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Business Incubators and Business Accelerators

Mauricio Schneck

The path in the world of entrepreneurship has provided me, and offers every day, some learnings. The market for new business walks in necessarily the views of the investor market. I witnessed successful partnerships, but also numerous opportunities that have lost their "market window", by the lack of resources, primarily because the inability or fear of entrepreneurs in their dialogue with investors.

I met similar scenarios in some global markets, such as the American. There, in the first decade of this century, gained strength the networks of angel’s investors, also known by the focus at the beginning of the business. They filled a "gap" between the structure with the initial development of business, and its effective market growth. The initial investment in an idea is typically undertaken by the three "F's", Family, Friends, and Fools! And before that period, the next level of investors was large, focused in companies already consolidated.

This space began to be filled by these networks, which began to organize the identification of good investment opportunities to persons or entities who were willing to take a higher risk, by the initial stage of the opportunities, but with a potential for higher returns.

In this same line of reasoning, the global environment of entrepreneurship came to understand that new ventures that came to the market, also had difficulty with the challenge of growth. It emanated the "Business Accelerators" as options to continue the "Ventures Incubators".

Of course that is not a rule for the path of a new business, but these concepts and definitions have become trivialized. Even in mature markets such as Europe and the American, the connotation "accelerator" came to be used as a pure marketing to attract tenants!

If you noticed, I like to stress that it is an incubator of "ventures". I explain. At least in the conceptual essence, your role is focused on providing support and guide new business ideas. These ideas became projects, passing or not by what some entities work as "pre-incubation", that end up validating its potential, being structured as an enterprise or venture, which may or may not turn out to be legally constituted as a company. This development and recognition that "business" is ready and with a minimum of maturity to walk alone in its market like a company, is the role of the incubators.

The accelerators also provide similar support services, but its goal is to climb the growth of existing business. It seeks to invest efforts and/or resources that may cause a considerable widening of the upward growth curve of the opportunity.

Both are important in the economic development of a region, but lack a conceptual organization and practice by the representative bodies. Their purposes are complementary and distinct. Unfortunately the image of the sector is not clear to potential entrepreneurs or businessmen, they should be oriented according to the stage of your idea, project, enterprise, or business.


Business Incubators and Business Condominiums

Mauricio Schneck

From the end of the last millennium, public efforts came to contemplate investments for entrepreneurial development and innovation in the Brazilian market. Regardless of opinions on the quality or quantity of application of these resources, it is a fact that some results were collected.

Unfortunately, reality is a lack of continuity of good programs already devised over the years, and which were interrupted by pure politics, in most cases simply because it is coming from another "party"! These programs could be refined, identifying any weaknesses and flaws, because no initial version is perfect, allowing the opportunity for improvement. Few are continued, and when they are, they become partisan interests. But we have had incentives that resulted in good ways for socioeconomic development, and one of them is what I put on the agenda here.

Result of the above efforts, we witnessed the emergence and popularization of "Business Incubators". Of course not only the resources used were responsible, but the context with the presence of professionals with a minimum of experience in entrepreneurship, and ideas on innovative parts, appearing in academic centers or in the market itself, contributed to the rapid growth of the sector.

Above all, it was the moment of consonance between the three "spheres" (the government, the market, and the academy) that provided and has been supporting the growth of these opportunities generators environments.

After a moment of strong incentives, where we got to about five hundred incubators, also suffer from the discontinuity of actions and improvements of public programs. Most of these entities have experienced a lack of a guiding support for the growth experience of their managers in entrepreneurial orientation, and a lack of financial resources for their survival. This resulted in a focus for purely survival. We begin to see many of these "incubators", turning into mere "business condominiums", simply providing a physical space for company’s installation. The priority was to ensure the "rent" for the longest period without some involvement with the intellectual, social, or economic development of the sheltered venture.

Another problem is the lack of continuity of professional managers, that when qualified are easily absorbed by better opportunities in the labor market. The management model of incubators has not proved sustainable. There are few exceptions that exist for virtually linked to a sponsor who still upholds and shares the importance of programs for entrepreneurial and innovative development.

