One problem many new home-based entrepreneurs and start-up business owners face is an overabundance of enthusiasm and a shortage of actual business know-how. That’s where a dynamic process of business enterprise development known as business incubation comes in. It is one of the more effective and popular techniques to help entrepreneurs and start-up business firms survive and prosper during their early years — when they are most vulnerable.
As 2014 began, Oklahoma had 40 certified incubators. Three incubators, located in Ada, Pawhuska and Tulsa were approved for certification in 2014. Read more in this annual report.
There are nearly 800 business incubators now throughout the United States and over 40 certified incubators in Oklahoma. And the best news is they really work and deliver the desired end result! According to the National Business Incubation Association, the overall success rate for businesses that begin in an incubator is 80 percent.
- Business incubators provide a physical location in which a new business can commence, coupled with support services such as shared facilities and business advice;
- Incubators are designed to produce healthy firms that create jobs and wealth, strengthen the economy, commercialize new technologies and revitalize communities;
- Incubators are sponsored by local governments, economic development agencies, universities, community colleges and vocational schools, private sector firms, and combinations of these groups.
Is Your Business Ready for Incubation?
Small business incubators typically provide all or some of the following:
- hands-on management assistance
- access to financing
- business and technical support services
- shared office space, access to equipment on a pay-as-you-go basis
- warehousing and manufacturing space
- common loading docks
- breakroom facilities
- common reception area.
Frequently Asked Questions About Business Incubators
- How do I find a business incubator in my community?
- There are more than 40 certified small business incubators operating in the State of Oklahoma.
- What does my start-up company need to do to join an incubator?
- Small businesses are selected as tenants in a variety of ways, depending on the criteria set by the sponsoring organization. The selection process may be as simple as one interview or may be more detailed, involving filing an application, submitting a business plan, and undergoing a review by a screening panel.
At a minimum, prospective tenants should have a good understanding of their product and a business plan that includes their requirements for capital, labor, space, marketing and advertising. Firms most suited to getting a start in an incubator include those involved in research and development, assembly and light manufacturing, advanced technology, and services.
- If my start-up company becomes an occupant of an incubator, will I receive a tax break?
- Yes! In 1988, the Oklahoma Legislature passed the Oklahoma Small Business Incubators Incentives Act. The Act enables the tenants of a certified incubator facility to be exempt from state tax liability on income earned as a result of occupancy for up to five years.
In 2001, the legislature amended the Oklahoma Small Business Incubator Incentives Act to extend the tenant’s tax exemption from five to ten years. The exemption remains in effect after the tenant is no longer an occupant in an incubator. To qualify for the tax exemption from the sixth through the tenth year, the tenant must make at least 75 percent of its gross sales to out-of-state buyers, to buyers located within the state if the product or service is resold to an out-of-state customer, or to the federal government. In addition, the Act enables the sponsor of a certified incubator facility to be exempt from Oklahoma income taxes for a period of ten years.