1

This report was prepared by Krzysztof

Zasiadly, Senior USAID MEP Incubator and

Business Development Center Expert in

accordance with the approved MEP work

plan for subcomponent 2.2

USAID MEP is implemented by

Deloitte Consulting LLP

Macroeconomic Project

Business Incubator Model

Business Road Map 2020

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CONTENTS

Part I. The Framework 3

1. Business Incubator Definition 3

2. Business Incubator Successful Factors 4

2.1 Systemic approach 4

2.2 Sustainability 6

2.2.1. Selection Business Incubator Operator by tender 6

2.2.2. Local climate and local authorities engagement 8

2.2.3. Sustainable development of Business Incubator after initial period 9

2.2.4 Feasibility Study for Business Incubator 9

2.2.5. Business plan for Business Incubator 9

2.2.6. Leaders and human resources 10

2.2.7. Business Incubator – independent corporation but part of local development structure

11

2.2.8. Location and premises for business incubators 11

2.2.9. Monitoring and assessment 12

Part II. Business Incubator Implementation 16

1. Business-incubator start-up 16

2. Key elements of business-incubator 18

3. Organizers and the legal form 19

4. Resident Companies 20

5. The principles of admitting new companies into the Incubator 21

5.1. Selection mechanism of Business Incubator residents 22

5.2. The principles of exiting companies from an Incubator 23

6. Basic forms of the Incubator Activity 23

7. Services and resources 25

8. Public outreach and marketing 26

9. Incubator funding sources 29

Part III. Monitoring/Assessment 32

Annexes 34-43

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Part I. The framework

1. Business Incubator Definition

The definition of a Business Incubator is not a registered trademark or universally applied

and therefore can have different meanings across various jurisdictions, depending on the

objectives of a Business Incubation Program and the conditions in which it is being

implemented.

According to the Law of the Republic of Kazakhstan ‘On Private Entrepreneurship’ from 2006, amended in 2007 and 2010:

“Business Incubator is a legal entity created in order to support small business entities upon start-up, by providing them with production rooms, equipment, as well as organizational, legal, financial, advisory and informative services. Business Incubators are set up in order to manifest support in creating and developing small business entities”.

The tasks of Business Incubators include:

1. Selecting small business entities in order to place them in Business Incubators. 2. Providing small business entities with training, marketing, consulting,

organizational, and management services.’

The above-mentioned definition is similar to the definition applied in many other countries.

According to the world’s largest Business Incubator association, the National Business

Incubation Association U.S.A., critical considerations in the definition of an incubator include

the provision of the following:

management guidance;

technical assistance and consulting tailored to young growing companies;

access to appropriate rental space and flexible leases;

shared basic business services and equipment;

technology support services; and

assistance in obtaining the financing necessary for company growth.1

1 Source: http://www.nbia.org/resource_library/what_is/index.php

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2. Business Incubator Success factors

2.1. Systemic approach

The current policy of Kazakhstan specifies broad and far-reaching goals in business

development. There are several governmental programs for the provision of both financial

and non-financial supports for small business. They are managed by different Ministries and

organizations: Ministry of Economic Development and Trade, Ministry of Labour and Social

Protection of Population, Ministry of Industry and New Technologies, Ministry of Agriculture,

National Agency for Development of Local Contents "NADLoc” JSC, National Agency for

Technological Development” JSC, Entrepreneurship Development Fund DAMU JSC,

KazAgroMarketing JSC, and Social-entrepreneurial Corporations.

To ensure success, the Business Incubator Development Program in Kazakhstan should be

managed and directed at the state level by a Steering Committee appointed by the Deputy

Prime Minister or by the Minister of Economic Development and Trade, on the basis of the

power of attorney which stems from the ‘Partnership program for the development of SMEs

in particular regions’ . Steering Committee aims to:

create an effective cooperation framework for Business Development Centers,

Entrepreneurship Development Funds, Business Incubators, Technology

Parks and Industrial Zones in Kazakhstan;

foster changes in legal regulations which make it possible for Business

Incubators to function effectively;

develop comprehensive, strategic Business Incubators program;

distribute state funds in an effective, efficient and sustainable manner;

accredit Business Incubators to certain standards;

develop model / standardized documents for Business Incubators;

build on the experience of the existing Business Incubators, Entrepreneurship

Support Centers and Technology Parks as well as donors funded

entrepreneurship support programs;

monitor, assess, and control the program, ensuring accountability;

create an information data base about former and current programs,

consultants and other resources; and

organize the training for Business Incubator staff.

At the local level, the Regional Coordination Committee would be in charge of the Business

Incubator Program. In the following diagram, all potential partners and links between them

are presented. (Figure 1)

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Figure 1. Institutional chart of business-incubator program in Kazakhstan

Ministry of Industry and New Technologies

Ministry of Education and Science

National Agency for Developement of Local

Contents "NADLoc"

DAMU Fund

DAMU Fund

Regional Branches

Financial Institutions

Corporations

Business Asociations,

Chamber or Commerce and Industry

KazAgroMarketing, KazMicroFinance

Deputy Prime Minister

STEERING COMMITTEE

Committee for Enterprise Development

Regional Coordination Committee

BUSINESS INCUBATOR

Start up businesses

Growing SMEs

Ministry of Economic Dev.&Trade

Ministry of Agriculture

Ministry of Labour and Social Protection of Population

Ministry of Oil and Gas

SME/Entrepreneurship&Industry Dev.Dpt. at Oblast' Akimats,

Astana and Almaty,

Local Labour Office

Universities and R&D Institutes

Technology Parks

Industrial Zones

Business Development Centres

Entrepreneurship Development Funds

Consulting /Training companies, Freelance Consultants

Business Incubator program organizational chart

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2.2. Sustainability

2.2.1. Selecting Business Incubator Operator by tender

On the basis of “Partnership program for SME development in the regions” there is going to

be prepared a development program for Business Incubators in Kazakhstan. Thanks to that,

EDC MEDT is going to establish the criteria which it will follow later, while making the final

choice of proposals from the regions.

Local institutions will be able to submit their proposals concerning the initial stage of

preparations for creating an Incubator, and/or concerning the main stage of its creation.

The initial stage includes ‘feasibility study’, market analysis, financial analysis, the evaluation

and preliminary draft of the Incubator localization, analysis of engineering costs, preliminary

architectural draft, etc. The awarded institutions are going to obtain assistance from the

MEDT/EDC consultants in order to prepare the project of implementation of the proper

project.

The next stage includes: the final architectural draft, financial decisions, designing, building

and renovating rooms designed for the Incubator, staff training, launching the actual

Incubator activity.

To ensure the successful and sustainable operations of business incubators, the Operator of

a Business Incubator should be selected by tender in accordance with the following

parameters:

Phase 1.

