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Lessons from abroad on entrepreneurship and incubation
Earlier this year, Jill Sawers, Incubation and Entrepreneurship Manager at The Innovation Hub, visited the United Kingdom to attend the 48th International Conference on Small Business, and an Entrepreneurs Expert Meeting as well as visit the Surrey Research Park.
The following reflects some of her impressions.
Jill Sawers (right) and fellow delegates on the steps of the Houses of Parliament in Belfast at the welcoming function of the 48th Conference for Small Business in Ireland. |
At the conference networking dinner, Jill (left) shared a table with Prof
Patricia Fleming (middle) of the University of Limerick in Ireland and Dr Don Bradley III,
Professor of Marketing and Executive Director of SBANC of the
University of Central Arkansas.
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During her visit to the Surrey Research Park, she was introduced to the pre-incubation activities, which form part of a programme of such activities linked through a number Centres at four universities in the UK.
Entrepreneurs are given a workstation in a pre-incubation centre to develop concepts into products, and to test these in the market. Should the result be the establishment of a business, other premises are found. Virtual members pay a flat rate for access to the Centre facilities (meeting rooms, equipment), but do not have access to a workstation. Mentors are recruited who agree upon a work plan with the entrepreneur. This is reviewed on a "go/no-go" basis after four months. The maximum stay in a Centre is 18 months.
The programme is funded by the higher education funding agency, with sponsorship by local banks, lawyers and other private sector partners. Sponsorship can also take the form of time, where local bankers, lawyers and accountants serve on "Entry Review Panels" at no cost, while some of the partnering professional service providers offer free consulting time to entrepreneurs.
Funding sources include seed funds and government programmes where funds are available for feasibility studies and development. Sources of entrepreneurs include spinouts from universities and referrals from solicitors, bankers, etc. A recent survey conducted at the University of Surrey indicated that only 10% of students were interested in starting their own businesses, and of this number, only approximately 1% eventually did.
Entrepreneurs Expert Meeting in Coventry
Salient points addressed in the presentations at this meeting about the development of small and medium enterprises, including start-ups, included the importance of maintaining a healthy balance between a company's marketing, operational and financial activities. Experience has shown that an over-focus on any one of these leads to a crisis in the business.
To effectively promote entrepreneurship, attention needs to be given to bring down barriers to growth, such as an underdeveloped risk capital market and the general negative response by banks to SMEs. In addition, it is important that entrepreneurship is celebrated and the risks and rewards are well balanced.
The importance of creating a culture of entrepreneurship in the university environment will help to create a feeder for incubators. A policy that supports enterprise creation and programmes to give effect to such a policy could help to achieve this. Many entrepreneurs who feel intimidated by an academic environment will appreciate a welcoming and friendly incubator interface. Once inside the incubator, however, entrepreneurs should be stretched to catch up with the most advanced in their industry. The importance of a "grow-on" space, where graduating companies are kept in the region of an incubator, was highlighted.
48th Conference for Small Business in Belfast
Representatives from 80 countries attended this international conference, where it was announced that South Africa would host the 49th Conference at the Sandton Convention Centre in June 2004.
Topics addressed issues facing SMEs, entrepreneurs and incubators. A number of issues were highlighted:
- The relevance of SMEs to the economy - 99% of all employers and 97% of all exporters in the United States are SMEs, while in the UK more than 58% of jobs in the private sector are generated through SMEs. In the US, an Office of Advocacy has been established that interacts directly with SMEs to establish their needs. This is a powerful tool to bridge the gap between what policy makers think SMEs require, and their actual needs.
- Challenges facing entrepreneurs - in the European Union, where 60% of all businesses are family-owned, 25% of SMEs experience difficulty in finding skilled people. Research findings indicate that entrepreneurs have a product and selling rather than a marketing orientation, do little formal market research, rely on intuition, do iterative and incremental planning and are quick to recognise opportunities.
- Incubators - the average capacity usage of incubator space worldwide was 70%, and the average period a company spent in an incubator was 2,2 years. Amongst US incubators, 75% are dependant on a subsidy, while 29% of their operating budgets were based on such a subsidy. Statistics indicated that the return on local tax revenue of incubators was $1:$5; extrapolation of this ito the benefits experienced by secondary industries would translate to a $1:$50 return on investment. Incubators are therefore seen to be extremely effective instruments for generating long-term economic development for a region.
For more information on any of the above, contact Jill Sawers via email: jsawers@theinnovationhub.com
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