PROVIDING EDUCATION AND TRAINING OPPORTUNITIES
IN BUSINESS INCUBATION

• Fostering Entrepreneurship
• Assessing the Psychological Aspect
• Course Design
• Content
• Delivery
• The Business Plan
• Outreach Activities

Fostering Entrepreneurship

According to the findings from a national survey of business incubators (Hernández-Gantes et al., 1996a), the majority of managers spend their time in building maintenance and fundraising activities and have little time left for activities leading to fostering entrepreneurship (e.g., individual counseling).

Entrepreneurs in business incubation report that the major incentive to join an incubator is to gain access to commercial space at low rates. A second consideration is the availability of clerical support and basic office equipment. Consulting services are ranked in third place, while education and training is usually the least important consideration. However, once entrepreneurs realize the complexity of running a business, the value of and need for consulting, education, and training opportunities increases greatly.

Some of the best education and training components in business incubation make these activities an integral part of the screening process. A key element is developing a business plan as an ongoing process to provide for a true entrepreneurial environment rather than just space at a low cost.

Seven elements of education and training are identified and described in this guidebook--from the early assessment of the psychological preparation of individuals interested in getting into business opportunities to outreach activities in the community. Course design and delivery considerations are also highlighted here.

Assessing the Psychological Aspect

Jon Goodman (1994) defines an entrepreneur as "someone who gathers together resources for creative and innovative purposes to meet needs or solve problems" (p. 36). To accomplish this, entrepreneurs must develop effective and creative ways to acquire knowledge about their products, markets, and competitors. Concurrently, the personal dimension involved in this process includes a value system where hard work, understanding of how others work, the capacity to motivate others, and the ability to weight risks and work under pressure come together to shape that intangible thing called entrepreneurship. Although there is no right or wrong psychological profile--for example, some entrepreneurs are team oriented, while others prefer to control and delegate responsibilities--an awareness of personality traits adds to the knowledge entrepreneurs need to have for "creative and innovative purposes to meet needs or solve problems." In short, it is helpful for the client to know whether he or she can stand the heat of being an entrepreneur or whether he or she needs to get out of the kitchen. Successful entrepreneurs use this information to build upon their strengths and "gather together resources . . . to meet needs or solve problems" that may arise due to identified personal limitations in order to perform the art of entrepreneurship at its best.

Evaluating the psychological aspect of the person (personality profile) is a requirement at one incubator located in the West. The purpose is to identify strengths and limitations in the light of the line of business in which the entrepreneurs are anticipating being involved. A number of personal attributes inventories are available ranging from very basic tests to determine candidacy for self-employment (Sutliff & Spears, 1994), specialized inventories (e.g., leader attributes from Moss & Johansen, 1991), to more sophisticated tests where feedback is provided based on inventory scores. To determine which personal inventory to use, a brief search can be conducted at the library to identify sources and request samples.

The value of assessing the personality profile is illustrated by the following case: Incubator clients at one incubator in a Native American reservation in the Northwest are provided with a 14-week small business management course called the "Greenhouse Program" as an action to support economic development efforts among the tribe members. Prospective entrepreneurs are given a personality profile test to identify strengths and/or weaknesses of these potential small business owners in relation to the kind of business for which they are best suited. This type of analysis has been well-received by the participants, including a Native American couple who went into business together who commented,

What the personality profile showed us was that I'm really precise, and I want things done right and quick, while [my partner] just jumps right in there without consideration of the whole field. . . . The profile indicated that we were very compatible--complementary to each other--to be able to work in a business together.

Course Design

The primary components of education and training in business incubation must encompass a knowledge of the entire business operation--from start-up procedures to expansion and growth. Obviously, the technical skills to produce the goods and services of interest are usually the foundation of any business. This is followed by two other major components: business skills and opportunities to develop an entrepreneurial vision.

• Learning About and Improving the How-To of the Business
  Surveyed entrepreneurs considered technical competence essential to understanding how to produce or deliver goods and services. Further, technical skills are essential to remain competitive and to be able to maintain quality at a high level while keeping costs of production at a minimum level. The work required to develop a business plan is an effective tool to evaluate the adequacy of the entrepreneurs' technical knowledge. Building an education and training program in business incubation around the development of a business plan and starting with the evaluation of the technical soundness of the business idea appears to be an effective practice.
  
  
• Business Survival Skills
  The second major component of education and training involves the development of business skills. Entrepreneurs must have a working understanding of financial statements and be able to analyze financial data to make informed decisions about investments, payments, and the management of resources available. Entrepreneurs must be at least familiar with general accounting practices to be able to manage the cash flow, keep track of costs, and maintain books for tax purposes. Further, education and training must include opportunities to learn the value of and strategies for sound marketing and management practices. The elements of the business skills component appear to be common across the board, regardless of the community context. In short, all entrepreneurs need education and training on how to set up shop, follow sound finance and management practices, comply with legal obligations, and prepare for expansion and growth.
  