The Steering Committee approves selection criteria on the basis of the objectives of the

specific business incubator and publicly announces the tender for the selection of the

operator. Selection criteria would include, at a minimum, the following:

The Business Incubator operator should:

1. Have a concept of business incubator work: who would be residents and clients,

who might manage business - incubator, who would be stakeholders, what

resources would be available: financial and in kind, etc.

2. Be an existing local organization/company , or consortium of local and international

firms.

3. Prove that facility for Business Incubator would be available.

4. Deliver resources and staff for Business Incubator.

5. Have local administration commitment and support.

6. Have experience in business.

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Phase 2.

1. Steering Committee nominates Selection Committee.

2. Selection Committee supported by experts reviews the applications.

Phase 3.

1. Selection Committee recommends potential Business Incubator Operators to

Steering Committee

2. Steering Committee takes the final decision as to which operators will be assisted.

Phase 4.

1. Steering Committee takes the final decision who will be operator of the Business

Incubator

2. MEDT/EDC signs contract with operators.

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Tender for assistance to Business Incubator

1 phase

4 phase

• Nominating the Selection Committee• Review of applications by Selection Committee and experts

Interview with applicants. Applicants should:- have a concept of BI work;- be an existing organization, which can deliver the facility,resources and staf for BI ;- have local administration support.

Steering Committee takes the decision based on the recommendations of Selection Committee

•Selection criteria•Tender announcement

2 phase

3 phase

Figure 2. Selection process of BI Operator by tender

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2.2.2. Local climate and local authorities engagement

The leading role in creating Incubators can be played by a wide variety of institutions, such

as oblast or city akimats, corporations, associations and trade unions, universities or

research and development institutes, non-governmental organizations, etc. (Fig. 3)

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Business Incubator Founders

Text

DAMU Fund

Akimat

Corporation

Business

Association

Industrial Zone,

Technopark

Universities,

R&D

Business

Incubator

Figure 3. Potential business incubator founders

Coordination at the level of oblast’ by Regional Coordination Committee would be most

advisable and should comprise:

the choice of a building that would be the seat of the Business Incubator;

real estate and other local taxes exemption;

creating conditions for the cooperation with local partners;

co-financing provided by the local budget;

co-financing and cooperation with the local business.

Due to the fact that big corporations prevail in generating of the Gross National Product and

in job generation, it is advisable to take steps in order to incorporate those big companies

into the Business Incubator Development Program. The Business Incubator, Business

Development Center, Entrepreneurship Development Fund, Technology Park and Industrial

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Zone can operate side by side, fulfilling their respective functions. In many situations, the

condition for success is to start from the Business Development Center, gradually

transforming it into a Business Incubator. In other cases, a Business Development Center

can be integrated into a Business Incubator as one of its residents.

2.2.3. Sustainable development of Business - Incubator after initial period

The state, in cooperation with local administration and stakeholders, has the duty to provide

a Business Incubator and the Business Development Centre with so-called “patient money”,

until such time that the activity becomes stabilized and ensures sustainable revenue levels. It

is important that the money should also be allocated to support start-up and developing

companies that are working within the framework of a business incubator and business

development center. This is to say, state support should be provided both to Business

Incubators and the Business Development Centres, as well as to the companies benefiting

from their activities.

While achieving operating break-even may require more time, the planning for sustainability

must be vigorously pursued from the outset. We therefore proposed that the Government of

Kazakhstan Government establish a Business Incubation Sustainability Fund.

2.2.4. Feasibility study for Business Incubator

Before an Incubator is put into operation in any region, individual feasibility study must be

undertaken to determine its viability and impact. The studies will assist in determining the

location, property selection, type, size, resources available, service offerings, target

businesses, local and regional support, and the economic situation in the region. Market

analysis, adjustment to demands in environment, wide range of activity, complexity of

operations will be proposed in further business plan.

2.2.5. Business – plan of Business - Incubator

Business plan is a synthesis of the knowledge and actions connected with launching and

managing a Business Incubator. Stakeholders expect to see a presentation of the Incubator’s

goals and of the ways which will ensure their realization.2

In order to prepare the right strategy it is necessary to adapt the business model to the

needs, resources and local conditions.

2 Annex 3 contains a hypothetical table of contents of the business plan of a Business Incubator, together with

a short guidance.

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Regardless of the specific goals of the project, the most important thing is to establish in

what way the Incubator will add value to the enterprises and also what benefits it will bring to

the economy.

In order to do so, it is necessary to add value to the Incubator first: qualified staff, adequately

renovated and divided area, business services, funds needed to bring the Incubator through

the break even point.

Business plan itself doesn’t ensure the attainment of the goals, but it shows that whatever

action will be taken, it has been thought over.

The goals of a business plan:

1. The evaluation of the usefulness and feasibility of the project of the creation of an

Business Incubator.

2. Attracting customers.

3. The organization of a financial support.

4. Involving all the interested entities.

5. Managing the Incubator.

2.2.6. Leaders and human resources

Support for improvement of Incubator staff competencies may include the following aspects:

contest for Business Incubator managers at the local level organized by operator

of the Business Incubator (Figure 4.)

ongoing training of the incubator employees in Kazakhstan through practical

training in existing incubators and JSC “Nazarbayev University”,

the participation of incubator managers in the conferences to become better

familiarized with proper Business Incubator management practices, the

improvement of customer services, obtaining funding through innovative financing

structures, and the contemporary business support trends,

preparing template documents concerning policies and procedures of Business

Incubators, as well as a set of textbooks, publications and software and use of

manuals and guidelines developed in the previous business support programs,

“training the trainers” conducted by local trainers – certified by the previous

business support programs and by international experts.

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- Selection criteria- Contest announcement- Nominating Selection Committee

- Review of applicationsby Selection Committee- Interview with candidates

Candidates should have-a concept of BI-organizational skills -knowledge in business development-competencies and practice in management

Board of Directors of Business Incubator takes the decision based on recommendations of Selection Committee

Recruitment of BI Manager

1 phase

2 phase

3 phase

4 phase

Figure 4. Selection process of BI managers

2.2.7. Business Incubator - independent corporation but part of local development

structure.

Due to the fact that Business Incubators have a social mission, they are generally

established as “not for profit” organizations established via a form of public private

partnership between several partners, including: DAMU Fund, Oblast’ Akim, City Akim,

Corporations, Social - entrepreneurship Corporations, Business Organizations. The law on

economic activities in Kazakhstan does not have such a broad variety of business entity

structures as in other countries, so therefore, it might be necessary to amend the laws and

regulations to enable Business Incubators operate as “not for profit” organizations.

2.2.8. Location and premises for business incubators.

Incubators that offer adequate leasable space and professionally delivered services to a well-

selected group of residents and clients can recover about two-thirds of its costs within two to

three years of operations. The building area should be more than 3000 m2, with at least

2000 m2 of rentable space, with the possibility of further expansion in the future.

