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S is for Start-up

All over the world, incubators and accelerators are popping up in an attempt to stimulate local, regional and countrywide economic development, and feed on the most prolific segment of business growth, S,S,M,E's. Never heard of an SSME?

It is impossible to calculate the value, importance or impact of small business on economies without including start-ups (the first ‘S’ in SSME). It has been estimated that there are as many as 400 million entrepreneurs worldwide and a large majority of these are obviously start-ups as opposed to small businesses.

First, we need to examine the disparities amongst nations as to what constitutes a small business. In the US, a small business is classified as a business employing 250 or fewer people. In Australia the definition of a small business is ten persons and in the EU it is 50 people. The stage below “small” is micro. In the US, micro equates to one to six people, in Australia, one to two, and in the EU less than ten. Businesses with fewer than five employees represented 94 percent of small businesses in South Africa.

It has been well documented that job growth is dominated by small business. In the US there are 22 million small businesses compared to 14,000 “large” businesses. Globally, the contributions of small business to GDP ranges from 74 to 93 percent.

In the context of incubation, questions arise as to how do incubation organisations tailor their programmes to meet the needs of their constituents? In this era of new fiscal realities, incubators, like the clients they serve, must learn to function as small businesses themselves. Managers and directors must ask themselves the difficult questions: What is our mission? Who is our client? How is the incubator going to be sustainable? What is our marketing advantage? What are the expectations of our clients? Can we meet those expectations with our available fiscal, human and service resources?

The overwhelming majority of applicants state that they are looking for funding. As incubator managers, we know that the competition for seed and early stage funding on a global scale is fierce and with new entrepreneurs from emerging nations joining the global economy, the competition will be even more formidable.

I subscribe to the theory that the incubation industry, just like its clients, must evolve and become proponents of the digital revolution. Incubators that remain entirely dependent on subsidies, are locked in to a fixed geography for clients and the experts to mentor those clients. If they still think that an incubator's attraction includes low-cost rent, a copier and an internet connection, then they are doomed to disappoint their communities. It has also been estimated that of the 400 million entrepreneurs worldwide, at least 84 percent are online at least once per day.

Access to the internet has been responsible for toppling governments, creating new associations and has provided the most significant communications and collaboration platforms since the invention of the telephone. Virtual incubation leverages the expenditures in digital infrastructure and provides access to a global network of experts that levels the playing field for early and emerging stage enterprises in rural, urban, established and new economies alike. Let's not forget the most important ‘S’ in economic development, the start-up.

 

Les Neumann is CEO of iCAN. iCAN is transitioning its eight years of incubation experience, knowledge, global contacts and geographic market from local to global; from subsidy dependent to for-profit and from bricks-and-mortar to a virtual, digital strategy. iCAN is changing the paradigm of traditional incubation & acceleration from the traditional geographically restricted, not-for-profit, real estate model to a global, virtual, for-profit one.
Published on 24-05-2013 20:51 by David Tee. 927 page views

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