04 | Marketing & Stakeholder Management | Planning an Incubator – Trainer Manual 1 Suite 2 Business Incubator Operations Marketing & Stakeholder Management - Part 1 Training 04 | |

04 | Marketing & Stakeholder Management 2 Introduction to Your Module 4 Trainer(s) Trainer B Please use this bullet point format to include information about the background of each trainer. Information Trainer A Please use this bullet point format to include information about the background of each trainer. Information |

04 | Marketing & Stakeholder Management 3 Before We Start… | Our Challenge to You: ENGAGE WITH US …… INTENSELY SERIOUSLY JOYFULLY

04 | Marketing & Stakeholder Management 4 Before We Start… | Keys to facilitating successful communication during this program. Ask us to slow down if we are speaking too fast. Stop us if you do not understand what we are saying. Please, please, please ask questions and offer comments. Our goal is to help you enhance both your knowledge and your skill. Skill development only comes with practice. Please engage in the exercise as you and your colleagues apply what you are learning. Please note that we have structured the schedule so that you have a networking break – specifically to enhance your opportunities for informal networking and also to give you time to check – and so forth. Therefore, during the rest of the session PDAs and laptops should be off.

04 | Marketing & Stakeholder Management 5 Section Timing COMPONENT 1. IDENTIFYING, ASSESSING AND REACHING CUSTOMERS AND STAKEHOLDERS xxhxx – xxhxx Break xxhxx – xxhxx COMPONENT 1. IDENTIFYING, ASSESSING AND REACHING CUSTOMERS AND STAKEHOLDERS (CONT.) COMPONENT 2: IDENTIFYING AND ASSESSING POTENTIAL COMPETITORS AND COMPLEMENTORS xxhxx – xxhxx Close Module 4 – Part 1: Schedule of Activities |

04 | Marketing & Stakeholder Management 6 Now, let’s discuss your ideas. What are the three most important questions you would like to have answered during this module? QsQs AsAs Five Minute Exercise | Now, let’s discuss your ideas.

04 | Marketing & Stakeholder Management 7 Efficient understanding of the incubator’s target market Effective benefits to key customers and stakeholders Incubator fulfils its mission Incubator established as a sustainable enterprise Module 4 – Part 1: Introduction |

04 | Marketing & Stakeholder Management 8 Strategic Marketing | Customer CompetitionCompany Marketing Strategy Achieving maximum possible positive differentiation over competition in meeting customer needs Social Environment Economic Environment Technical Environment Political Environment

04 | Marketing & Stakeholder Management 9 IDENTIFYING, ASSESSING AND REACHING CUSTOMERS AND STAKEHOLDERS Component 1: |

04 | Marketing & Stakeholder Management 10 Terminology Those individuals and organizations that provide the cash flow to the incubator allow it to cover its costs of operation and thereby be sustainable. Customers, but also those individuals and organizations that contribute non-financial value to the incubator and help it fulfill its mission. Customers: Stakeholders: |

04 | Marketing & Stakeholder Management 11 Exercise Identifying Customers STEP 1 (10 minutes) Each trainee should take out a single piece of paper and draw a line down the middle of the page. On the left hand side, list all the customers the incubator might have during the pre-launch phase of the incubator lifecycle. On the right, trainees should list all the customers the incubator might have during the post-launch phase and into later post- launch phase, imagining how the customer base might be structured so that the incubator is able to achieve financial sustainability. STEP 2 (10 minutes) The trainers will make two lists on the board, asking trainees in order to state their most important customers during each of the two phases in the incubator lifecycle. Similar responses will be aggregated under the same categories. STEP 3 (5 minutes) Discussion of results with trainer. In each case, identify why the customer would want to be associated with the incubator and where else they could have their needs met. |

04 | Marketing & Stakeholder Management 12 Incubators typically have one or more institutional sponsors that provide “seed capital” to launch the incubator: Government economic development agency - local, regional, or national NGOs Chamber of commerce or other local business organization University Local bank Typical activities in the foundation phase include: Conducting a feasibility study | Defining the scope of the incubator | Writing a business plan | Securing financial commitments for the launch and early life of the incubator | Establishing a board of directors involving the relevant stakeholders | Recruiting an incubator manager. Foundation Phase Who are your sponsors? |

04 | Marketing & Stakeholder Management 13 Attract an entirely new set of customers: Incubatees - These must be attracted in sufficient numbers to meet the expectations of sponsors and to contribute towards the incubator achieving its mission’s objectives. Widen the range of types of customers: Customers should eventually be spread across a range of types - from potential incubatees learning about and then applying to join the incubator to current incubatees maturing through the incubation process and graduating. During this phase, the incubator needs to dramatically change its portfolio of customers. Development Phase |