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Without such an area, it would be very difficult to generate rental income that would be

sufficient to obtain sustainability taking into account that start ups cannot afford to pay high

rent.

If it is not viable to provide that area initially, the incubator may start operating as a so-called

“incubator without walls”, but with the prospect of moving into a physical building in the

future.

There is plenty to consider when selecting or building a structure. If the building project

doesn’t meet its goals, either physically or monetarily, the foundation of the incubator project

will likely fail.

2.2.9. Monitoring and impact assessment

An assessment of Business Incubator’s operational and financial performance can be carried

in the short term, based on information readily available from the management team.

A more comprehensive evaluation requires a considerable amount of original data collection

and field work. Usually it is deferred for at least 5 years. It can take years before the benefits

of setting up a business incubator are felt.

The monitoring of the of Business Incubator program will be implemented at various levels of

program management.

Central level, MEDT/EDC:

- is going to prepare the guidelines for monitoring implementation

- is going to prepare a set of indicators that are required in order to report about how

the public means are used, and about the Incubator’s impact on the local

environment

- is going to prepare the methodology of conducting the monitoring

- once every quarter year will analyse the use of public funds by the incubators, and

the results of their activity

Regional Coordination Committees are going to collect and analyse quarterly, semi-annual

and annual reports concerning the Incubator activity.

The management of the Business Incubator is going to prepare monthly, quarterly, semi-

annual and annual reports concerning the Incubator’s activity and the use of financial means.

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The impact of Business Incubation is widespread and numerous measures based on

experience of many countries are used internationally when comparing business –

incubators in different countries, including:

• business creation and survival;

• business growth and markets served;

• businesses created by minority or low-income individuals;

• cluster development;

• environmental footprint;

• financial performance;

• markets development for products and services;

• investment in client companies;

• jobs created and safeguarded;

• local economic diversification;

• regional regeneration and social inclusion;

• tax and national insurance contributions.

Indicators calculated on a monthly/quarterly/yearly basis through Business Incubator are

usually as follows:3

Process indicators

• Number of events organized to promote entrepreneurship

• Number of people educated or impacted through BI events

• Number of training events organized

• Number of people attending the training events

• Number of first contacts

• Number of patents requested

Performance indicators

• Number of Business Plans produced

• Number of Start-ups

• Number of Jobs created in start-ups / SMEs

• Number of jobs created by BI clients

• Enterprise survival rate after three years from their creation

• Number of SMEs supported

• Number of spin-offs (academic/research/industrial)

Cost-benefit ratios

• Cost per job created

3 Based on European Business Innovation Centers Quality System.

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• Public financial contribution per job created

• Average number of start-ups created per 1000 000 KZT of BI costs

• Average number of jobs created per 1000 000 KZT of BI costs

• Average number of business plans created per 1000 000 KZT of BI costs

• Average number of start-ups per full time employee of the BI

• Average number of Jobs created per full time employee of the BI • Average number of Business Plans per full time employee of the BI

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Table 1. Activity Plan for Business Incubators Program

# Task/Activities Responsible 2012 2013

Jul Aug Sept Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept

1. Approval of Business Incubator Program MEDT

2. Nominating the Business Incubator Program Project Team

EDC

- Selection criteria for Core Team EDC

- Selection of Team members by tender EDC

3. Nominating of Steering Committee Deputy PM/MEDT

4. Selection of Business Incubator sites

- Development of Selection Criteria for Business Incubator Sites

Steering Committee

- Announcement of the tender for Business Incubator sites Steering Committee

- Form BI sites Selection Committee Steering Committee

- Final decision on BI sites approved

5. Feasibility study for selected BIs EDC/MEP

- Assessment of BI Strengths and Weaknesses

6. Business Plan for selected BIs

6. Building capacity of Business Incubator staff “Nursultan Nazarbayev” JSC

- Formal training to BI staff “NN” JSC

- Internships EDC

6. Improving financial sustainability of BI EDC

- Instituting fees for services EDC/MEP

- Other sources of income EDC/MEP

- Pricing policy EDC/MEP

7. Strengthening of BI internal operations to improve BI capacity to manage the BI operations in a sustainable manner

EDC/MEP

- Technical assistance EDC/MEP

- Training for BI Managers on: “NN” JSC

a) Operational Skills “NN” JSC

b) BI Services “NN” JSC

c) SME Workforce Development “NN” JSC

d) Sourcing Financing for BI residents “NN” JSC

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# Task/Activities Responsible 2012 2013

Jul Aug Sept Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept

8. Strengthening of Consulting and Training Skills EDC/MEP

Provide training to BI Staff/Consultants/Trainers

On-the-job training in Consulting

Consultants and Trainers Costs Recovery system

9. Certification of Business Incubators Steering Committee

Development of Business Incubators Certification System EDC

10. Information and Communication Technology EDC

Interactive portal

Distance learning and consulting EDC

E-business EDC

11. Development of Management Information System for BI EDC

Monitoring and controlling of BI operations, staff and consultants

12. Manuals, Newsletter, other publications EDC

Monthly BI-Updates EDC

Manuals and training kits developed by Kazakhstan experts EDC

Publication translated EDC/MEP

13. Promotion of Business Incubators program EDC

14. Monitoring Steering Committee, Regional Coordination Committees

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Part II. Business Incubator Implementation

1. Business Incubator Start-Up

A Business Incubator, like a business, must be established on the basis of objective data and

analysis. Prior to initiating a business incubator, a number of studies must be undertaken for

the following purposes:

To determine the feasibility of establishing an incubator

To provide a blueprint that can be used by the management to launch and operate

the incubator

The due diligence and analysis process is time consuming and typically span 18 or more

months. Activities are comprised in four basic phases (Figure 6):

6. Project Start-Up: 1-3 months:

Setting up the work program

Establishment of Steering Committee and recruitment of BI management

7. Development phase: 3- 6 months

Feasibility study conducted

Design options considered and tested

8. Business planning: 3-6 months

Operational framework completed

Incubator design finalized

Financial forecast ready

9. Establishment of the Incubator: 6-9 months

Implementation strategy developed

Residents selection started

Construction works completed

Launching the Incubator operations

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1. Conceptualisation,

2. Steering Committee

and Project Team established

1. FeasibilityStudy

2. Selection of BI Operator

1. Business Planning

2. BI staffestablished

1. Construction

2. Residents’ selection

Grand Opening

3 м. 9м. 12 м. 15 м. 18 м. ∞

Business Incubatordevelopment

SMEs

1.BI operations 2. Monitoring

Figure 6. Timeline of BI establishment and development

2. Key elements of business incubator

There are seven fundamental characteristics of a Business Incubator:

1. Functional area, which consists of modules, with an affordable rent and on flexible

rental terms.

2. Shared area and office services, appliances and network of cooperation.

3. Synergy among residents, caused by the fact that they stay under one roof and

exchange experiences.

