How Coworking Space Owners Can Harness The Power Of Incubator Spaces

Launching a startup isn’t easy. Even the best ideas can fail due to limited resources and finances.

But it’s not all doom and gloom. There are many strategies business owners can use to get their ventures off the ground.

Business incubator spaces, for example, provide support from one central office location. From workspaces to tech to experts, they offer a diverse range of tools in exchange for equity or a monthly fee.

Interested in learning more? In this article, we’ll explain the differences between a business incubator, an accelerator, and a coworking space. Plus, we’ll tell you the top features the best incubator spaces have and how can you leverage that to improve your coworking space.

Quick Summary:

• Business incubator spaces support entrepreneurs, startups, and small business owners as they get their new ventures off the ground.
• One of the top benefits of a business incubator is that it provides physical office space in a central location. Entrepreneurs can use it for meetings and other business operations.
• By working from a shared workspace, startups can take advantage of a coworking community. Morale and motivation improve when entrepreneurs are surrounded by like-minded people.
• Coworking space owners can leverage incubator spaces by integrating incubator programs and resources into their offerings, creating a hybrid environment that attracts and supports early-stage startups. This strategic fusion enhances the value of their coworking spaces, fostering innovation and collaboration while increasing member retention and satisfaction.

What Is a Business Incubator?

A business incubator gives startups access to resources they don’t have the budget for. The service is usually for a limited time — specifically, until the business can survive on its own.

Entrepreneurs, startups, and small businesses all use incubators. By signing up for an incubator program, participants can run their operations from a shared workspace. In addition to physical office space, the deal may include other resources, such as mentors, technology, and training and education.

So, why does this matter?

Tracy Kitts, former Chief Operating Officer of the National Business Incubation Association, says businesses backed by an incubator have a survival rate of 87%. Compare this to those going it alone, and you’ll see a massive drop in the success rate — just 44%.

For managers who run incubator spaces, the payoff may be equity in the company. Incubators can also make money through sponsorships, partnerships, or membership fees.

What’s the Difference Between Incubators, Accelerators, and Coworking Spaces?

We already know business incubator spaces are for early startups, providing the tools they need to launch successfully. But what happens when a startup is ready for the next stage?

An accelerator or coworking space may be the right option. Let’s take a brief look at each of them:

Accelerator Spaces

• Purpose: Accelerator spaces are designed to fast-track the growth of early-stage startups by providing intensive support over a fixed period, typically ranging from a few months to a year.
• Programs: These spaces offer structured programs that include mentorship, education, and often seed funding. The goal is to prepare startups for growth and investment.
• Mentorship: Access to a network of experienced mentors, industry experts, and successful entrepreneurs who provide guidance and advice.
• Funding: Many accelerators offer initial seed funding in exchange for equity, helping startups to develop their products and scale quickly.
• Demo Days: Programs culminate in demo days where startups pitch their ideas to a room full of investors, increasing their chances of securing further investment.
• Focus: Accelerators have a strong focus on high-growth potential startups and work intensively with a select group of companies.
• Time Frame: Participants join for a defined period, after which they are expected to have made significant progress and to be ready for the next stage of growth.

Coworking Spaces

• Purpose: Coworking spaces provide a flexible, shared working environment for freelancers, remote workers, small businesses, and startups. They focus on creating a collaborative community.
• Flexibility: These spaces offer various membership plans, from daily passes to long-term leases, catering to different work styles and needs.
• Amenities: Coworking spaces typically provide office amenities such as high-speed internet, meeting rooms, printing services, and communal areas, fostering a productive work environment.
• Community: Emphasis on building a diverse community through networking events, social gatherings, and collaborative projects.
• Cost-Effective: They offer a cost-effective alternative to traditional office spaces, particularly for individuals and small teams looking for professional workspaces without long-term commitments.
• Diversity: Members come from various industries and professions, creating a rich, diverse environment that encourages networking and cross-industry collaboration.
• No Fixed Program: Unlike accelerators, coworking spaces do not have structured programs or a fixed duration of stay. Members can join and leave as per their convenience.

As long as the facility meets the requirements, you don’t need to choose just one service. For example, an incubator space can complement a coworking space.

Any shared setups should come with private office spaces and dedicated desks.

The Top 6 Features of a Good Business Incubator Space

Having access to a business incubator comes with a range of perks for entrepreneurs and startups. Here are the top six features for supporting new businesses:

1. Physical Office Space

Successful companies can launch from unconventional spaces. For example, Facebook came to life in a college dorm room. Other familiar names, including Microsoft, Amazon, and Apple, started in garages.

While inspiring, these stories aren’t the norm. Business is competitive, and around 91% of startups fail without support.

