Mark S. LongMark S. LongLong Performance Advisors Long Performance Advisors

Ellettsville, INEllettsville, IN

Why you really need a feasibility study – first!

What’s a Business Incubator? If you're thinking about building one – why

you need to do a “business incubator feasibility study” up front – and who’s qualified to do them, and what they should do/cover when they’re being done.

What makes a community “ready” for a business incubator?

a program designed to accelerate the successful development of entrepreneurial companies

through an array of business support resources and services,

developed or orchestrated by incubator management,

and offered both in the incubator and through its network of contacts.

Cheap rentSubsidized housingA way to use an old buildingUrban renewal“Build it and they will come”

What Business Incubator What Business Incubator Isn’tIsn’t

The Incubation DifferenceThe Incubation Difference Help with business

basics Mentoring Networking Marketing assistance Access to capital Links to

University/Corporate partners

Business training programs

Help with operations

Do We Do We NeedNeed an Incubator? an Incubator? Determination of need Find your “deal flow” Where/who are your

customers? How many?

Feasibility studies Business plan Funding plan Sustainability plan

When is a Business Incubator Feasible?When is a Business Incubator Feasible?

11stst Step - Commitment Step - Commitment The stakeholders have developed a mission statement and The stakeholders have developed a mission statement and

established measures by which the project will be established measures by which the project will be evaluated.evaluated.

The stakeholders understand the kinds of investments The stakeholders understand the kinds of investments (land, money, time, other resources) they will be required to (land, money, time, other resources) they will be required to make over time and the respective magnitudes.make over time and the respective magnitudes.

A single project champion or group of advocates has been A single project champion or group of advocates has been identified to marshal resources in the early stages of the identified to marshal resources in the early stages of the project.project.

When is a Business Incubator Feasible?When is a Business Incubator Feasible?

22ndnd Step - Resources Step - Resources Adequate cash flow analyses have been performed and Adequate cash flow analyses have been performed and

threshold levels of financing have been secured.threshold levels of financing have been secured. A building can be secured (if necessary – some programs are A building can be secured (if necessary – some programs are

virtual!) which lends itself to the needs of early-stage companies virtual!) which lends itself to the needs of early-stage companies (easily modularized, flexible, core infrastructure, multi-use).(easily modularized, flexible, core infrastructure, multi-use).

Specialized equipment and/or office furniture is available at Specialized equipment and/or office furniture is available at minimal costminimal cost

A “market niche” or specialized areas of focus are identified A “market niche” or specialized areas of focus are identified which can be served by the incubator through surveys, focus which can be served by the incubator through surveys, focus groups, interviewsgroups, interviews

When is a Business Incubator Feasible?When is a Business Incubator Feasible?

33rdrd Step - Expertise Step - Expertise The project manager/director understands the role of the The project manager/director understands the role of the

incubator within the context of other local and regional economic incubator within the context of other local and regional economic development projects.development projects.

A team experienced with incubation will lead or coach the A team experienced with incubation will lead or coach the formulation of the business plan.formulation of the business plan.

People with experience in construction/rehab will be part of the People with experience in construction/rehab will be part of the business plan development effort.business plan development effort.

An expert puts the entire context together for the incubator to An expert puts the entire context together for the incubator to function – educational environment, support groups (mentors, function – educational environment, support groups (mentors, advisors), finances, space, equipment, etc.advisors), finances, space, equipment, etc.

When is a Business Incubator Feasible?When is a Business Incubator Feasible?

44thth Step - Market Step - Market The incubator offers specialized business and technical The incubator offers specialized business and technical

assistance services in order to meet the needs of targeted assistance services in order to meet the needs of targeted entrepreneurs who have been identified (during the study)entrepreneurs who have been identified (during the study)

The people testing the feasibility complete a market The people testing the feasibility complete a market assessment that identifies a significant assessment that identifies a significant quantityquantity of potential of potential client candidates (2X more than the # expected).client candidates (2X more than the # expected).

The feasibility study team can identify a sufficient number The feasibility study team can identify a sufficient number of of qualityquality candidates to enter the incubator (candidates candidates to enter the incubator (candidates qualified against set criteria)qualified against set criteria)

Integration into larger communityIntegration into larger community◦ Part of overall community economic development planPart of overall community economic development plan◦ Community/sponsor support for mission and operationsCommunity/sponsor support for mission and operations◦ Enlists support of entire communityEnlists support of entire community

An effective teamAn effective team◦ Professional management & support staffProfessional management & support staff◦ Network of business advisors, mentors and consultantsNetwork of business advisors, mentors and consultants

ProfessionalismProfessionalism◦ Emphasizes client assistanceEmphasizes client assistance◦ Holds clients accountableHolds clients accountable◦ Models good business practicesModels good business practices◦ Strives for financial sustainabilityStrives for financial sustainability◦ Measures effectiveness and impact regularlyMeasures effectiveness and impact regularly◦ Reports to shareholders on regular basisReports to shareholders on regular basis

Now You’ve Got It! Best Now You’ve Got It! Best Practices?Practices?

It pays to “bring in an expert” – someone who has experience in feasibility studies, who has completed several of these and can compare your community to other communities of a similar size and nature

Ask for references – what about projects similar to yours? Do they have experience in the key areas you are considering (Agriculture, Mixed use, Technology, Biomedical/health, Alternative Energy, etc.)?

So Who Can Do This?So Who Can Do This?

Check with trade groups – the National Business Incubation Association (www.nbia.org) has a list of consultants who do feasibility studies around the world

Don’t let just anyone do it – check references Don’t “skip it” – and then wonder what

happened to the details Many grants and public agencies require a

feasibility study to be completed before a grant can be awarded

Look for ProfessionalsLook for Professionals

Put It in Writing II: A Guide to Incubator Policies, Procedures, and Agreements; Author: Mark Long

Best Practices in Action; C. Colbert, D. Adkins, C. Wolfe, K. Lapan

Developing a Business Incubation Program – K. Boyd

Available at the NBIA bookstore(www.nbia.org)

Recommended TitlesRecommended Titles

Mark S. Long

mlong@longperformanceadvisors.comhttp://www.longperformanceadvisors.com

A trusted name in Incubator Feasibility Studies since 2007