4. Seed capital is located in the incubator or there is access to loans, guarantees and

equity investments.

5. Access to information, facilitating connections and promotion.

6. Training aimed at enhancing competence and skills, consultancy.

7. Accounting, legal and technological services and marketing.

The operation of a Business Incubator is characterized by the following elements:

1. Careful selection of entrepreneurs, who have growth potential, as well as a flexible

process of entering the incubator.

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2. Rental rates and fees for services are usually lower than those on the market and

gradually increase.

3. Small management team provides consultancy, training, information, access to

external sources of funding, and supports the synergy among residents.

4. Operating like a business with the prospect of achieving considerable sustainability.

In the diagram below governance of Business Incubator is presented.

Business Incubator structure

Board of Directors

Manager Advisory Committee

Business Service Providers Network

Administration and bookkeeping

Business services,Residents selection

Facility and technicalservices

ResidentsAffiliate clients

Figure 5. Governance structure of BI

Business Incubator Manager is in charge of every day operations

1. Managing and operating Business Incubator as an effective business unit

2. Providing business services within entrepreneurial environment

3. Wide range of duties and responsibilities of a landlord

Board of Directors, constituted by stakeholders representatives, local leaders, bankers, etc.

1. Represents stakeholders and other interested parties

2. Plans and sets the Incubator policy

3. Is responsible for the overall viability of the Incubator

4. Sets guidelines for hiring, evaluation and transition of management

5. Supports Incubator fundraising activities

6. Attracts local leaders to cooperate with Incubator

Advisory Committee, which consist of professionals and interested parties

1. Provides advice to Incubator management and residents

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2. Takes final decision on admissions to Incubator

3. Facilitates communication between Incubator and local community

3. Organizers and the legal form

An Incubator is part of the local business infrastructure, providing the basis for future private-

sector led economic growth; and therefore, Incubators should be part of a local development

strategy. Incubators all over the world are mostly set up by non-governmental organizations

which are liked to local and regional authorities and also to big companies. Organizational

structures and the size of resident companies are varied. Each concept of the Incubator

should meet particular local development needs, conditions, and the goals.

The experience of different countries suggests that such units should function in a similar

way to companies and their residents. Given their social mission, Incubators are typically

established as “non-profit” entities, often via some form of public-private-partnership. The

involvement of a wide range of partners and stakeholders is also a defining characteristic.

It is suggested that Business Incubators in Kazakhstan should be created to ensure that they

are non-profit entities. The Business Incubator operator should have the possibility to collect

rental fees and the fee for services. Its Charter should contain an entry concerning the

running of a not-for-profit business activity, which would make it necessary to allocate any

retained earnings to the further development of Business Incubation Program.

Business Incubators which previously operated in Kazakhstan were constituted in a diverse

number of legal structures, mostly as governmental or local administration economic units;

however, the Competitiveness Act of 2008 sets restrictions on state and local administration

entrepreneurial activities which mandate a new approach.

Lessons learned in Kazakhstan and in other countries should be used when developing

“Partnership program for Small and Medium- Sized Business development in regions”.

4. Resident companies

Business Incubator offers services for newly-created companies which are no more than two

years old, have enormous growth potential and create jobs essential for the proper

development of the local market

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Each incubator should create an adequate recruitment selection policy for residents. Those

Incubators which are aimed at start-up companies, however, should not exclude older

companies with a strong market position, so-called Anchor Residents. The lease of 20%-

30% of the Incubator area to those entities which are reliable payers will ensure financial

stability and an increase in the Incubator’s prestige. The contact with a company with stable

market position will be an opportunity for cooperation for start-up companies. During the

selection process of the residents, it is extremely important to assess their potential abilities

and their willingness to cooperate.

Big corporations in monocities will be able to place their spin-off companies, as well as teams

that work on the new projects, within the Incubator. They will also be able to order products

and services from incubator residents.

There are no fixed rules concerning the type of activity, the line or the company status, such

as an unemployed person, a woman, a representative of ethnic minority. The general

tendency is to avoid the type of activity that would be retail oriented, focusing instead, on

productive activities and services.

A resident company stays within the Incubator for 3-5 years at most. After this time, the

company should be able to function independently. It often happens; however, that

companies leave a Incubator earlier. One of the principles of the functioning of the Incubator

is that companies have the right to leave it at any time, provided that they act in accordance

with the conditions of the lease agreement: easy in - easy out.

When it comes to the selection strategy for the companies which are to enter the Incubator,

the basic evaluation criteria should be connected with the ability to conduct the long-term

process of entrepreneurship support and the development of local market structures,

together with Business Development Centre and Entrepreneurship Development Fund.

The basis for the evaluation of the Incubator in the long-run is constituted not by high

income, or by a well-maintained and well-equipped building, but by survival in the market of

resident companies, evidenced by increase in sales and profits, new products and

permanent jobs. The selection of entities and forms of help for companies starting an

individual business is the first step to create an effective Incubator that would actively

participate in the process of stimulating the economic growth in the region.

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5. The principles of admitting new companies into the Incubator Candidates to the Incubator:

1) The following companies will be admitted into the Incubator:

New companies

The existing ones which want to develop

2) The companies which are candidates for the Incubator can be:

Production companies;

Service companies;

Craft companies;

Wholesale trade companies, especially of locally made goods, sold outside

the region.

The candidates to the Incubator should:

Have the opportunity for self-development;

Have the potential that would favour the strengthening and the diversification

of the local economy;

Be in operation for no more than 2 years;

Require the space which can be delivered by Incubator;

Their seat and management should be located in the city or in the region;

They should create new jobs, especially for the citizens of the cities and/or of

the region;

Offer anti-import products and services;

Use new technologies which ensure bigger competitiveness among the

companies and the enhancement of employee qualifications;

Sell goods and services outside the city and the region, in order to improve

their export capabilities;

They shouldn’t damage the environment or other residents of the Incubator;

They should be ready to cooperate with other residents of the Incubator;

They should have a business plan for the future development;

They should be able to generate income and to deduct taxes;

The Incubator should be able to meet their needs.

5.1. Selection mechanism of BI residents

Step 1.

Manager of the Incubator conducts a preliminary assessment of potential residents

Manager has a meeting with each candidate and conducts individual interviews in

order to give one of the three (3) opinions:

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1. an opinion confirming the candidate can be admitted into the Incubator

2. an opinion stating that a candidate lack sufficient potential to be admitted

into the Incubator

3. an opinion recommending that the candidate should take part in a course of

how to establish and run an enterprise in a Business Development Center

located in Business Incubator or external one.

Step 2

The participants of basic entrepreneurship trainings will be recommended by the

Manager of the Incubator as mentioned above. They will be also recruited through

opened advertising campaigns

- Thanks to training workshops, the manager of a Business Development

Centre will be able to recommend the candidates for further interviews.

