Kudzai Mubaiwa Business Hub
In this week’s instalment we look at the last six elements in developing a business plan for an innovation space. It helps to treat the new incubator or innovation space like another new business or start-up that requires a detailed plan and fully acknowledging that there will be lots of learning along the
way.
It has been extremely encouraging to hear from various people who are realising the simplicity of stirring up entrepreneurship and innovation within their immediate communities by creating incubation and accelerator programmes, technology hubs and makerspaces.
Client application, selection and graduation processes
We firmly believe in a model that requires incubator clients to be thoroughly selected and screened.
This is a key component in minimising failure. Not all entrepreneurs and their projects will suit an incubator.
The incubator or hub manager wants to oversee such candidates who have real need of their support and can demonstrate it, but should not be directly competing with a similar project in the same hub.
Growth potential is critical for selection, as is their projects “fit” with the space’s objectives.
Naturally it must be clear that a market is available for their product or service. This is why some spaces, like us, will open calls that request candidates to motivate for a spot in the programme, be open to some kind of face to face interview and can operate willingly and comfortably within the guidelines and rules set by the space, through to the end.
Often, selection is influenced by the profile of both the proposed start-up and the pedigree of the co-founders.
Both candidates and hub managers can be covered if they put everything in writing – what the space will offer, what the incubator will require in return.
If they are in a physical co-workspace it will mean literally evacuating them once the term of the lease contract lapses, or when their space requirements increases, or when they secure a round of funding sufficient to give them a good start alone.
All this must be stated upfront to protect the interests of both parties and signed for in a contract with simple and clear terms of reference.
Staffing plan
Three is a crowd is the old English adage, but in business incubation, it’s generally a perfect staff number.
Keeping it lean is not only efficient from a cost savings perspective, it is effective.
The hub manager or incubator manager tends to be the focal person who interacts with all stakeholders – a board when the space gets one, other ecosystem counterparties, the clients, the general public and other staff and often has many roles combined into one. Some call this person a community manager or director.
Ideally this should be a person with economic development experience and contacts; and in the case of very technical spaces a well versed person with a head for business may be preferable.
It also helps to have strong operations staff to look into administration and facilities issues and certainly in this digital age a techie is always required to man the hub site, social media and support the clients in similar regards.
The work is very intense and the incubator manager must be very hands on, especially at inception to get things going on all fronts including branding the space, establishing the partnerships stated in the business model canvas, ensuring an online presence, vetting applications, financial management, facility oversight, leading sustainability efforts, hosting periodic events, programming, one-on-one mentoring and linkages for clients, reports, and public relations.
It’s a lot of work, and one has to be besotted with the concept as it requires ongoing training and reading to stay current and relevant.
A strong operations person will ensure the facility stays impeccable and maintained, keep the books, make purchases.
The resident techie will ensure all technology aspects are supported in a tech hub or makerspace.
These three work quite closely to run a tight ship and need to be supported by an advisory board.
Facility
This is a very important element because many innovation spaces fail to achieve sustainability due to poor choices on this one.
When starting a new programme, consider if you would rather own a property than lease it – it is senseless to pay huge amounts of rent, which you cannot recoup from clients, when there is an option to purchase.
A balance must be struck on the size – it must not be too small to have the co-working space, offices and a meeting/training room, but it must not be so big that you cannot fill it up – occupancy must be at least 75 percent to give confidence to interested clients.
The plan should be clear on shared and non-shared costs with each client paying their rent, but meeting rooms, training rooms, kitchens, bathrooms and a reception being shared.
Location matters in real estate, and this will be informed by your target market, for a youth inclined centre, the CBD is attractive if you want a lot of traffic for community events, while some more complex spaces are best out of town in quiet neighbourhoods. Finally, the layout must suit the type of innovation space you will run.
There is no benefit in fancy real estate which does not suit client’s needs, as many clients simply want a place with definite power, Wi-Fi, a phone and copier and any kind of furniture to sit on!
Budgets
The goal of financial sustainability must drive everything in your plan. Financial projections will be informed by the activities related to the incubator objectives.
There will be an initial start-up budget, heavy on capital expenditure and then an operations budget detailing the requirements to keep a space going over the next five years with annual figures clearly shown.
Fund-raising must be an ongoing thing, but at the beginning, there must be secured commitments to get the program to start.
Grants are a good idea at start or receiving some kind of impact investment funds. Beyond that, sustainability options we outlined in a prior article have to kick in soonest. Adjustments can and should be made continuously to ensure the incubator is run on a cash basis.
Project work plan
The step by step actions for implementing the programme are required.
These can be split into the short term ones such as incorporating and formalising the innovation space, hiring the incubator manager, finding a site, creating a selection process and recruiting the first clients, forming an advisory board, developing programmes and policy documents and fund-raising.
It’s advisable to run a minimum 6 months in pilot so as to test everything and then make changes and launch.
Thereafter longer term work plans in line with the innovation space objectives can be prepared in detail, and promoters can tick boxes along the way to ensure everything is covered.
Incubator evaluation criteria
After all has been said and done, the resources committed to an incubator or innovation space must yield the required outcomes and meet objectives.
They must have been clear and measurable from the onset so that milestones and achievements can easily be noted.
Indicators may include number of small businesses housed, trained, jobs created, tax contribution of clients, client company achievements, financial sustainability of the hub and innovations emanating from the space periodically.
It is only then we be able to say, we have truly contributed to national economic development.
- Kudzai M. Mubaiwa is an economic development professional and managing consultant of InvestorSaint (Pvt) Ltd, a financial education company. She is also a certified incubator manager and co-founder of iZone. You can reach her via email on kudzi@investorsaint.co.zw or Twitter handle @kumub