But part of this universe of national incubators, through their representatives, went to work to change this uncomfortable scenario. Allied to representative bodies and public administration, began to discuss ways to improve the programs and methodologies that bring guarantees an effective operation and results generated by business incubators.

An incubator is a controlled environment that provides to an early organism, favorable conditions for their development and growth. A business incubator, houses and engages in the development and growth of business ventures, providing services and infrastructure set up to stimulate and encourage the generation of results.

It is a fact that the intentions are to improvement, but we need to review the concepts. Most of the time the focus is the development of projects and incubated ventures, but it is also essential that it is understood that a business incubator is also an enterprise that needs to achieve financial sustainability itself, and ensure the quality of its services.


Where will arrive the public machine?

Mauricio Schneck

This adult generation that watches our moment of inefficient and ineffective public administration, saw considerable changes in the achievements of social and economic improvements. We are all outraged by the lack of appropriate management and public investments, in addition to impotence in taking action. Not by lack of tries, through demonstrations or public opinion, but what has changed with this?

We have a "contaminated weapon” with our own ignorance, known as the "vote". The vote obligation makes people who do not have the notion of complexity that is a public management, elect political ideals and not ideal policies! Not that this cluelessness is the fault of those who do not have, because the responsibility is the lack of a consistent educational policy. Just as we must demonstrate knowledge to practice a profession, sport, or any activity, we need to conquer the right to vote by requirements too.

But we always have hope. Tomorrow will always be better (or worse?). Globalization, the information age, the development of knowledge, among others, influenced in today we can better identify problems and witness the best examples in the world, forming the conscience of our shortcomings.

Currently what we saw and see are broken promises and fake smiles, with a public machine used to exchange political interests. We hope that people who exercise functions in the public sphere, regardless of importance of its job, one day work with the will and the purpose of a struggling professional. And hope these professionals are nominated by their proven technical competence and not to satisfy a "political party".


How far do you see?

Mauricio Schneck

If we look at only fifty years, the reality of computing as witnessed today, was unacceptable or practically impossible. Unfortunately, today we continue with these same concepts. If we try to imagine this same horizon for the future, we find that the vast majority of people among us do not accept that disruptive changes will happen. The technological universe is a proven that cuts across any economic sector or supply chain we can imagine. Where it is not yet explored, is a matter of time.

The information age has arrived since the end of the last century. At this point, we see the evolution of technology that allows us more speed and accuracy of the information. This significantly impacts the quality and competitiveness in the markets and businesses. The technology supports the provision of innovative ideas or simple improvements to existing products or services. The concept behind the technology must be proven and verifiable, showing a marketable horizon.

Several sectors have surpassed production challenges by automating their processes. If we look at the impacts of the technological universe, between software’s and hardware’s, we’ll see the industry, commerce and services faster and more dynamic. Admittedly, the machine replaces man, but we must understand that this process is needed, delivering higher quality and productivity over what we already mastered as humans, and forcing us to seek new ways to generate employment on business and innovations, yet unexplored by humans. And we need it!

Speaking of business is needed that entrepreneur know deeply his production chain. He should understand what will be offered as a product or service, for which markets they will be destined and how their needs will be met. The results of the company's strategy, even with these parameters well-defined, will depend on the skill and vision of their leaders to anticipate the innovations to their consumer market, as well as the implementation of technologies that enable agility and scale.

The success of any business is obliged by its growth potential. Building a strong position in any market is a laborious, costly and time consuming. Any market undergoes changes. Keeping up the political, economic, technological, and competitive scenario, will permit evaluate the correct time to set new goals.

Achieving a sustainable business is directly linked to the strategy followed by the enterprise for rapid growth. The survival of a company depends on its ability to generate significant profits. The competitive advantage has certain characteristics that distinguish it from its competitors or create barriers to them.