- Then selected people will be recommended by the Manager of the Incubator

to the Advisory Committee, which will make the final selection of the

candidates.

Step 3.

Advisory Committee makes the ultimate choice concerning those people who plan to

start or to develop their economic activity within the Incubator.

5.2. The principles of exiting companies from an Incubator

1) The primary activities aim at exiting a company out of the Incubator are connected with

ensuring long-term effectiveness of business incubation program. This distinguishes an

Incubator from ordinary commercial real estate turnover. The Incubator offers services

and space in a way which is not available on the commercial real estate market. In an

incubator, a Lease Agreement and a contract for professional services can be terminated

for any of the following reasons:

the time of residence in the Incubator has been exceeded: 3-5 years;

a blatant infringement of the provisions contained in the statute of the

Incubator;

cases defined in the Lease Agreement;

failure to perform (the company doesn’t commence activities within three

months);

the company’s area requirements exceed the Incubator’s capabilities;

the company runs the type of activity which can threaten other residents or

which can be damaging to the natural environment; or

24

illegal activity of the company.

2) The company may resign from operating within the Incubator at any time, in accordance

with the provisions contained in the Lease Agreement.

6. Basic forms of the Incubator activity

6.1. Providing affordable facilities. A Business Incubator will provide each entrepreneur

with an area that he/she needs, depending on the business’ stage of development. By

providing the residents with an area that meets their current needs, it is possible for them to

allocate scarce financial resources to other value-added services. This is connected with a

flexible lease policy that will enable businesses to move to bigger or smaller rooms,

depending on their changing needs.

6.2. Organizing professional consultancy. The Incubator, in cooperation with Business

Development Center and with the Entrepreneurship Development Fund, provides –either

directly or through third party providers- professional advisory and consulting services for its

residents. The manager or the staff of the Incubator provides basic advisory services,

including marketing and financial advice. As far as other spheres are concerned, for example

legal issues, the manager refers residents to the BDC or other qualified advisors. Residents

who are professional advisors will also be used in this respect, for example the accounting

office, advertising agency etc. They could be offered lowered rental fees in exchange for

providing cheaper services to the residents.

6.3. Professional network of business service suppliers. The Incubator, BDC and

Entrepreneurship Support Fund should organize local service providers: lawyers,

accountants and financiers, into a network of local business support. Collaboration will be

based on formal agreements with business associations, consulting companies,

governmental agencies and international aid projects as well as on informal, personal

relations with individual professionals and mentors Incubator graduates, and other mature

companies. The Incubator will provide the access to residents in exchange for free of charge

informative seminars or preliminary consultations.

6.4. Shared office area and services . Residents will benefit from affordable access to

various types of office equipment and services. They don’t waste their money purchasing

such equipment, and they bear the costs proportional to their use. They also have the

access to professional service, allowing them to focus on their core business activities. As

25

such, they don’t waste their time on looking for equipment and services outside their

workplace.

6.5. Recommending residents to other businesses. Supporting the cooperation between

residents can bring benefits. General cooperation includes the informal exchange of

information concerning service providers, financing and the market. If the management of the

Incubator notices the possibility of a more integrated cooperation, based on a subcontracting

or on contracting, it recommends the companies to one another. More formalized actions,

including the general promotion of companies within the Incubator, are organized in the form

of periodic meetings, popularising the information concerning companies, for example on the

website and in the brochures of the Incubator. In order to create a network of cooperation

between the residents and the external companies, a special program of “Incubator Without

Walls” will be used, which involves the cooperation with the companies that have already left

the Incubator, those companies which are the Incubator’s customers, although they have

never been its residents as well as other companies and institutions.

7. Services and resources

Incubators usually offer a wide range of services to their residents, as well as an access to

advisory and financial support. Comprehensive service offerings of an Incubator may include:

Placing companies side by side in order to ensure cost-effective managerial

counseling and constant cooperation of the resident companies.

Help with the management, access to a group of consultants, library.

Access to training, for example by the cooperation with a Business Development

Centre.

Access to professional training for the current and future market needs, especially for

residents.

Professional accounting and legal services.

Collective purchase of services and products, such as production materials, furniture

and equipment.

Access to governmental and non-governmental funds for economic development.

Access to sources of financing, investments and working capital, for example by the

cooperation with Entrepreneurship Development Fund.

Contacts with Business Angels, Venture Capital.

Transfer and commercialization of technology as well as contacts with universities

and Research and Development Institutes.

26

Providing help concerning commercial contacts, national and international, including

contacts with big corporations.

New opportunities for the development of companies through joint ventures.

Shared services including:

Management and Secretarial Staff

Telephone reception.

Seminar rooms

Lease of equipment

Internet and computer equipment

Copier

Desk top publishing

Accountancy

Audiovisual equipment

Stockroom, transport, reception and issuance of goods

Due to the fact that residents should adapt to the conditions on the market, the Incubator

should not offer all of its services for free. While establishing the type of payment, it is

important to take into consideration market relations as well the company’s abilities at a

given time. Moreover, the Incubator itself should function like an enterprise, which means

that it should have a strategy of obtaining financial means to run current activity, to renovate

buildings and to make new investments.

8. Public outreach and marketing 8.1. Attracting new Residents

Within the first years of its operation, an Incubator resembles a newly created company. As a

result, it should pursue marketing and other activities concentrates on three areas: the

organization of the Incubator, providing assistance and promotion of the residents of the

Incubator, as well providing promotion and support for the network of companies.

Stage I: The organization of the Incubator

Involves familiarizing the local community with the idea of a business Incubator, especially

with the benefits it can bring to individuals and the local community. There will be organized

awareness events, promotional campaigns, presentations at the seminars and conferences,

advertisements in local media, etc. as described below.

27

Potential residents are selected through direct advertising campaign which is aimed at the

target market and describes the Incubator’s activity. This strategy will involve reaching small

companies, the people who want to set up their own company as well as people who are

registered as unemployed.

Potential for entrepreneurship in Kazakhstan does not exceed the potential of other countries

and judging by the ratio of registered companies with respect to the population numbers, it

amounts to 7.5%. In many other countries this ratio amounts about 10%, example Poland

has 38 million population and 4 million companies registered. In Kazakhstan the basic

problem lies in reaching those companies which would be able to start economic activity.

This task requires support from adequately qualified people who would be able to provide

recommendations, such as creditors or business associations. This could also be

Employment Agencies, departments of the economic activity of the local administration.

