The client application, selection, and graduation process should be designed to bring in companies that match the incubator’s mission and focus, are at the right stage of development, and can benefit from the services offered by the incubator. Ensuring that each client meets all of these criteria is critical to the success of the incubator. A sample client application form can be found in Appendix B.
This section outlines a proposed four step application process for each client. This process should take no longer than five business days to complete.
Applicants will be required to fill out an application form that will ask for basic contact information, business plans, and funding and services required.
If the application meets the eligibility requirements, the applicant will be required to submit a formal/informal business plan for review by the executive director.
If the director finds it difficult to decide the admission status of the applicant, the applicant will present his or her plan to a selection committee that will decide whether or not to admit the applicant.
Guidelines
Step 1: Complete Application -
Applicants will be required to complete an application form either on line or on paper that will ask for their contact information, business plan or description, funding and services required (preliminary and long range), a brief description of the business, and the current stage of business development.
Step 2: Provide Business Plan or Business Description -
Applicants that meet the incubator’s basic qualifications will be required to submit a business plan or written description of the business. This document should include an in-depth description of the business’s current stage of development, the market potential, the competitive landscape, the management team, and the overall feasibility and viability of the business model.
The business plan should ideally be reviewed by the executive director and individuals with expertise in the applicant’s industry. The applicant’s needs should be clarified through this document and the reviewers must determine if the incubator can meet those needs.
For applicants with strong business plans, Step 1 and 2 may be adequate to issue an acceptance decision after board review, without an interview.
Business and Operating Plan
Step 3: Presentation to a Panel -
The applicant will be asked to present his or her business plan and business needs to a committee comprised of governing board members, the executive director, and industry experts relevant to the applicant. The committee should make sure that any gaps in the application from Steps 1 and 2 are filled. Based on the panel’s input, the executive director will make a recommendation for acceptance or rejection to the committee.
Step 4: Discussion of Expectations -
The selection process should be completed with a discussion of the incubator’s expectations of the client. For example, the executive director will require that clients pay rent and fees for services in a timely fashion, and the client will be required to sign a contract outlining the terms of agreement for using the facility.
Evaluation Criteria
Applicants will be evaluated on a variety of criteria based on the mission and objectives of the incubator. Criteria should include the following:
• The business must have a sound business plan, including a multiyear financial plan • The business must show job creation potential
• The business must demonstrate a need or niche market for its product or service • The business must be a for-profit business in a stable or growing field
• The business should plan to remain in the Shiawassee County region upon graduation
• The business must be well-suited to benefit from incubator services and should have space needs that the incubator facility can accommodate
• The applicant must not be in direct competition with a current incubator client • The business must be in the early stages of development
• The applicant must be willing to participate fully in the incubation program, including taking advice of the director and other professionals
• The applicant should be able to pay fees (rent, salaries, overhead) charged by the incubator while developing a positive cash flow
More criteria should be drafted that are in line with the mission and objectives of the incubator once more specific goals become available for reference.
Graduation Policies
In the Incubating Success report, only one incubation management practice was linked to a negative correlation with success: lack of a formal graduation policy. Therefore, a well-defined policy that helps encourage timely graduation is a necessity. Several factors should come into consideration when drafting a policy including, but not limited to, the following:
Time Limits
A maximum amount of time during which clients can use an incubator’s services should be set, usually somewhere around three years. This time limit should be written into a client’s contract and can vary depending on the needs of the company (health technology firms, for example, may take longer to clear administrative hurdles than other companies). Regardless of the specific time limit, enforcing this policy is essential for the success of the incubator.
Value Provided
An incubator should continue to provide value for the client. If a client company has grown past the incubator’s ability to provide it necessary services, then the client company should graduate from the program. This assessment could be performed on a regular basis during meetings between the executive director and client. Policies and procedures should be developed by the incubator management in advance to prevent underperforming incubator clients to remain in the incubator.
Graduation Criteria
In order to graduate, a business should have:
• Followed or made necessary modifications to its business plan • Developed a substantial network of advisors and professionals • Started generating sales revenue
• Acquired sufficient capital to sustain the business