1. 03 | Planning an Incubator 1 www.infodev.org|www.idisc.net 03 | Planning an Incubator 1 Suite 2 Business Incubator Operations Planning an Incubator Part 2 Training 03 | www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET

2. 03 | Planning an Incubator 2 www.infodev.org|www.idisc.net Introduction to Your Module 3 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 www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET

3. 03 | Planning an Incubator 3 www.infodev.org|www.idisc.net Before We Start… www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET Our Challenge to You: ENGAGE WITH US …… INTENSELY SERIOUSLY JOYFULLY

4. 03 | Planning an Incubator 4 www.infodev.org|www.idisc.net Before We Start… www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET 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 e-mail – and so forth. Therefore, during the rest of the session PDAs and laptops should be off.

5. 03 | Planning an Incubator 5 www.infodev.org|www.idisc.net 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 www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET Now, let’s discuss your ideas.

6. 03 | Planning an Incubator 6 www.infodev.org|www.idisc.net Module 3 – Part 2: Introduction www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET Establishing an incubator is a significant, long-term investment for the community at stake. Effective planning is a key factor in ensuring the future success of such an initiative and the return on investment for the principle stakeholders. THEREFORE - the incubator development team should apply a systematic approach to planning an incubator exploring step by step: The feasibility study planning The incubator’s business plan The establishment of optimal operational strategies

7. 03 | Planning an Incubator 7 www.infodev.org|www.idisc.net BUSINESS PLANNING Component 2: Developing and using Vision and Mission Statements Strategic Objectives Selection of appropriate business model The components of a business plan and its uses as a management tool www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET

8. 03 | Planning an Incubator 8 www.infodev.org|www.idisc.net A vision for the future; A mission that defines what you are doing; Values that shape your actions; Strategies that define the approach to achieving the mission and vision; Strategic objectives to guide your daily, weekly and monthly actions; A risk evaluation; and Impact, monitoring & evaluation measures. Vision & Mission Statements, Strategies for an Incubator The main elements of the strategic framework of an incubator: www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET

9. 03 | Planning an Incubator 9 www.infodev.org|www.idisc.net A vision statement summarizes the image that the incubator would like to convey regarding its future. For example, a manager may seek a “highly competitive area with vital enterprises creating jobs.” Vision and Mission Statements A mission or purpose statement explores the role of the incubator in achieving the vision. Who develops the mission and vision statements? Its development cannot be delegated to external parties to prepare. It must be owned from the outset by the key stakeholders involved in the long- term planning and support of the incubator. Local champions often emerges with their own vision about what the incubator should set out to achieve. It is important to get ‘buy-in’ to this vision from the outset. www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET

10. 03 | Planning an Incubator 10 www.infodev.org|www.idisc.net The vision of the TREC-STEP incubator in India is "Partnership for mutual benefit across the public and private sectors” focusing on: Knowledge based industrial clusters; Academia and entrepreneurs partnership in cutting edge achievements; Entrepreneurship spirit at all levels of the society; Intellectual asset and diffusion of wealth in the society; and Quality of life, environment and growth. To this end, TREC-STEP missions are to: 1.Promote knowledge based industries; 2.Develop and transfer technologies; 3.Train technology and business skills; and 4.Develop new project initiatives. Vision and Mission Statements www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET

11. 03 | Planning an Incubator 11 www.infodev.org|www.idisc.net Who develops the vision and mission statements? The vision and mission statement for an incubator cannot be delegated to external parties to prepare. It must be owned from the outset by the key stakeholders involved in the long-term planning and support of the incubator. Very often a local champion emerges with their own very clear vision about what the incubator should set out to achieve. It is important, however, to get ‘buy-in’ to this vision from the outset. For this reason the first version of the mission and vision statements should be developed or at least discussed and agreed by the first board of directors and key stakeholders. Thereafter, although the mission and vision statements should not change frequently, they should be reviewed for continued relevance as part of a strategic planning review which should take place periodically at least once per year. How to Build a Powerful Vision Statement www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET Vision and Mission Statements

12. 03 | Planning an Incubator 12 www.infodev.org|www.idisc.net A vision statement should be a powerful motivational tool, which brings all stakeholders together to work towards a common inspirational goal. To start discussions about a vision statement, the following questions should be considered: What were the stakeholders’ primary motivations for setting up the incubator? Related to these motivations and thinking more broadly, how would each stakeholder define success for the incubator? From a client perspective, how would you like clients to experience and benefit from the incubator services? Setting aside the question of funding, how would each stakeholder envision the incubator in 10 years time? Vision and Mission Statements www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET

13. 03 | Planning an Incubator 13 www.infodev.org|www.idisc.net The mission statement describes the "what" of the organization: It states why the incubator has been established It states what the organization aims to achieve A typical mission statement contains three components: 1.The overall purpose of your incubator - what are you trying to achieve right now? Why are you in business? 2. What your incubator does – what are the core products and services it provides? 3. What is important to your business? What are the values your business holds and aims to convey to clients and stakeholders; for example accountability, objectivity, creativity, and ingenuity? Vision and Mission Statements www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET

14. 03 | Planning an Incubator 14 www.infodev.org|www.idisc.net Different Strategic Objectives for Different Types of Incubators Technology Commercialization or Technology Transfer Foreign Investment Attraction Employment Creation Wealth Creation Development of a Particular Industry Economic Diversification Helping Students Become Entrepreneurs Entrepreneurship Development To address marginalized groups www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET

15. 03 | Planning an Incubator 15 www.infodev.org|www.idisc.net Self-sustainability is a perennial issue for business incubators across the globe and one that should be considered from three principal perspectives: ‘Deal flow” i.e. the need for an ongoing critical mass of quality clients Ongoing support from innovation and entrepreneurship stakeholders such as the government, industry, academia, and banks Financial self-sustainability Designing a Sustainable Business Model “A business model (also called a business design) is the mechanism by which a business intends to generate revenue and profits.” www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET

16. 03 | Planning an Incubator 16 www.infodev.org|www.idisc.net Ongoing Quality ‘Deal Flow’ – Demand from Quality Clients Deal flow issues Incubator design Critical mass Networks www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET Business Incubation Intensive Virtual and outreach incubation Pre-incubation Entrepreneurship awareness

17. 03 | Planning an Incubator 17 www.infodev.org|www.idisc.net How to secure on-going public support - aspects to watch out for. Adapt to trends: To maintain public support and relevance over time the business incubator needs to continually adapt to changing circumstances and public policy priorities. Accountability to stakeholders: Incubators should be aware they do not operate in isolation. They are always accountable to their shareholders. Ongoing Government and Policy Support www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET

18. 03 | Planning an Incubator 18 www.infodev.org|www.idisc.net Incubators should be managed with an entrepreneurial mindset! Strategies must be defined in order to drive business incubation to become financially self-sufficient. If achieving self-sufficiency means management needs to spend substantial time on non-business incubation activities, possibly fund raising or developing and managing other revenue earning businesses, then problems can arise. Management will have less time to spend helping develop the clients’ businesses and over time the value of the services provided can deteriorate, diminishing the business incubator’s brand and image in the community. Financial Self-Sustainability Ex: A client cannot pay rent because of problems with the business, but the incubator has social mission of poverty reduction. How should the incubator manager act? www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET

19. 03 | Planning an Incubator 19 www.infodev.org|www.idisc.net Components of the Incubator Business Plan Start with a set of business goals Indicate the reasons why the goals are attainable and provide a thorough proposal for reaching the goals within a specific period of time Conclude with an indication of the resources required and the means by which they will be attained. Should be prepared by management and NOT consultants Business plans for incubators will also: Confirm the feasibility study results and assumptions Identify and resolve any remaining problem areas Set performance monitoring and benchmarks Indicate how the strategy will be communicated to stakeholders, including incubator tenants, to secure their continuous support and involvement in incubator operations Provide a template for the management and operational procedures The Business Plan should: www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET

20. 03 | Planning an Incubator 20 www.infodev.org|www.idisc.net Components of the Incubator Business Plan www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET 1. Executive Summary 2. Vision and Mission 3. SWOT Analysis 4. Strategic Objectives (short, medium, and longer term) 5. Business Model 6. Marketing Plan and Relationship with Stakeholders Target businesses Their specific needs How to attract them Pricing Occupancy levels 7. Management and Operations Facilities Entry and exit policies Types and level of services Staffing Role of the Board 8. Financial Management and Planning Capital budget Operational budget Scenario and sensitivity analysis and expenses Cash flow projections Profit targets 9. Risks and Mitigation Strategies 10. Monitoring and Evaluations towards Development Plan What will determine success? How and how often will this be measured?

21. 03 | Planning an Incubator 21 www.infodev.org|www.idisc.net The Marketing Plan contributes directly to the sustainability of the incubator by identifying and securing ‘deal-flow.’ To attract more or better quality clients To engage new partners, sponsors, and donors Most Marketing Plans contain: An executive summary A statement of the incubator’s overall business goal or vision A description of the incubation program and its current services The Importance of the Incubator Marketing Plan Objectives of the Marketing Plan: www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET

22. 03 | Planning an Incubator 22 www.infodev.org|www.idisc.net Clearly targets businesses; Illustrates their specific needs and details how to attract them; and Indicates how the incubator will reach its target market. A summary of the promotional plan should be included, indicating the type of promotional material to be used and how it will be deployed. The Importance of the Incubator Marketing Plan The objective is to have a marketing plan that: www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET

23. 03 | Planning an Incubator 23 www.infodev.org|www.idisc.net The goals will often follow the ‘marketing mix’ formula addressing the:  Product/Service Portfolio  Pricing strategies including bundling  Place - how clients can access the service  Process - how the product/service is delivered  People - who is in contact with clients  Promotion - how to raise awareness among potential clients  Physical evidence supporting the brand A timeline of marketing activities planned over the next year An estimate of the expected costs associated with each strategy or activity Marketing Goals and Strategies A list of specific marketing goals and strategies to achieve the incubator’s overall strategic objectives should be established. www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET

24. 03 | Planning an Incubator 24 www.infodev.org|www.idisc.net Marketing Goals and Strategies Managers need to understand their clients and determine what they are prepared to pay, developing business models that suit their need. How to set prices taking into consideration the incubator’s revenue sources : Managers must understand their clients and determine what they are prepared to pay. If an incubator has a good value proposition, then rents can be at the commercial rate or higher for the type and quality of space offered. Similar to commercial rental rates, office services can also be benchmarked against the current market values. Royalties and equity are more difficult, but in the end the rates need to cover the incubator’s costs and allow for failures. www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET

25. 03 | Planning an Incubator 25 www.infodev.org|www.idisc.net 1.It starts with a good marketing strategy! 2.And depends on the incubator offering good services of value to the entrepreneur. 3.Services need to be sold by credible personnel that have sufficient training and experience to explain the services offered and clearly lay out their advantages. 4.Use past and current clients to provide credibility to the incubator’s services. How to convince entrepreneurs to use scarce resources to purchase services and agree to royalty agreements. Marketing Goals and Strategies www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET

26. 03 | Planning an Incubator 26 www.infodev.org|www.idisc.net Management and Operational Planning Small premises are very difficult to find and leasing agreements often impose very heavy penalties in the event of premature termination. Incubators can address the need to have enterprises on-site by: Having modular space available in the incubator to house pre-incubation clients with small or scalable premises at a reasonable rent within the framework of a flexible leasing agreement ("easy-in, easy-out") possibly renting office space on a weekly basis. Offering shared space, with small working areas, or hot-desking arrangements when entrepreneurs can reserve a shared workspace area for a limited period of time. Providing assistance in finding larger or permanent premises at a later stage, as part of the graduation policy of the incubator. www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET

27. 03 | Planning an Incubator 27 www.infodev.org|www.idisc.net Overview of Human Resources Requirements Management and staff need to be recruited to provide a good level of service in the following key areas: Administration of the incubator – financial, legal, HR, IT Development and maintenance of the physical environment Provision of quality business development services to clients Marketing, stakeholder management and public relations Strategic planning, reporting, monitoring and evaluation www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET

28. 03 | Planning an Incubator 28 www.infodev.org|www.idisc.net Overview of Financial Planning Financial planning should model Revenue Expenses Capital costs With a view to sustainability over time To determine the funding needed and for how long and to set financial targets for monitoring Note: it is easy to overestimate revenue and underestimate expenses www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET

29. 03 | Planning an Incubator 29 www.infodev.org|www.idisc.net Overview of Risks Plans are only ever plans and there are always risks By identifying risks you are thinking ahead about how to handle contingencies that arise So it is good to include an analysis of risks and mitigation (how to address them) in a business plan www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET

30. 03 | Planning an Incubator 30 www.infodev.org|www.idisc.net Use of the business plan There are two primary uses: 1.To secure stakeholder support and finance 2.As a tool to guide management and against which the board monitors performance – Annually and periodically throughout the year (monthly or quarterly often) Management reporting to the board against key targets and milestones: – E.g. enquiries, pre-incubation client numbers, incubation client numbers, graduation, impact data (jobs, investment, revenue of clients and typically only annually), financial performance against budget – And then to change and improve the plan in response to changing circumstances and to continually improve All too often the second is not taken seriously enough www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET

31. 03 | Planning an Incubator 31 www.infodev.org|www.idisc.net Exercise 3.2 - Translating Mission Statements into Objectives and Action Plans STEP 1 (5 minutes): The trainer should stimulate a group discussion to identify four or five of the mission statement objectives presented in Table 4 from Component 2 that resonate with most of the group. Following this, the trainer will break the trainees up into smaller groups each one focusing on a different mission statement objective. STEP 2 (15 minutes): Each group should suggest a strategy for implementing the mission statement under the following headings: Marketing Operations Finance STEP 3 (10 minutes): Each group should present their strategic approach and the trainer should facilitate a discussion with the wider group. www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET

32. 03 | Planning an Incubator 32 www.infodev.org|www.idisc.net Module 3 – Part 2: Training WRAP UP www.infodev.org|www.idisc.net WWW.INFODEV.ORG | WWW.IDISC.NET Key Insight #1: Key Insight #2: Key Insight #3: Key Insight #4: Key Insight #5: Any others?

33. 03 | Planning an Incubator 33 www.infodev.org|www.idisc.net Stay Tuned! www.idisc.net www.infodev.org