The technology, although its impact in supporting all of these goals, is only part of the way to the success of a company. The capacity to generate competitive business, pass thru the competence of its leadership, persistence, creativity and courage to take risks. Think about it!


Business Models

Mauricio Schneck

When we analyze any entity for profit from a macro view, and within the scope of its core business, easily perceive that their essential activities are present in two key pillars, one focused on the development of its offer and the other on its commercialization.

The commercial sector is the main area charged by the results, it is responsible for taking the company and its image to its customers. We can consider that among the strategies to support a sales area, we have a good product, prices well established, well-developed planning, qualified staff, among others.

The quality of its relationship with the market drives the commercial success. Sales are structured in an efficient communication and especially in challenging goals. I consider two models in the commercial approach: Simple Sales and Complex Sales. It’s possible that both exert the same sales process, but the time spent on each activity is different. The illustration below explains the use performance in each of the models.

business_model

In the Simple Sales model the seller has a deep knowledge of their product, but little about his client. It is concerned mainly with the closing of its sale, regardless of its needs, using, in most cases, convincing arguments to achieve his goal, and not interested in keeping the customer. This strategy best applies in products/services with low added value and in markets with low purchasing power.

In the case of Complex Sales, the goal is to meet customer needs, making him to profit with the purchase, worrying about keeping him for long term. In this model, the seller study the customer needs and then present alternatives for the purchase. This type of sale is to create a bond of trust, and to this, the process should not end with the closing of a purchase, but get thru an after-sales service, in which the retailer can strengthen the purchase and ensure having responded to customer needs. It is a strategy for products and services with high added value and markets with high purchasing power.

Choose to apply one model or another depends on the type of product, the market and the business objectives. In some cases the sales model seems more suitable, however, it may be inconsistent in some situations.

A sale can apply intermediaries or not, fitting various forms of interaction. In these cases, the intermediary market has a key function, since it is him who contain the precise technique to determine the entry of the product on the market.

Studies show that the cost to acquire new customers is almost the double to keep an existing customer, and four times to win back lost customers. Companies must learn to know its market(s) and especially their customers. These can be classified as:

Potential: customers who have the appropriate profile to the proposed offer by the company.

Eventual: customers who are satisfied with a momentary relationship with the company, and have it as a reference to purchase.

Loyal: older customers that buy almost exclusively with the company, disregarding the competitors, and disclose the company to other potential clients.

Among the forms of sales, I highlight two types that include different business models practiced, Direct and Indirect Sales.

DIRECT SALES

The Direct Seles is a type of sale based on personal contact between sellers and consumers. In business models and specific sectors, is primarily responsible for the success and development of business activity.

It’s different models may require fewer resources, such as network marketing, for example, which has been increasingly popular, or large investments in the development of commercial organizations.

Consultative Selling

Widely used in the last 20 years, was adopted, mainly, by large companies. Explores the benefits, advantages and differentials of the products, resulting in bonds of trust to your customers, forming a long-term relationship that seeks to increase consumption and relationships. In this model, the seller not only analyzes the client's needs, but question it, helping you identify the best solutions, with direct benefits to the customer's business. The sale by consulting establishing lasting investments in product concepts, advertising, training structure, relationship and recognition marketing activities.

Selling Door to Door

Popular, this model requires a relationship with the consumer more frequently, requiring a personal demonstration of the products, and the presence of promotions. The demand for the purchase occurs as a result of the ability of the sale and mainly by the offered differentials in prices, payment terms, special deals and even freebies. This type of sale involves a team profile more skilled at product demonstrations, and more funds for development of showcase of products and samples.

Catalog Order or Direct Mail

In this model the relationship between the company and the consumer is almost non-existent and limited to delivery of the catalog for dissemination of products and a callback method only for the withdrawal or delivery of the request. The purchase decision happens, mostly, because of the variety of products which are mainly with discounts and promotions. Requires a less sophisticated profile of the sales force and low investment in training, demanding more money for production and large-scale distribution of advertising material.