Access to a physical office space can make a big difference in the day-to-day running of a startup. Business incubators provide professional office space with desks, chairs, and other amenities. With furnished offices, teams can collaborate in person.

The building should be in a convenient location, such as a city or technology hub. With a dedicated meeting space, entrepreneurs can pitch ideas and meet clients. These meeting rooms can be booked in advance using a coworking booking platform.

Depending on the types of clients the incubator program serves, the space may also offer a laboratory or creative amenities. Larger buildings may even include a cafe or restaurant.

2. Technology and Tools

Incubator programs need more than desks and bathrooms. Technology should also be part of the mix to give startups the tools they need for success.

Here are some essential tech features the best incubator office suites have:

• Computers, fax machines, printers, and scanners
• Telephones and noise-canceling headsets
• Accounting, word processing, and other professional software
• Antivirus software and encryption
• Reliable, high-speed internet
• Projectors and microphones for meetings
• Analytics, goal-setting, and research tools

Remember, some business owners will also have remote workers or collaborate with international companies. Quiet zones set up for video conferencing can be beneficial for these individuals.

And because incubator spaces constantly have people coming and going, technology can help maintain security — think video cameras, mobile door access, and alarm systems.

Watch the video below to learn how to manage WiFi security in a connected space:

3. Mentorship Opportunities

It takes a team of people to run a business. New startups don’t always have the funds to hire across every department, so this is where incubators come in.

Mentorship is invaluable for those just starting out. By tapping into expertise from others in the industry, entrepreneurs can learn to avoid common mistakes and build successful brands. They can also get advice on marketing, management, human resources, and legal obligations.

Incubator spaces are designed to connect like-minded people. Mentors can offer support to entrepreneurs in person, with advice tailored to the industry and business stage.

4. Training and Education Opportunities

Skills and knowledge gaps can harm any business.

For example, if a manager isn’t up to date with local laws, they may have legal issues. Red tape can stop a business from progressing, and fines can impact cash flow.

Ongoing learning is essential for businesses that want to understand the market, improve efficiency, and reduce risk. This is why most incubation programs feature opportunities for education and training.

Training can have a mix of formal and informal options and can even be customized to each participant’s needs.

But what types of education may be relevant, you might ask? Think marketing, accounting, management, and customer research.

With a business incubator space, training sessions can be held in a central location. The building may even include a dedicated study hub. Training days can be held on-site, while remote learning can be virtual.

5. Financial Support

Some incubators invest money into startups, which can be used for a range of purposes, such as staff wages, product manufacturing, or expansion.

Investment isn’t a gift, however — and those who provide seed money get a stake in the company. Incubators have a hands-on role in making sure the venture is a success. So, before committing, it’s important for all parties to share the same vision.

Having office facilities will help ensure everyone is on the same page. Meetings can support business planning, budgeting, and growth and efficiency strategies.

Incubator spaces can also be used to connect startups with other potential investors. If the idea is good enough for an incubator to get behind, others will likely want in on the action, too.

6. Coworking Community

Coworking spaces come with perks for early-stage startups. Instead of feeling isolated, these small business communities help make everyone feel connected.

Having other entrepreneurs in the same location can be good for morale. Whether it’s a coffee “brain break” or the discovery of new role models and mentors, a space shared with others is beneficial.

And a community of entrepreneurs is only the beginning. Experts can be on-site, ready to offer business assistance. Plus, incubator spaces can be set up for formal or informal networking events. Expert speakers can share their wisdom while entrepreneurs build their professional networks.

Remember, not everyone thrives in a bustling work environment. So, make private spaces and meeting rooms available, as well.

What Are the Benefits of Business Incubator Spaces?

Business incubator spaces are beneficial for both entrepreneurs and supportive organizations. Here are some of the top benefits that come with this kind of partnership:

Flexibility

Private offices often come with long-term leases. For small businesses, this type of commitment can be daunting.

Why? Because if the business grows, it may require a bigger office. Alternatively, when money is tight, an office space in a prime location may feel out of reach.

Incubator spaces are a flexible option and a good way to test the waters. Entrepreneurs get everything they need to kick off their venture — with room to scale if they need it. Then, once the business grows, they can pivot to a coworking arrangement or take out a lease elsewhere. And if it goes the other way and becomes unviable, scaling down is much easier.

Because incubator spaces have experts and modern technology on hand, entrepreneurs can also change their goals and strategies in real-time. If an issue is flagged early, legal or financial issues may be avoided.

Research

Startups fail for various reasons — and 42% fail due to a poor market fit. Even the best ideas can fizzle out if there’s no market for their product or service.

