Before you Join an Incubator, Read this.
Originally written Jan 30, 2019
In my journey to become an entrepreneur , there are 2 feelings I will never forget.
The first is the day I attended the introductory meeting of a Startup Accelerator. I felt like I could fly. That meeting was filled with inspirational stories of whom we now consider tycoons in the business world. What they all had in common was that they each started out small, with no money at all, and it took time for them to dominate their industries. Up until that day, I thought that every business had to start with a hefty bank account. As I was introduced to the world of entrepreneurship, startups, and minimal viable products (MVPs), I felt a rush of excitement. I saw all the possibilities, and I couldn’t wait to get started on the idea that I had. I’ll never forget that feeling. I joined the accelerator, got to work, and after 3 months, my business idea won the Audience’s Choice award during our final presentations.
The world of an entrepreneur is an exciting place with lots of stages and changes. One of those stages may include joining an incubator., and that feels like: “Wow! I’m on my way to success. I’m going to get support, mentoring, access to experts and investors!”
First let’s define what an incubator is: Commonly, an incubator is a device that helps nurture an infant born prematurely, or in need of medical attention. In business terms, it’s usually an entity that promises to help a small business thrive, with support, mentoring and guidance. It could open doors to new opportunities, introduce the start up to influential people, skilled professionals, and even investors.
Before you set your sights on joining a startup incubator, here are a few things you should know.
1. You will Get Space to Work.
Pros: Usually at a lower cost compared to renting an apartment or factory, with services such as wifi, a business center, a coffee station, and meeting rooms. It’s a space for the team to focus on their business, near their mentors, away from their day jobs and their homes.
Cons: It’s not free, and it can be expensive. At the end of the day you are paying rent, and in some cases you might be asked to pay for the services (wifi, meeting rooms, business center) which can be an unnecessary cost for you.
2. You Get a Business Address.
Pros:The incubator’s address can serve as work address, separate from your home address, which is needed for opening bank accounts, creating a commercial registration, and your applications for different licenses.
Cons: If you leave the incubator, you should be ready to update all your documents, portals, and accounts to reflect your new address, which is extremely time consuming.
3. Networking and meeting new entrepreneurs
You won’t be the only startup at the incubator.
Pros: This presents the opportunity to meet new people, share ideas, and barter services. For example a graphic designer from one team could barter his/her services for Tech services from another startup. It’s also a great way of reaching new customers and raising awareness about your business via cross promoting: The graphic designer will show off his skills designing the IT company’s logo, and mentioning what kind of services they offer, While the IT company raves about how much they love their new logo designed by the graphic designer.
There have also been situations when teams have merged to form a new business because their ideas complemented each other.
Cons: If the incubator hosts startups with products or services similar to yours, you’ll have the stress of competition and protecting your ideas.
4. Ease of Access to Individuals in Government Sectors.
Usually in an incubator the director has a network of government officials and VIPs that could assist the startups when making decisions or looking for assistance in government procedures. It is much easier to contact a person directly than to try to navigate a website, visit a distant location, or try to reach officials by phone or social media. These are usually tedious because these sectors are under staffed and cannot accommodate all the requests they receive efficiently.
Pros: You’ll get your questions answered quickly by the right people, and this can have immense impact on your business. Personally, I couldn’t have gotten my licenses without the people I came to meet through the incubator.
Cons: None really.
5. Access to Experts.
Incubators usually offer their startups services or access to entities that offer services such as financial or legal consultants.
Pros: The incubator will invite professionals for a day or two to meet with the startups. Financial experts, marketing pros, lawyers or branding gurus can come in and meet with the startups answering questions and offering advice.
Cons: If the service is free, your time with these consultants is very limited. If the consultant is willing to take you on as a client, they he/she may or may not give you a discounted price for their service, and you may or may not be able to afford it.
6. Presentations and Workshop Opportunities
Incubators usually arrange presentations by professionals to share general knowledge, experience, success stories, and allow the startups access to these professionals to network and learn.
Pros: These presentation are usually very helpful and consolidate a wealth of knowledge and experience in as much as an hour or two. Startups are encouraged to ask questions, and the presenters are usually open to sharing their contact details for future support or hiring. These presentations can also be very inspiring and prove to the startups that persevering through the challenges of starting a business is worth the time and effort.
Cons: Attending too many presentations and workshops could become a distraction from doing real work. Consider letting one member attend on behalf of the team. Another thing is although presentations are usually free, workshops usually are not. As an entrepreneur you have to consider when and how you’re spending your money.
7. Helpful Employees within The Incubator.
Entrepreneurs need all the help they can get. The incubator’s admin team work hard to run the incubator and support the startups.
Pros: They can help with guidance on procedures, or suggest the right contact person for an issue. In the incubator I joined, there was one friendly lady I could always go to, and if she didn’t have an answer she was nice enough to say: “I’ll find out and get back to you.” She always did.
Cons: Like any workplace, you may not always like everyone you work with, and some people might not act professionally. Have you ever been promised a document or a service by someone that you need to do your job, only to have them lead you on for two weeks then simply say ‘sorry, couldn’t do it’? That could happen in incubators too.
The second feeling I will never forget, is the day I couldn’t make the rent and had no choice but to leave the incubator. I was naive enough to think I could get an extension on the due date, and I could have worked harder to avoid the situation.
Rent is a huge burden you have to consider as an entrepreneur. Do you have a source of income, friends, or family you can fall back on? It was a huge set back for me, especially since my licenses, business bank account, shipping account were all connected to that location. All the labels on my products had that address to be compliant with FDA standards too. I would have rather spent the time and effort making the changes on more important matters.
Do the pros outweigh the cons? I think that would depend on your business, how many members you have on your team, each one’s skill set, the services offered by the incubator, and what you hope to gain from joining.
The more members you have, the less the burden is financially on each person, and the more work you can accomplish as a team, and hopefully, the more sales you can acquire.
Do your research on the incubators in your area, speak to people who have been there. Speak to people who have left. Ask yourself why you want to join, and set a plan with goals that you can measure at the end of the contract.
I have been a solo entrepreneur for 4 years. If I could go back in time knowing what I know now, I would hold back on renting space. It placed an unnecessary burden that distracted me from the core of my business.
Everything happens for a reason is cliche but true. My experiences have made me wiser and reshaped my perspectives around business. I’ve learned that everyone has an agenda that they will follow through with. No one owes me anything. I’ve also learned that being tipped off balance is just a part of business, and just like physical balance, finding your balance again depends on how strong you are at your core.