  
• Fostering Entrepreneurship
  The third design component is central to the development of an entrepreneurial environment in business incubation; that is, to provide for opportunities to understand how to survive and make money given the business community climate. The design should include provisions to bring entrepreneurs, bankers, and government officials to the business incubator to share real-life situations in order to expose the in-house clients to meaningful experiences. These opportunities should help entrepreneurs develop realistic expectations and understand the subjective--yet informed--nature of making decisions based on an entrepreneurial vision and business goals. The aim of education and training will be to nurture critical thinking, creativity, and innovation, and to learn problem-solving techniques based on the experiences of other entrepreneurs.

Content

Entrepreneurs are usually interested in solving problems as problems emerge. Thus, the timing and relevance of the topics included in the three major components of the education and training design must be customized to fit the needs of the clients as much as possible. The first step is to identify the content of education and training activities. The second step is to identify real-life examples to make the education and training opportunities relevant and contemporary to entrepreneurs.

• Identifying Content
  One strategy to identify content is to survey the needs and wants of entrepreneurs both in and out of business incubation. This process can be conducted on a formal basis, but in most instances this is done informally through the daily exchange of ideas and consultation occurring at the incubator. Breakfast and lunch meetings where entrepreneurs and other representatives from the community attend can serve as another source of ideas to identify relevant content. Presenters, consultants, and government officials represent another way to identify content which is needed.
  
  
• Identifying Relevant Content Material
  A requirement of education and training activities is the inclusion of relevant material that is both needed and wanted by entrepreneurs. Content must represent real-life issues which can help prepare entrepreneurs in solving current problems or upcoming situations. The relevance of the content is essential in promoting attendance by entrepreneurs because, as one incubator manager explained,

  They're all heading in different directions. They all have different schedules and their noses to the grindstone. They don't like to take time off to go to seminars. We know they need the information. We know that it's pertinent information for them. The trick is convincing them that they should take the time off.

Delivery

The delivery of education and training opportunities is perhaps the most critical aspect of successful programs. The most relevant and timely topics will fail to make an impact on the entrepreneurs if the delivery is not engaging and stimulating.

• Use the Right Speakers
  Choosing the right speaker or combination of speakers is critical in ensuring an effective delivery of education and training. Incubator managers indicated that presenters must have communication skills to deliver the material of interest. In some instances, the combination of a knowledgeable speaker and one who can inspire entrepreneurs appears to work best.
  
  
• Use Relevant and Meaningful Examples for Delivery
  An ingredient for effective delivery, as mentioned earlier, is the use of real-life examples so that entrepreneurs can relate to practical experiences. The use of case studies describing efforts to launch businesses, situations leading to failure, the survival of problematic situations, dealing with business regulations, and so on, is an effective way to add relevance to delivery. Further, bringing entrepreneurs to education and training activities to share their personal experiences related to the topics at hand is another effective way to increase relevance and provide meaningful examples to incubator clients.
  
  
• Make Sure the Delivery Is Timely
  Obviously, entrepreneurs want to learn about experiences they can readily use to solve problems or meet their current needs. Having a tax seminar in August, for instance, will not draw much interest as compared to offering the same seminar during the tax report season. Since entrepreneurs are at different stages of business development and are involved in different lines of business, careful attention to their common needs is essential.
  
  
• Make Sure the Delivery Is Flexible
  Another consideration for effective delivery of educational and training activities is to have a flexible schedule and format for presentations; that is, to promote attendance and make every effort to reach as many clients as possible. Entrepreneurs not only represent adult learners, but a segment of the population which is always pressed for time as well. Thus, a variety of formats, including seminars, workshops, informal talks, lunch and breakfast meetings, and so on, can attract the participation of incubator clients and entrepreneurs in general. A "quick and dirty" survey of the best scheduling options can inform incubator managers of the most appropriate times.

The Business Plan

Across business incubators, the use of a business plan appears to be common practice both for management and educational purposes. Developing a business plan is a useful educational and training tool which can be manipulated to weave a series of connecting topics based on a real business idea. This is perhaps the ultimate, authentic learning experience, since all aspects involved in developing a business plan are relevant and meaningful, serve to identify the strengths and weaknesses of a business idea, and provide a comprehensive understanding of all aspects of the business. Most incubators require a business plan as a prerequisite for enrollment, but in some instances, developing this plan is part of a suggested course required to be taken prior to enrollment in business incubation. On occasion, incubators only require a business idea for enrollment and request the development of a business plan as part of an education and training program incubator clients can take once they are enrolled. When and how to use the concept of a business plan depends on the organizational operation of the incubator.

The advantages of requiring the creation of a business plan as part of a course prior to enrollment in business incubation include (1) a chance for entrepreneurs to study the feasibility of their business idea, (2) opportunities to assess the strengths and weaknesses in terms of personal preparation in all aspects of the business, (3) an understanding of steps and consulting services needed to start up and operate a business, and (4) the development of a rapport with business incubator staff. All in all, entrepreneurs seem to appreciate this early experience and value the business incubation concept in terms of the opportunities provided to develop an entrepreneurial vision rather than just a source of low-cost commercial space.

