Why are Business Incubators important?
Business incubators are an economic development tool to facilitate enterprise creation and development. The aim of a business incubator is to achieve better outcomes for small, young, innovative firms, and reach these outcomes more rapidly than would otherwise occur. These outcomes encompass both accelerated growth and success of entrepreneurial companies and the containment of costs arising from potential failure.
Incubation offers an intensive approach to business development that is hard to replicate and is about taking a ‘whole of business’ approach. Business incubators nurture companies during their formative years by providing both business premises and a strategic, value add system of business assistance. Critical is on-site incubator management which assists companies with their resourcing, management capability, finance raising, product development, marketing, and technical expertise. Business incubators are essentially a network of individuals and organisations. Synergies are fostered between tenant companies in an incubator, and also with outside networks.
Through expanding the business base and diversifying the regional economy, business incubators have the potential to move the New Zealand economy to more sophisticated and demanding paths of development. These changes come about when business ideas are turned on their head and taken from one area to a significant new area. Business incubators can stimulate such entrepreneurship, particularly in sectors of high technological intensity. Technology companies tend to have a high degree of uncertainty in developing and commercialising a product and are therefore more risky endeavours. With the right connections and relationships business incubators can bring a new market-oriented way of thinking to these companies. As a result, innovative ideas are less likely to fail, to be shelved, or to be undersold.