These promotional activities will be targeted at the following people:

those who have started to run economic activity

engineers

higher education graduates

students in the final year of studies

office workers of Employment Agencies and of the departments of local

administration

banks and financial institutions

members and employees of Associations for Entrepreneurs

participants of trainings for entrepreneurs and managers

representatives of oblast’ and city akimat

school headmasters

representatives of universities, high schools, Research and Development

Institutes

the management and employees of the existing companies

Benefits to individuals:

reducing uncertainty connected with creating and running a business

constant support in the form of services and providing help in solving problems

connected with economic activity

a sense of independence and pride of being the owner

Benefits to the local community:

28

creating new jobs for the members of a local community

new products and services for the members of a local community

economic and social development

Local newspapers will inform about the Incubator and offered services, current activities

and new resident companies. Television and radio broadcast short announcements

describing the Incubator and its services, and the instructions how to obtain further

information. Similar announcements will be used to advertise trainings, workshops and

other important events. Special information brochures will be prepared for the unemployed

and for the local entrepreneurs.

Every 2-3 months a so-called “Open Day” will be organized in the Incubator in order to

present products and services offered by the resident companies. Every year the

Incubator will organize a black tie party in order to honour local politicians and the people

supporting the projects as well as the outstanding companies.

Stage II: Help and the promotion of the residents of the Incubator

Marketing and advertising are those factors which can ensure continuous development of

the Incubator and of its companies. When the newly created companies reach their clients

and start to develop, the appraisal of the Incubator, being a centre which influences local

economy and resources, will also increase.

Marketing strategies of the companies and of the Incubator will overlap and this will result

in joint promotional campaigns, for example open days in the Incubator will be an

opportunity to accumulate knowledge about the products and services available in the

Incubator and it will also be an opportunity to build connections between consumers and

the suppliers.

Business Incubator together with business associations is going to organise local events

and trade fair promoting goods and services offered by residents and by the clients of the

Incubator. These includes:

various forms of promotion run by the companies, for example special price

reductions

stands presenting articles and services offered by local entrepreneurs

parties which aim at attracting a maximal number of people

29

The Incubator will also help to promote individual resident companies and other clients, by

ensuring the presence of all sorts of media and also by preparing, publishing and distributing

advertising materials.

Stage III- Promoting and supporting Business Associations and networks of entrepreneurs

Developing a strategy for building a network of entrepreneurs is going to focus on:

1. Supporting Entrepreneurship Development.

Questionnaires will be sent to individual entrepreneurs and to associations in order to identify

opportunities for the development of economic activity by the residents of the Incubator.

Propositions for entrepreneurs will relate to the cooperation with the suppliers and

cooperative commissions and services (for example cleaning, equipment repair etc.).

Another aim of supporting entrepreneurship is to build a network based on individual

consulting, which will ensure valuable help in a short period of time and which will result in an

economic cooperation in the future.

2. Organizing local support.

The Incubator will organize a network of local support from the local community, regional and

city administration, NGOs, and local media through advertising campaigns. Those

campaigns will include:

press promotion (articles and announcements), press conferences, promotional

letters containing information about the Incubator and its activity

periodic meetings with journalists

the participation of the Incubator’s employees in events promoting SMEs, organized

by other institutions

posters and brochures about the Incubator and its program

Utilizing this network of entrepreneurs, comprised of Business Associations or Chambers

of Industry and Trade, individual companies and entrepreneurs, the Incubator will try to

build mutually enriching cooperation and confidence in entrepreneurship. An Incubator

Advisory Committee will be created and it will consist of the local business leaders, local

development agencies, residents of the Incubator as well experts from different fields, in

order to promote the Incubator’s program and to improve its functioning.

30

The network of entrepreneurs will also establish contacts with other programs supporting

business, data bases, foreign investors and export opportunities.

9. Incubator funding sources The Incubator can be financed from various sources and in different forms.

9.1. In kind contribution

a) The building is handed over for ownership to the institution which manages the

Incubator or it is given into free of charge usufruct or into lease for at least 10 years

b) The Incubator receives the equipment and the furnishings for free

9.2. Financial contribution

a) The organization which is managing the Incubator has a share in the founding fund

b) Payment of higher membership fee by associate members when Incubator's legal

form is "Incubator Association".

c) Operating costs are financed by local authorities or by other sponsors:

the salary of the employees, current expenses: rental fee, water and electricity fee,

cleaning fee, call charges, mail services, etc.

9.3. The individual contribution of entrepreneurs in exchange for reductions of rental fee

and office services

The funding of the building and room adaptation

Free of charge advisory services for other entrepreneurs

Running the accountancy of other companies

9.4. Resident Payments

Revenues that come from the payment of rents

Revenue deriving from services provided to residents and to external clients.

9.5. State funds supporting entrepreneurship, innovation, the development of rural areas

and countering unemployment, including: Employment 2020, Business Road Map

2020, etc.

9.6. Local loan and guarantee funds, set up by local authorities and partners

31

Business Incubators are organizations with a small liquidity margin. This requires very

precise planning and predicting of the cash flow. Depending on the stage of development

Business Incubator uses different financial sources of financing.

Initial funding comes from local administration, stakeholders and the state which provide a

Business Incubator with financial sources or in kind input until the activity becomes

stabilized and ensures considerable income.

Prior to the Business Incubator operations launch money or in kind input is necessary to

cover the costs of feasibility study and business plan, funding capital, registration of the

Incubator entity, obtaining training license, construction works and purchase of equipment,

covering the transportation costs, security, insurance, etc.

Achieving operating break-even requires usually 5-8 years. When Incubator starts

operations more and more money comes out from common activities, outside services,

royalties or equity from incubated companies. Not for profit Incubator, which is focused on

social results is able to finance operations through grants and subsidies

The portion of money available for start-ups and developing companies also the source of

Incubator’s revenues collected from rent and services offered to residents and clients.

Feasibility Study,

Business PlanRegistration

Funding

capital

Training

licenseEquipment

Construction Тransport SecurityTelephone

linesInsurance Miscellaneous

Running costsFunds for SMEs

FinancingBusiness Incubator

Initial funding

32

Part III. Monitoring/Assessment

Monitoring is one of the basic functions of Business Incubator management and it constitutes

the completion of the managing cycle. The BI business plan contains not only a description

of the aims and of the development strategy, but also a description of the means of their

monitoring and implementation.

National Business Incubation Association U.S.A. suggests that all incubators collect 10 basic

data points on an annual basis for all clients, and annually for graduates for at least five

years after they leave the program.

It’s important to set a baseline for all of these data points for each client when it begins a

relationship with the incubator, either as an in-house or affiliate, so that Incubator can track

growth in employment, sales, etc., over time. Incubator management should request this

data from clients for the first time when accepting them into the program.

1. Number of current clients

The number of companies Incubator currently serves.

2. Total number of graduates since program inception

Quantifying the number and performance of graduates is essential to demonstrating

program success.

3. Number of graduate firms still in business or that have been merged or acquired

Graduate firms that remain in operation demonstrate Incubator program’s ability to

produce successful companies that survive. Additionally, mergers and acquisitions are

successful business outcomes. Therefore, graduate firms that have executed these exit

strategies should be tracked and included in Incubator tallies of successful graduates.

4. Number of people currently employed full-time (<32 hours) by client and graduate

firms.

