The Role of Incubators in SME growth

Business incubation started in the 50’s in Batavia , New York, As of 2013 there are more than 9000 incubators world wide in the GCC more than 30….

Incubator Definition

• A business support process that accelerates small business start ups and growth using infrastructure & people to provide a range of services and resources to entrepreneurs

• There are many different models of incubation (equity model, rent model, royalty model)

• Incubators are part of a wider transformation process to address market failure and accelerate entrepreneurship

Incubator set up & structure

• Sector focused located in technology & science parks, Industrial parks, Universities

• In the USA more than 85% are publicly funded same in EU majority are publicly funded. In Oman first one established in 2004 in KOM as of 2013 SAS, NBC are all publicly funded.

• The first incubator TKM graduated 15 companies in the ICT sector

Services

Pre-incubation

Awareness Idea Development Business model

validation Business planning

support Boot camps

Incubation Refine BP Operations support

– back office Primary market

development Training and

mentoring

Acceleration

Market growth development

Customized development support

Measuring impact ….

• Successful incubators are those that can adapt to clients needs(business basics, networking , financial and legal, marketing, linkages to key stakeholders)

• Key success factors are the quality and skill set of the management staff of the incubator

• The clarity of the incubators mission and support from its board and stakeholders to ensure sustainability

• Agree on clear metrics to measure impact of a program ( job creation is not ideal, growth rate, graduation and survival rate)

• The need to provide support beyond graduation..• incubators are only part of SME policy and need to be

evaluated along with other mechanisms of providing support to SME growth

The National Business Center

Started in 2013.. Incubated 16 companies (mixed

incubator) Provides space, training, mentoring

and marketing Overall revenue of incubated

companies in 2013 RO 800,000 Incubation period a maximum of 3

years Advantage of strong linkages with

Industry, academia , research and part of a technology park in KOM

Plan to establish other incubators in Sohar and Nizwa

Conclusion

• Incubators are good tool to accelerate entrepreneurship but not the only tool and needs to be considered as part of a wider policy of SME growth..

• An incubation policy framework needs to consider objectives of incubation , funding and sustainability issues, ownership , management and appraisal as well as reducing failure rates

• Oman is still at an early stage to measure impact but can benefit and customize best practices based on needs of clients.. And having incubation policy part of wider SME development…