When the business plan is used as an educational and training tool after entrepreneurs are already enrolled in business incubators, the purpose is to refine the original business plan or idea and provide customized consulting services to meet individual needs. Thus, education and training usually work as part of a package of consulting services where the business plan is central to the business incubation experience which is complemented with traditional educational and training activities.

There are a number of resources describing the necessary elements in a business plan. A quick search can provide a list of references. Materials and ideas from other incubators are also useful. There is no need to develop materials on business plans from scratch. These are already available, and all the entrepreneur has to do is select the one she or he feels is best for her or his needs. Some references and resources are suggested at the end of this guidebook. For instance, the following is an example of a business plan created by a private consulting firm, which can be further developed in a business incubation course. It stresses the need to include a number of decision points, by month, as indicated below (Williams, 1992):

Month 1

• Write business description
• Examine current financial situation
• Start business/industry research
• Set personal goals - 3, 6, 12 months
• Describe related experience
• Select type of business - retail, wholesale, manufacturing, service, or combination
• Consider form of start-up - scratch, business, purchase, or franchise

• Select company name/address
• Research and select legal form
• Complete legal registration
• Start/complete management training
• Request information from SBA, State Small Business Center
• Start market research

• Describe target market
• Summarize start-up costs
• Print business cards
• Arrange telephone answering
• Gain tax training and register for Federal Employer Identification Numbers
• Write product/service features and benefits
• Calculate product/service costing
• Establish product/service pricing
• Complete marketing plan

• Establish outside advisors
• Do 12-month profit and loss projection/cash flow projection
• Set up office (including furniture)
• Estimate starting capital needs/sources
• Prepare recordkeeping system
• Complete business plan

• Secure starting capital
• Establish business bank account
• Analyze employee needs
• Create promotional calendar
• Locate business insurance
• Write weekly time budget
• Print sales promotion literature
• Make first sales call; adjust sales message

• Obtain inventory/supplies
• Finalize lease (if applicable)
• Complete legal needs (including contracts)
• Doublecheck phone, recordkeeping, supplies
• Apply for credit at office support suppliers (office supplies, photocopy, and so on)
• Make trial run of phone setup, sales prospecting, office layout, and so on
• Prepare grand opening announcement: OPEN FOR BUSINESS!

Outreach Activities

An important function of the educational and training activities generated by business incubators is to reach out not only to in-house entrepreneurs but also to the business community at large. Thus, the marketing of these services and other strategies to include all groups in the population is necessary to extend the benefits of education and training and to promote entrepreneurship.

Marketing strategies include promotional advertising via radio, newspapers, and fliers which are more critical when the incubator is at an earlier stage of operation. Once the incubator begins to develop a networking system and a reputation, education and training services are spontaneously disseminated by word of mouth and by referrals by presenters, entrepreneurs, government agencies, and other individuals. Even though this informal dissemination process may work, it is always a good idea to maintain traditional marketing strategies (e.g., radio, newspapers ads) within the budgetary lines.

Conducting outreach activities is particularly important in interesting minority and female entrepreneurs, who have been traditionally under-represented in small business ownership, in learning about business opportunities. These efforts have to be emphasized and followed up with enrollment practices targeting these groups if progress is to be made in this regard. Incubators are often pressed by the need to fill their vacant space to meet financing needs, and although there may be an interest in recruiting minority and female clients, the bottom line is to fill space available as quickly as possible, regardless of the applicant's background. Hence, special funding and management commitment may be required to offset waiting periods before space is taken by target entrepreneurs. Again, once the incubator develops a reputation of service to diverse groups, these outreach activities are facilitated by in-house clients and individuals in contact with the incubator. Further, to assure continuous support for diversity and the inclusion of minority and female entrepreneurs, outreach activities may include the use of mentors who provide invaluable assistance and guidance to these entrepreneurs.

Another strategy to reach outside the incubator is to offer educational and training opportunities at facilities which are more accessible to entrepreneurs in the community and the general public. Facilities such as meeting rooms may be provided by the chambers of commerce, local banks, government agencies, and private industry. This strategy is useful when the incubator is located in areas that are perceived as "unsafe" by area residents.

Breakfast and lunch meetings represent another strategy for outreach activities. These opportunities can be combined to build a networking system within the business community (see networking section, p. 14). Since key players in the business community come together during these meetings to discuss current events and topics influencing the economy and local businesses, breakfast and luncheon meetings are an excellent forum to reach entrepreneurs and the general public and fulfill, indirectly, an educational function.

Reaching out to high school and postsecondary students is perhaps an activity with a great deal of potential for educational purposes. Students can be exposed to entrepreneurial activities and even participate in internship programs to explore entrepreneurship as another career path. Cooperative programs and partnerships can be established with business incubators to support this activity. Further, in the case of postsecondary institutions that support business incubators, these opportunities can be promoted and extended to students other than those from the business department. For instance, students from technical fields may be able to identify entrepreneurial opportunities where they can use their technical expertise. It has been indicated previously that entrepreneurs in business incubation can be a valuable educational resource even through daily informal interactions.