Commercial Events

Explore an informal social event to demonstrate the offer collectively, because it causes great effect when exploited in practice. It is based on promoting the interaction between potential consumers/customers directly with the products.

Telemarketing

It is the sale by telephone with unlimited geographic reach. Both the seller can call the customer (active sale), as the client looks for the company (receptive/passive sale).

Internet

One of the most growing modalities, by being aggregated to technological development. It's selling through websites, allowing interaction with the consumer, and demonstrates the products with multimedia features (animation, video, audio). It is an effective way to reach distant consumers and provide information. This model includes the social networks.

 Direct sales benefits all parties involved. After analyzing and identifying the appropriate model for establishing direct sales, the company must create the called Compensation Plan, which is to determine the remuneration form.

INDIRECT SALES

Indirect Sale is one that is through partners. It is an extension of the responsibilities of the company, through representatives, distributors and/or dealers, in a beneficial model to all stakeholders.

It is important that these partners know how to attend the needs of consumers with quality, leaving to the company to invest in training and capacity building of partners, prioritizing quality profits before the quantitative advances.

Franchises

It is a type of trading system characterized by involving the distribution and marketing of products/services established by contract between the franchisor (the owner of the business) and franchisee (who acquires the business unit), determined by a single standard for all units, defined by rigorous models, through computerized controls, regulations and stable administration, resulting in the similarity of the networks. In addition to assigning their own rates, like the advertising fee and franchise fee linked to the franchisee's gross sales, is ideal for companies wishing to expand their operations with low investment. In contrast, represents a good opportunity for those who wish to have your own business. The model is in broad expansion, in diverse industries.

Licensing

In this system there isn’t a requirement for standard operation. The licensor has less control over the licensee, who is allowed to train staff and manage your drive with greater freedom, fitting to its sales geography and its consumers. Sale by license does not follow the Law of Franchising, but demand for a simple contract with rights and obligations of both parties. This system is ideal to enhance the company's name, since many entrepreneurs want to reach a market audience with even the same brand. The results show that this type of process is common to most companies that have strong brands and stabilized over the market worldwide.

Sales by Retail

This model works with resellers responsible for selling directly to final consumers, such as kiosks, supermarkets and convenience stores. It is a way of resale witch demands a conquest of space in the market against its competitors. You can see the importance of the quality of these partners and their sales outlets as essential for effective results. Fits to the retailer decisions about the level of service offered, the product line marketed, pricing policies, geographical coverage, access to customer and store size.


Polo of Investment & Business

Brain - Brazil Investment and Business
www.brainbrasil.org

Latin America stands out as one of the most important sources of growth in post-crisis. Brazil, given its robust growth and sustainable, vibrant internal market and the title of investment grade stands as one of the poles in the new business network in the region.

Latin America has the opportunity to transform and improve their fledgling network architecture, the region has size and growth potential that are getting attention from around the world, this is the time for Latin America leverage its great potential and important strategic advantages such as its weight in international trade and its Multilatinas to create a more connected network across countries, minimizing intermediate access to capital and generating new business opportunities, income and employment through strengthened direct links with other regional networks.

The time is now, Brazil has the qualities necessary to also become one of the poles of this new regional architecture, has an important role on the continent, is expected to grow vigorously in the next decade, mainly to strengthen its ties with neighboring countries and the world. BRAIN's vision of a network of business with Brazil as one of its poles does not require artificial movements of liberalization and reckless exposure, it is not a project that requires full convertibility exchange rate, tax advantages, let alone create a free zone finance or a dollarized economy.

The vision is of an economy with fast recovery capability, adaptable and diverse, with an internationalized service sector that supports the projection of Multilatinas and generate benefits for the various sectors of the economy and society of Latin America as a whole.

Without coordinated efforts success is not guaranteed. Other countries with similar or greater potential lost their window of opportunity, the success requires a coordinate action, strategic, public-private, long-term and on multiple fronts that include simplifying the tax system and the bureaucratic regulations, the development of education and increased the international cooperation and the governments with the private sector. 

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