The economic development community is increasingly looking at startups as an opportunity for growth, which we think is great. We have also seen an increase in the number of organizations considering business incubation as a strategy to promote entrepreneurship. This may be less great. Incubation can be a highly effective strategy, but one that requires a great deal of sustained commitment, financial support, and technical capacity. Too many incubators are created without these assets in place and are doomed to failure.
We have prepared a two-part white paper examining business incubation. Part One: What We Know (Is Incubation a Winning Strategy – Part 1) examines data on the practice of incubation and shares the insight we have gleaned from interviews with dozens of incubator operators in the U.S. and Canada. It offers an objective assessment of the impact of incubation on startup success. Part Two: Factors in Success (Is Incubation a Winning Strategy – Part 2) shares some of our observations and thoughts on the practices that can help to determine whether an incubator may be successful. It concludes with a brief mention of some of the emerging collaborative models that may serve more clients and be better matched to the capacity of typical economic development organizations.
Place Dynamics has just released The Creative Spark, an assessment of the potential for a coworking space, or network of spaces in Southeastern Wisconsin. The study envisions using a coworking platform to promote entrepreneurship and help to grow small businesses in the region, with a focus on design and creative professional services.
The City of River Falls and University of Wisconsin – River Falls raised the prospect of establishing a business incubator focused on agricultural and bio technologies. Place Dynamics was retained to examine the feasibility of the project and recommend the best process for moving forward.
Our analysis determined that there was too little activity in the targeted sectors to support the incubator as proposed. We instead recommended a broader focus on business, scientific, and related professional services, while retaining some capacity to incubate manufacturers serving bio industries.
We recommended a structure for the proposed incubator, including ownership, management, and client tiers. We also identified likely development costs and prepared cash flow projections helping the community to determine the level of subsidy the facility will require.
A panel on real estate was pretty emphatic in saying that coworking would not be a good fit for strip centers and office buildings in a corporate park. The conference tour of Austin’s coworking spaces may require a modification of that statement.
A majority of coworking spaces in Austin and elsewhere are located in downtowns or traditional neighborhood business districts. These can often be described as districts experiencing redevelopment. They naturally appeal to the creative and independent kind of people who gravitate toward coworking spaces. They tend to be walkable or bikeable areas, have access to transit, and are located close to favorite restaurants, eateries, and social hang-outs. Importantly, too, they are close to home. But what if home is in a suburban area with no traditional center? That’s the case or the northern and southern parts of Austin, where you will find spaces in a strip mall or glass office tower surrounded by parking. There are differences, though. Here is a brief overview of Austin’s coworking spaces.
“We are getting in at the base of the bell curve and we will ride this thing to the top. We are starting a revolution and this is really exciting.” I am paraphrasing Liz Elam, organizer of this year’s Global Coworking Unconference in Austin, Texas, attended by about 240 coworking operators and advocates from around the world.
Many people will ask “What is coworking?” The easiest way to describe it is shared workspace in which self-employed workers, freelancers, contractors, consultants, small businesses and others gather to work independently together. Coworking is more than just space, though. Effective coworking centers create a community in which members network, share, and come together to work on projects. It is something distinctly different from business centers, which simply seek to rent space to multiple tenants. You might want to check out his YouTube video…
Coworking is a 21st century way of doing business, enabled by the newfound ability of workers to go mobile, by increased outsourcing by businesses, and by the rapidly rising number of self-employed persons and small businesses. Since coworking spaces began to appear in the mid 2000’s, the number of centers has doubled each year. There are now about 1,320 coworking facilities worldwide. From a look at the conference attendees, coworking is a Gen X and Gen Y game. Perhaps three quarters or more of the attendees were 46 or younger – similar to studies of who occupies coworking space.
Some take-aways from the first day of the conference:
People are looking to pool resources and share in resources they all need to succeed. Coworking is an ideal platform for this kind of collaborative consumption.
Incubators are starting to look carefully at what a coworking model can provide as a means to encourage start-up and growth.
An important aspect of coworking is the freedom to express yourself and be yourself at work. There are a large number of people employed by corporations that are finding coworking spaces.
We no longer have one place of work. Different kinds of work can be conducted in different places – home, the traditional office, a coffee shop, a coworking space, etc. More than a third of the workforce is mobile.
The biggest competition for coworking is the third bedroom. Coworking gets workers out of the isolation of the home.
We have moved from an industrial society where economic development meant infrastructure, to a society in which competitive advantage is found in people.
Part 2 will share observations from a tour of nine coworking spaces in the Austin region.