If Incubator collects current employment figures from both clients and graduates on a

regular basis i will be able to show growth over time.

5. Number of people currently employed part-time (>32 hours) by client and graduate

firms.

Depending on the type of company, there may be significant part-time employment.

6. Current monthly salaries and wages paid by client and graduate firms.

If Incubator asks for current monthly salaries and wages (as opposed to annual numbers)

it will be able to calculate current average wages using the current employment

information having been collected.

33

7. Gross revenues for the most recent full year for client and graduate firms.

For the company’s last full year, what is the total (gross) revenue amount shown on its

income statement?

8. Dollar amount of debt capital raised in most recent full year by client and graduate

firms (bank loans, loans from family and friends, revolving loan funds, or other loan

sources)

How much money was borrowed in the last full year?

9. Dollar amount of equity capital raised in most recent full year by client and graduate

firms (include investments from angel investors, venture capitalists, seed funds, or other

equity capital sources)

` Certain stakeholders are keenly interested in the level of investment Incubator clients

and graduates attract. Additionally, touting these investments can help to recruit clients.

10. Dollar amount of grant funds raised in most recent full year by client and graduate

firms (special programs, state grants, etc.).

Many stakeholders are interested in the ability of Incubator clients and graduates to

attract grant funds. Touting their success in attracting grant funding also can help to recruit

clients.

NBIA recommends these ten basic metrics because they cover the most-requested program

outcome areas and because they will meet the requirements of many incubator funding

sources4. Sponsors decide what additional data points they’d like to be collected. What will

be added to the base data collection effort will depend on Incubator program’s mission,

location and other factors

4 Source: http://www.nbia.org/impact/suggested_metrics.php

34

Annex 1

Business Incubator program of work

Business

Planning

Development

Phase

Preliminary

tasks

Establish Steering

Committee Public sector Private sector

Project Team Prospective

Manager Consultants

Inception Report

(Work Plan)

Background analysis

Regional situation

Target market

Possible location

Supply side

(existing

enterprise

support)

Demand side

(entrepreneurship)

Market testing

Interim report

Business Planning

-strategic aims

-Incubator design

-operating framework

-facilities and services

-organisational structure

-financial estimates

Final report

Evaluation strategy Implementation strategy

1

3

9

12

22

Timing

months

Phase

Source: Practical Guidelines for Business Incubators, UNIDO Manual

35

Annex 2

Feasibility Study structure

1. Introduction and Summary

2. Methodology 2.1. Methodology for background analysis

2.2. Methodology for supply side analysis

2.3. Methodology for demand side analysis

2.4. Work Plan for Feasibility study

3. Findings 1.1. SWOT analysis 1.2. Beneficiary analysis (Demand side)

1.2.1. Market 1.2.2. Needs and requirements

1.3. Supply side analysis 1.3.1. Supporting institutions, measures and instruments

1.4. Miss matches/gaps of demand and supply 1.5. The proposed Incubator building 1.6. Financial scheme for the Incubator

1.6.1. Planning 1.6.2. Building related investments 1.6.3. Infrastructure 1.6.4. Operating

4. Conclusions GO or No – GO a. Is the Incubator project feasible? Why?

4.1.2. Risks 4.1.3. Most appropriate design

4.2. Next steps

5. Sources of information

6. Annexes 1.1. Data – analysis demand side 1.2. Data – analysis supply side 1.3. Demand side questionnaire 1.4. Supply side interview guide 1.5. Cover letters 1.6. List of demand side interviewees 1.7. List of supply side interviewees 1.8. List of BI set up Team

Source: Development Guidelines for Technology Business Incubators, F,Dietrich, B.Harley,

J.Lanbein, InWEnt, Bonn 2010

36

Annex 3

Business Plan of Business Incubator

Table of Contents

1. Executive Summary (2-3 pages):

a) Goals and Objectives

b) The Mission

c) Uniqueness: what added value a given Incubator brings

d) The description of the building, services and management

e) A summary of financial forecasts

f) What is going to be achieved thanks to the business plan

2. A short history of the Incubator (1 page):

a) How the idea developed

b) Who was involved

c) What is the climate for Incubator support.

3. Product and services:

a) A discussion on the philosophy of providing shared services, consultancy in the

sphere of management, trainings and funding

b) A description of the needs of entrepreneurs and the ways in which the Incubator

can meet those needs

c) Showing the unique features of the services provided by the Incubator

d) Presenting the way to ensure services of high quality

4. Sectors/ market:

a) The status of an Incubator on the market of business services and the real estate

b) Customers: Who and why can become a resident of an Incubator

c) The residents’ sensitivity to: the price, the type and quality of provided services,

localisation, management policy.

5. Competition analysis:

a) Direct competition: other Business Support Centers, Business Incubators:

i. Price

ii. Types of provided services

iii. Customers

iv. Localization

b) Indirect competition

i. Companies and institutions which lease the space

ii. Providing joint services (co-working, Business Centre, cluster)

iii. Providing business services

37

c) The competition’s reaction to the Incubator

d) Strengths and Weaknesses of the Incubator in comparison with the competition

6. Marketing strategy:

a) Pricing policy and the alternatives

b) The sources of obtaining residents and in what way the Incubator will enter the

existing networks of business support

c) The idea of promoting the Incubator

7. Functioning

a) The main assumptions behind the Incubator policy:

i. Enter criteria

ii. Exit criteria

b) Characteristics of the Incubator Management:

c) The tasks and responsibilities of the Board of Directors and of the Advisory

Committee

d) Executive Board:

i. The tasks and responsibilities

ii. Experience and qualifications

iii. Experience in managing the building, providing services to companies

and managing risk

8. The Incubator development plan:

a) A description of the proposed building

b) A description of the surroundings

c) Design of the space division

d) A description of construction works and the assessment of costs

e) Equipment requirements

f) Calendar of construction works

g) Strategy of the lease of space

h) The structure of residents and risk management

i) The strategy of rental payment

9. Financial forecasts:

a) Balance sheet

b) Revenues and expenses

c) Cash flow forecast

d) Analysis of the anticipated financial transactions:

i. profit potential and the period of subsidization

ii. financial requirements

38

iii. sources of funding

iv. the use of funds

10. Anticipated risks:

a) Market risk

b) Management risk

c) Environment risk

d) Regulatory risk

e) Financial risk

i. Connected with the funds

ii. Connected with the cash flow

iii. Growth risk

11. Supplementary documents

Many documents act like a litmus paper for the assessment of the accuracy in approaching

the initiative to create a Business Incubator. Their existence itself is a sufficient proof that the

project has been thoroughly considered. These documents include:

a) Standard Lease Agreement

b) Agreement concerning the services provided by the Incubator

c) Curriculum vitae of the basic staff

d) Pictures, photographs and the design of the building

e) Resident’s Application Form

f) Organizational scheme

g) A description of the local support, a list of interested entities and the advisors

39

Annex 4

Incubator Without Walls

Incubator Without Walls can constitute an independent programme of business incubation,

however it is often an element of a Business Incubator programme. It enriches the offer of a

Business Incubator because it operates beyond its walls. Thanks to Information and

Communication Technology the scope of its operations are territorially unlimited. This is

particularly significant in those regions, where there are no other business support

institutions.