Incubator spaces can be useful for researching everything from potential customers to product price points. With the support of in-person professionals, startups can set realistic goals

For incubators investing in the startup, the research phase will determine how successful the project may be. They can then make the necessary decisions. For example, they can decide whether more money should be invested or whether they should end their partnership.

Budgeting

Sticking to a budget can be tough for startups. The cost of manufacturing a product or starting a service is just one consideration.

Entrepreneurs need a range of experts, including those with legal, accounting, and marketing backgrounds. Add to this physical infrastructure, insurance, energy bills, and license fees, and the costs can quickly skyrocket.

An incubator space is a cost-effective solution. Instead of paying for everything separately, it’s all included in the program. It’s not uncommon for an incubator program to have a service fee, but this is more budget-friendly than the alternative.

Entrepreneurs can get support on budget creation and advice on areas where cost-cutting may be required. Experts can also give them tips to avoid overspending.

Growth

Launching a startup can be a slow process, with a lot of trial and error along the way.

But entrepreneurs don’t have to start from scratch — they can use proven strategies to grow and expand their brand. With the support of professionals, growth can become much faster.

Incubator spaces have a network of industry leaders ready to share their knowledge. By tapping into these resources, the risk of doing business decreases.

Money is also essential for those who want ‌to get ahead. Without adequate financing, the bills can pile up, causing a business to stagnate or fail. It’s also easier to secure a loan — and have more options for expansion as a result — with a healthy bank balance.

Incubator spaces keep the outgoings down for startups, giving them room to grow without the financial strain.

Whether the incubator is receiving a fee or equity, the growth and success of the startup is a priority.

Synergizing Coworking and Incubator Spaces: A Strategic Advantage

As discussed, coworking spaces and incubator spaces serve distinct yet complementary roles in the entrepreneurial ecosystem. Coworking spaces provide flexible, collaborative environments where freelancers, remote workers, and small businesses can thrive.

Incubator spaces, on the other hand, offer structured support, resources, and mentorship to early-stage startups, focusing on accelerating growth and innovation. The intersection of these two models presents a unique opportunity for coworking space owners to enhance their offerings and attract a diverse clientele.

By integrating incubator elements into coworking spaces, owners can create a hybrid environment that appeals to a broader range of entrepreneurs.

This fusion not only attracts startups seeking support and mentorship but also provides existing coworking members with access to valuable resources and networking opportunities.

For instance, coworking spaces can host incubator programs, workshops, and mentorship sessions, fostering an ecosystem of learning and collaboration.

This can lead to increased member retention and satisfaction, as well as a reputation for being a hub of innovation and growth.

Moreover, coworking space owners can form strategic partnerships with local incubators to offer joint membership packages. This allows members to benefit from the flexible work environment of coworking spaces and the specialized support of incubators.

Such collaborations can also include shared events, pitch competitions, and demo days, further enriching the entrepreneurial experience and building a vibrant community.

Incorporating incubator features can also attract investors and corporate partners interested in supporting early-stage ventures. This not only adds value to the coworking space but also provides startups with the visibility and resources needed to scale their businesses.

By leveraging the strengths of incubator spaces, coworking space owners can create a dynamic, supportive environment that caters to the evolving needs of today’s entrepreneurs, driving growth and fostering innovation.

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FAQ

How Do Business Incubators Make Money?

One way that business incubators can make money is through equity. An example commitment would be $100,000 worth of resources in exchange for 7% equity.

Shares in the startup can also be converted to cash in the future, or the entrepreneur can buy them out.

Alternatively, business incubators can charge a fee in exchange for facilities and support.

Is Running an Incubator Profitable?

You can make money as an incubator if you partner with the right startups. However, some incubators, such as universities and institutions, are not-for-profit.

Before signing a contract, those who run incubators should consider the industry they’re in and the viability of their product or service. They should also have a clear business plan and an entrepreneur who shares the same values.

What Are the Main Goals of Business Incubators?

Business incubators aim to support entrepreneurs in launching profitable ventures. Private incubators look for startups with promising business ideas in industries they’re familiar with.

Depending on the type of incubator, the creation of local jobs, new technologies, or medicines may ‌act as an incentive.

What is the Difference Between Incubator and Coworking space?

An incubator and a coworking space serve different purposes despite both being environments that foster business growth. An incubator typically provides startups with resources like mentorship, expertise, and sometimes capital, aiming to nurture the business through its early stages until it becomes sustainable. This support is often offered in exchange for equity and comes with a structured program.

In contrast, a coworking space offers a shared office environment without direct involvement in the businesses it houses. It provides a place to work among other professionals, offering amenities and networking opportunities but without the intensive guidance and support characteristic of incubators. Thus, incubators focus on business development and growth, while coworking spaces primarily provide a flexible workspace.