When you hear the word “start-up”, if you imagined a couple of college dropouts, working out of a messy basement office, you’re not entirely wrong. But start-ups can also be companies that have been around a few years, only haven’t grown or expanded in terms of employees, offices or revenues.
Did you know that only about 10% of start-ups are successful? The other 90% fail; 10% of them fail within the first year, irrespective of the industry they are in. Here are some more interesting (and perhaps shocking!) numbers: only 2 in 5 start-ups are profitable, 1 in 3 break-even and 1 in 3 continue to lose money. That’s a very slim win percentage!
Did those numbers discourage you from your entrepreneurial dream? Are you ready to call it quits or going into a mini panic attack? Stay with us a bit longer. We promise you, it’s not all downhill. Let’s take a look at unicorns such as Airbnb, Reddit and Dropbox. These start-ups HAVE seen exponential growth and have one thing in common: they were launched with a business incubator that helped provide infrastructure support, capital investment and some basic yet necessary coaching.
With start-ups continuing to rise and unicorns becoming more common, there is little surprise that corporate giants such as Microsoft and GE have business incubation and acceleration programs. Below are four reasons why we think business incubators can play a significant role in the success of a start-up.
- Shared office spaces: Rents these days are skyrocketing. No seriously, they are rising higher than a hot air balloon! So, if a start-up is able to alleviate these costs, it is a HUGE burden off their shoulders (and their bank account obviously!). This is one of the immediate problems that a business incubator solves for a start-up. These offices are usually fully equipped with all the necessary supplies and resources. Telephones, local address for business communication, printers, fax machines, etc – all readily available, in a very cost-efficient manner. This money saved, is money earned and can be invested back into the business, which for a start-up is extremely imperative.
- Capital Investment: One of the major reasons for a start-up failure is cost and pricing related issues. One in three start-ups begin their business with under $5,000 and 33% of start-up capital for employer firm is under $10,000. One in four businesses had limited growth because they were not able to receive the funding they required. Funding and investment is the single most important problem that can make or break a start-up. And a business incubator can solve that if you can exhibit potential in your business! Show them the vision, show them the money and they WILL support you!
- Team Access: According to Huffington Post, it can take up to 38 hours that cost about $1,300 to hire just one employee! Recruiting and adding team members is, by far, one of the hardest things to do. Trust us – and you probably faced it already – it ain’t no easy feat. Finding that one person with the perfect mix of relevant work experience, shared passion and cultural fit will get you wired up! Business incubators efficiently solve the problem, with a ready access to a fully built team that can cover every aspect of your business. Depending on the type of incubation partner, the support can range from marketing, bookkeeping, public relations, admin support, social media and more! This not only saves cost but saves you a lot of hassle and stress going through a massive pool of applications to filter that one candidate.
- Mentoring Support: “Learn every day, but especially from the experiences of others. It’s cheaper!” – John Bogle. Wiser words were never said. Mentors were once, or even are entrepreneurs themselves. More often than not, they have a lot of experience and have faced a multitude of challenges. Their successes (and failures!) can be quite helpful and insightful for a virgin solopreneur. It’s a fact – mentored start-ups grow 3.5 times faster and raise 7 times more money. Being part of a business incubator can be the missing piece in the puzzle for a start-up to become successful.
If you are a start-up, looking to work with a business incubator or accelerator, or just exploring the idea, hit us up on email@example.com or +1 (905) 257-9696 and let’s chat.
Evolve Business Advisory helps start-ups and solopreneurs run their business seamlessly via our business incubation and acceleration services, while you can focus your time, energy and finances on growing the business.