The network of cooperation is constituted by the residents of a Business Incubator,

companies which have already left the Incubator, the external clients who make use of

selected services offered by the Incubator, companies which participate in specific projects

initiated or managed by the Business Incubator.

An Incubator Without Walls reaches out and consists of a group of companies which

cooperate with one another to take advantage of synergies in order to achieve what might be

otherwise not be possible companies were working individually. The network of cooperative

collaboration may take various forms, from the exchange of information to setting up

companies in order to provide product development and commercialization. An Incubator

without Walls can be used in the following fields:

Quality

In order to survive on the market, the company has to offer high - quality products. The

instances of common activity in the field of improving quality, include:

employee training; and

the exchange of experiences in the field of management and production

technique.

Expenses

The expenses of SMEs are often proportionally higher in comparison with the expenses of

large companies, which stems from so-called ‘economy of scale’. Nevertheless, if a group of

entrepreneurs sets common goals and each of them covers part of those expenses, such

actions become cheaper. The instances of common activity to reduce expenses include:

the purchase of materials;

the purchase of equipment; and

using stockroom area.

40

Production potential

Competition and the market forces incentivize entrepreneurs to make high quality products in

a short period of time. Due to specialization within the networks of manufacturers, it is

possible to react quickly to changing product requirements and to join efforts to meet these

requirements.

New product development

Companies can often increase their profits by manufacturing final products instead of

providing semi-finished products. Business Incubator and Incubator Without Walls provide

adequate conditions to combine the abilities of manufacturers in order to realize the final

product. The costs of developing new product, for example the salaries of experts are often

too high for just one company. Thanks to sharing costs by several companies, it is possible

to obtain new opportunities, products, markets and profits.

Marketing

Taking effective control of the markets which ensure profits, often requires making new

investments. Proper market research, promotion of new quality, as well as reaching potential

buyers are expensive and many individual companies can’t afford to do this in a proper way.

The network of cooperation creates favourable marketing opportunities, for instance:

joint exhibitions during trade shows

a guide book about companies, translated into several languages

the purchase of guide books about foreign companies, etc.

Access to consulting, sources of funding, office services and equipment.

Companies which participate in the program of the Incubator Without Walls have the access

to office services, consulting, loan funds and equipment on the same terms as the residents

of a Business Incubator. Depending on the Incubator’s goals and objectives, local support,

development stage of the company, the resources available and Incubator’s policy they may

be charged similar Incubator residents for services.

41

Annex 5

The Business Incubators in Rural Areas

Most of the barriers for developing business in rural areas arise from rural communities

small population density. Rural areas lack resources, such as business and technical

expertise and meet many other barriers.

There are three main fields of activities in rural areas, connected with agriculture:

1. Farms, agriculture production, logging, stock and poultry rearing, forestry,

2. Agricultural products processing industry,

3. Services, including those promoting new farming methods, for example the

production and sale environmentally friendly fertilizers.

These areas should develop in parallel. The two latter ones could provide residents for

Incubator operating in the countryside. These Incubators should carry out the following

functions:

1. New jobs creation, including promotion of self-employment amongst men and

women in agricultural regions of Kazakhstan,

2. Promotion of use of inactive farm and production facilities,

3. Modernizing and improving production techniques which increases productivity,

4. Assisting businesses in their search for essential financial support and equipment,

5. Creating distribution and marketing channels for local producers,

6. Forging links between agricultural production and the processing industry,

7. Facilitating access to foreign and domestic markets.

The unused buildings of farms, firms and institutions in the countryside can be used as a

foundation for the creation of business incubators. Machinery and equipment left over from

the closed down or restructured companies might be offered to new entrepreneurs. Buildings

and machines could be used for production purposes, and in case where businesses own

them outright, they could be used as a collateral when applying for credit.

Food Processing Incubator

The production of food requires an expensive production base and appropriate hygiene

standards. Small producers often cannot finance the cost of bringing the facilities up to the

required standards.

This is why some potential entrepreneurs wishing to produce, process and sell food are

interested in Business Incubator.

42

In the countryside the group of food processing entrepreneurs for which an Incubator could

be organized is usually too small. Some businesses are seasonal and need space in the

incubator for only a short period of time during the year. The space could be let to farmers

who need it seasonally, at the harvest time, or for fruit and vegetable processing. Residents

starting their business activities within the Agribusiness Incubator often need less than 20

hours a month to prepare their products.

The maturity of food products can be produced in a short time span. Such firms would not

remain in the incubator permanently, but depending on their need, they could rent equipment

and space by the hours, or by the day, etc.

Storage, production and office space should be set aside for this. In the Food Processing

Incubator, activities based on shared space and machineries reduce production costs and

allow better use of facilities.

Organization of space

Production space should be organized so that several users can take advantage of it. For

this reason the most important fixed machines must be places along the walls, to be easily

accessible. The open area in the center of the kitchen or other production space then allows

for different configurations of work stations, and for the deployment of the light equipment

used in food processing. Large cylinders can be purchased for operations which require

compressed air. They can be used for the production of bottled sauces, pizzas, mustards,

baguettes, mayonnaise, dumplings, confectionary, etc.

Consulting and training

Labelling, familiarity with food industry regulations, design of packaging, the setting of expiry

dates and adapting recipes for market needs are all requirements of this industry.

Contracted external experts should prepare seminars and demonstrations, and conduct

training on these topics.

Rural Incubators make their services available to the community at a large as Incubators

Without Walls. They bring public into their facility through seminars, presentations and open

meetings.

Types of users

43

The largest group of users in food processing Incubator comprises of the small family firms

who are producers and supply food to retailers. This type of food processing firm can be very

attractive to farmers’ families whose main source of income, however lies elsewhere.

Managing Agribusiness Incubator.

The Incubator facility have to be ready for use at all times, according to residents’ needs. The

equipment has to be properly maintained. Garbage disposal at least twice a week and

control of dangerous chemical substance should be provided in the Incubator.

Developers of Business Incubators have adopted different means to address the problem of

agribusiness in rural areas. These means include:

- Networked incubators, that involve a “hub” program servicing satellites in less

populous communities,

- “Incubator Without Walls” programs,

- Incubators supported by resource-reach institutions such as universities, and

- Collocation of public service agencies within the incubator to provide business

assistance services and support the Incubator through rental fees.

Many Agribusiness Incubators also reserve space for “anchor” residents – mature

businesses that pay market rents and do not need incubation services.