Business incubation in the Eastern Cape: a case study

Business incubation is a concept that describes a business development process that is used to grow successful, sustainable entrepreneurial ventures that will contribute to the health and wealth of local, regional and national economies. Incubators provide a place for businesses to build their foundations. Business incubators use a combination of physical space, resources and services to facilitate and develop businesses, enhance their progress, break down barriers to success, reduce risks and increase the potential for successful survival of early stage ventures., their progress, break down barriers to success, reduce risks and increase the potential for successful survival of early stage ventures. Business incubators are part of a larger value chain that connects enterprises to a vital support system. Most incubators connect their clients to local service providers (such as lawyers, corporate service providers or accountants) and establish relationships that will last after the firm leaves the incubator. Once an enterprise is ready to leave the incubator environment, it will need space to move into, which in turn, boosts property development and leasing. Because of the enhanced credibility of the business incubation process, landlords would be more confident as a stable, growing business can be a reliable tenant. The empirical object of the study is the Seda NMB ICT Incubator in Port Elizabeth. Eastern Cape. Like any other business an incubator is created to deliver a service or product for as long as possible and in this process must create value because the ultimate objective of any profit seeking business is to create wealth for its owners with due consideration of all its stakeholders (Brigham & Ehrhardt 2005:7-12). A preliminary investigation of the Seda NMB ICT Incubator raised the question whether the operation of this incubator meets the performance standards as identified in the international literature. The purpose of this study is therefore to establish whether the performance of the Seda NMB ICT Incubator is in line with generally accepted performance standards. At this stage the standards can be identified as a strategic alliance of the business (vision, mission and strategy), financing principles, management principles and human resource development and growth opportunities. The SEDA NMB ICT Incubator is financed as follows: Partly by the Department of Trade and Industry (the SEDA technology programme) and partly by the Nelson Mandela Bay Metropolitan Municipality. It is recommended that public/private partnerships should be formed to ensure the continuity of the Port Elizabeth incubator. A second recommendation is that the SEDA NMB Incubator becomes more focussed in terms of its clients it is serving. At present it is serving a wide variety of ICT clients ranging from website design, graphic art to preparing business plans for ICT businesses. The period of incubation may be too extended as some incubatees have been on the premises for more than five years. It is recommended that the SEDA NMB Incubator pays attention to the length of stay of an incubatee. The vast majority of the incubatees on the SEDA NMB Incubator premises are not compliant with business acts and regulations. Seven incubatees reported during the personal interview that they were not compliant with all the acts and regulations