In the last blog, the importance of a “Grow Your Own” strategy was discussed. But, which entrepreneurial support model is the best one to deploy when pursuing a “Grow Your Own” strategy and aiming to start and retain homegrown businesses? Incubation (in an incubator facility) is the best model (versus accelerators).
Basically, a combination of the incubation process and the length of time that a company spends in an incubator help to retain homegrown businesses. The incubation process accelerates the successful development of entrepreneurial companies by providing an array of business support resources and services designed to help a business reach a series of milestones. Companies entering the incubator have already tested the viability of the market, business and product. Then, through the incubation process, they develop a business model and plan, complete product development, secure their first customers, build out their team, and obtain funding to support business growth. The length of time that a business spends in an incubator (facility) ranges from 18 to 24 months for an information technology business to approximately 3 years for a medical device company, to perhaps 4 years for a pharmaceutical business. By the time that a business has completed the milestones and graduated from the incubator, it has generally grown to about 20 to 25 employees. Over its 25-year history of creating successful incubators, BCD has learned that the now, larger business is more likely to stay in the community.
20 to 25 is the critical number because talent is an important asset. The business’ employees are vital to continued company growth. The employees and their families are rooted in the community and do not wish to leave. Spouses have jobs in the community. Children attend local schools. They have friends and built relationships that are local. Reaching that critical number is the key to retaining homegrown businesses in a community, and deploying an incubator to help businesses to reach that critical number is an effective method for making that happen.