04 | Marketing & Stakeholder Management 14 Mature Incubation Phase Once the incubator reaches the mature incubation stage: The nature of the incubator’s relationship with its sponsors changes, as it is no longer “subsidized” on the basis of the political goodwill of the sponsor, but could now also be providing it with contracted services. At this stage, customers might include: Incubator tenants who rent space and pay for services Incubator clients not residing in the incubator who pay for services Organizations contracting the incubator to deliver programs and services. At this stage, the community’s perception of the incubator begins to be driven by the incubator’s performance. |

04 | Marketing & Stakeholder Management 15 Identify Additional Stakeholders An incubator needs to identify additional stakeholders who may not contribute cash, but who may provide non-cash value that is critical to the success of the incubator. Additional stakeholders should be identified from the feasibility assessment. Will become part of the incubator’s extended network. Will help the incubator operate successfully as a business. Will assist incubatees to start-up, survive and thrive. |

04 | Marketing & Stakeholder Management 16 STEP 1 (10 minutes) Trainees, in teams, will brainstorm and develop a comprehensive list of non-paying stakeholders who might be recruited to help the incubator achieve its mission – in pre- launch, launch and post launch phases. STEP 2 (15 minutes) The trainers will make a list on the board of the results generated by the groups, asking them in order to identify one of the stakeholders on their lists. To shorten this process, after each item is stated and recorded on the board, the instructor can ask how many other groups had the same response, and could record the number of responses next to that item. STEP 3 (5 minutes) Discussion of results with trainer, including reinforcing the limitations regarding assistance that can be provided to incubatees and achieving greater value by building and managing an extended incubator network. Exercise Identifying Stakeholders |

04 | Marketing & Stakeholder Management 17 Identify Additional Stakeholders (continued…) What other ideas emerged from Exercise 4.2? The additional stakeholders can support the incubator in performing its own enterprise functions by: Participating in the incubator’s board of directors. Providing volunteer staff support. Communicating with and conducting promotional activities. Providing services, knowledge, training, mentoring, coaching, and counseling to incubator companies. |

04 | Marketing & Stakeholder Management 18 Mentoring/counseling Training Networking Access to Facilities Access to sources of capital A community of entrepreneurs Access to business opportunities Sponsors: Jobs, taxable revenue, technology transfer, inner city rejuvination etc. Incubatees: profitable company Attracting good future clients as successful incubatees become role models Sustainable incubator Assess the Needs of the Customers and Other Stakeholders Incubatees: Generally have a much more complex set of needs, reflecting all the components of a business plan that must be addressed if the incubatee is going to be successful. These include: Sponsors: Primary need of a sponsor is likely to be measurable outcomes. The nature of the outcomes will depend on the type of sponsor. Results: Benefits for incubator: |

04 | Marketing & Stakeholder Management 19 Segmenting the Market with Respect to Potential Incubatees The incubatees associated with an incubator need to match with the key drivers of incubator success and reflect its mission. Segmentation of the market is helpful if the incubator intends to establish long-term financial sustainability. The criteria for market segmentation are identified very early in the incubator establishment process and are reflected in the incubator’s admission criteria. |

04 | Marketing & Stakeholder Management 20 How should an incubator manager attract potential incubatees? Respond to inquiries Proactively seek out potential applicants through:  The networks of the incubator sponsors, and  Non-sponsor organizations University, government and corporate R&D centers; University business schools and entrepreneurship centers; and Business organizations that have SMEs as members and so forth Mechanisms for reaching out to potential applicants are discussed in the context of Component 4. Attracting and Retaining Customers |

04 | Marketing & Stakeholder Management 21 What is the current or planned business model for your incubator? How much of the total operating budget of the incubator is covered by cash flow from sponsors? In what form is it delivered – capitalization up front, ongoing annual subsidy, fees for contracted services, etc? How much of the total operating budget of the incubator is covered by cash flow from incubatees? In what form is it delivered -- rent for space, fixed fee for the bundle of basic incubator services, variable fee as a function of services used, etc?? Financial Considerations Discussion Questions: |

04 | Marketing & Stakeholder Management 22 Sponsors may provide seed investment sufficient to cover the launch and ramp up of the incubator. Thereafter the incubator must establish a sustainable business model. Sponsors may be prepared to subsidize the incubator in perpetuity. This is not likely to turn out to be true, but one way to test this commitment is to front load the funding in perpetuity as an endowment. Sponsors may provide a facility at no cost or for a nominal rental fee, enabling the incubator to use rental of space as a relatively reliable source of ongoing cash flow. Sponsors may be willing to convert from “provider of subsidy” to contractor of services on a fee-for-services basis. Financial Considerations - Sponsorship Option 1: Option 2: Option 3: Option 4: Other options?? |

