a thriving start-up scene, an entrepreneurial culture and easy access to business support, markets and funding. The following is recommended for business incubators to create an enabling business incubation ecosystem and to nurture growth oriented small enterprises:
- Develop and implement a more stringent screening tool to identify the generic and specific small enterprise development needs.
- Provide a full range of generic and specialised in-house business development services.
- Formalise the composition and provision of pre-incubation services to attract the right small enterprises.
- Identify and implement lean start-up tools as part of the pre-incubation process.
- Intensify one-on-one small enterprise support through mentoring and coaching during the incubation process.
- Use a combination of quantitative and qualitative metrics to gauge business improvement.
- Pursue linkages with academic institutions to offer value-add services such as research and development and commercialisation.
- Formalise the composition and provision of post-incubation services to ensure longitudinal tracking of small enterprises after they have graduated from incubation. This will identify further support needs e.g. Access to information, networks and markets.
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