04 | Marketing & Stakeholder Management 23 Incubators should operate as efficient as possible, in order to minimize the costs. One common pricing strategy is to charge market rates as determined by other providers of similar services. Another common pricing strategy is to charge below market rates initially, increasing them each year so that by the time the incubator expects the incubatee to graduate, the pricing of services exceeds market rates. It is also common for incubators to charge a base fee for “membership” in the incubator, which may include a fixed cost for basic services and a variable cost if space is rented. Financial Considerations - Incubatees |

04 | Marketing & Stakeholder Management Offering the right Product & service 2.At the right Price 3.In the right Place 4.By informing the right people through sound Promotion and 5.By involving the right People in the delivery of 6.The right Processes 7.That have all the elements of Physical evidence supporting the brand Marketing Mix – the 7 P’s The 7 P’s: |

04 | Marketing & Stakeholder Management 25 Example of different customer needs and the tactical marketing mix considerations Mix attributeTenantsGovernment funder Product Good infrastructure Highly skilled mentors providing effective advice Access to finance Job creation Company growth for taxes/rates Hub for SME development Price Value for money; reduction in costs of start-up Investment in economic growth and people development Promotion Networking Advertising and publicity Community involvement and success stories Place Well equipped and conveniently located premises Disaffected area and low cost premises People Skilled and flexible staffSkills development/multi-skilling Processes Highly efficient and rapidCost effective Physical evidence Well managed incubatorGrowing enterprises |

04 | Marketing & Stakeholder Management | Exercise STEP 1 (15 minutes) Break into groups and each group should chose a member’s incubator to work with for the exercise. Use the table format on the next slide to assist you in your answers. Using this table, you will identify what each of your customers need from you. Then you’ll outline what you currently offer them and you’ll try to fill in what your competing interests can offer your customers. Pick one or two of the Ps only for the exercise and complete the others after the training STEP 2 (5 minutes) Once this is done, look at any gaps between what your customers need and what you are offering them. Also look at the gaps between what you can offer them and what the competing interests offer. STEP 3 (10 minutes) Each group to report back key insights, noting the exercise should be completed by participants after the training, with other people on the incubator management team. Is there alignment between who your customers are and what you are doing in each of the 7 Ps?

04 | Marketing & Stakeholder Management | Exercise ProductPricePromotionPlace Customer Group PeopleProcessPhysical Customer Group They Need We Offer Competitors Do

04 | Marketing & Stakeholder Management 28 IDENTIFYING AND ASSESSING POTENTIAL COMPETITORS AND COMPLEMENTORS Component 2: |

04 | Marketing & Stakeholder Management 29 Possible ways to identify and make contact with complementors include: Consulting with representatives of incubator sponsors and directors. Reviewing the local media and the internet for stories about entrepreneurship development and support programs. Questioning potential and current incubatees about support they have received from other organizations. Meeting with leaders of highly visible business organizations. Interviewing business service providers. Recognize and Assess Other Organizations Serving the Same Customers The incubator can see these organizations as competitors or as complementors. |

04 | Marketing & Stakeholder Management 30 Key steps to developing and implementing a plan for turning potential competitors into constructive complementors: Step 1: Identify the highest priority needs of incubatees. Step 2: Assess all identified organizations that provide services to this segment and determine the extent to which complementor organizations meet incubatee needs. Step 3: Confirm that complementor organizations are willing to help incubatees. If yes, proactively refer incubatees to the appropriate complementor organizations. Step 4: Where appropriate, collaborate with complementors in offering services to incubatees. Step 5: While recognizing the capacity limits of the incubator management, support complementors in the delivery of their services. Determine How the Incubator Can Complement Rather Than Compete with Other Organizations Serving the Same Customers |

04 | Marketing & Stakeholder Management 31 This process must be done effectively or else it can become a major distraction from fulfilling incubator duties and supporting incubatees. Done well, this process can dramatically leverage the capacity of the incubator and result in much better outcomes for incubatees. The incubator manager must make careful choices about with whom to collaborate, when to collaborate, in what ways, and at what levels of intensity. To that end it will be useful for the incubator to maintain a relationships management database. (Who is in it? What is recorded? What is it used for?) Reflections… |

04 | Marketing & Stakeholder Management 32 Module 4 – Part 1: Training WRAP UP | Key Insight #1: Key Insight #2: Key Insight #3: Key Insight #4: Key Insight #5: Any others?

04 | Marketing & Stakeholder Management 33 Stay Tuned!