Erasmus IP European Wilderness Entrepreneurship

Rural Business Incubator

An unique opportunity for rural socio-economic
development!
Clara Ruby Prez Fernndez
Milos Van Leest

Emilian Stoynov
Tea Mazi

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Table of Contents
INTRODUCTION ..................................................................................................................................... 1
BACKGROUND ....................................................................................................................................... 1
BUSINESS DESCRIPTION ......................................................................................................................... 2
WHAT IS A BUSINESS INCUBATOR?.................................................................................................................... 2
IMPACT ON THE TARGET AREA. ......................................................................................................................... 3
WORKING MODEL OF A RURAL BUSINESS INCUBATOR .......................................................................................... 4
THE BUSINESS MODEL CANVAS ............................................................................................................. 6
CUSTOMER SEGMENTS: .................................................................................................................................. 6
CUSTOMER RELATIONSHIPS: ............................................................................................................................ 6
VALUE PROPOSITIONS: ................................................................................................................................... 6
KEY ACTIVITIES:............................................................................................................................................. 7
KEY RESOURCES: ........................................................................................................................................... 7
KEY PARTNERS: ............................................................................................................................................. 7
CHANNELS: .................................................................................................................................................. 7
COST STRUCTURE: ......................................................................................................................................... 7
REVENUE STREAMS:....................................................................................................................................... 7
RESOURCES: ........................................................................................................................................... 8
WEBSITES:.............................................................................................................................................. 8

Introduction
In late March and early April 2014, a group of 38 students from all over Europe attended the
European Wilderness Entrepreneurship Intensive Program of the European Union. This course
is developed to connect wilderness with entrepreneurial activities. In the first part of the
program we as students had to do research in the area called Western-Iberia in order to get
inside knowledge about the current economic, social and environmental situation. In the
second part of the program, 8 groups of students had to come up with an business idea for
local stakeholders.
We as group 2 had the idea to create a project idea rather than a clear business plan. We did
so because we believe this idea has to be something for people living in the area instead for
outsiders like us. The idea is not a direct business but a service providing organisation. This
service can be a non-profit, not-for-profit or a profit focussed organisation. It is up to the
initiators which template they are going to use. What is more important is the way the project
is carried out and by whom. We think the rate of success lies in the multi-stakeholder
approach. To gain trust amongst the participants it has to operate independently and with a
vision to strengthen the target area. A possible composition of the project team can be with
Universities, NGOs, local authorities and most important local communities and
entrepreneurs which has a common interest in local economies with an ability to sustain the
environment and rural population rather than only financially(which is important as well). The
idea described in the following report is free to use for people interested. We can only advice
to implement it in a project base way in cooperation with knowledge institutes like universities
and NGOs.

Background
Western-Iberia is a border area in North-East Portugal and the West of Spain, and is known as
an area of rich cultural heritage, traditional agriculture and varied landscapes. One of their
trademarks is the production of Jamon Iberico, the famous smoked ham from Spain, and olives
and almonds. The landscape is unique in the world due to the endless Dehesas
orchards/pastures(Stone-oak and Cork-oaks) where livestock is kept in combination with trees.
For hundreds of years people from Western-Iberia made a living with the production of crops
and livestock. In this way the area kept its shape, economy and natural value. Nowadays the
area is a famous destination for tourists from all over the world to visit medieval cities and
landscapes, prehistoric art, Nature reserves, a good climate and delicious local products. On
one hand, tourists bring in many opportunities for entrepreneurs, on the other hand, the area
awareness is brought back to the homes of the visitors which creates awareness and is in a
way beneficial for economic development and related economic survival.
A threat nowadays is a changed economic climate of Spain and Portugal which has an
influence on the state of economic perspective in the entire Iberian peninsula. Due to many
reasons such as the financial crisis and global warming (traditional) Enterprises, agriculture and
tourism came under pressure. However, tourism is on its way back to normal or is even
growing again. Another, and fast emerging change is a rapidly growing dependency on global
trade in the entire European Union. Where in the past village communities could be mainly be
self-sufficient in food production and job creation local economies have to deal nowadays with
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a competitive global market where the production of quantities is a must to survive.

Unfortunately, in case of Western-Iberia, the area is partly not capable to adapt to the new
situation. Especially, smaller enterprises are not able to keep up. As a result, many small and
medium farmers disappear and leave the area, and younger generation seek their fortune in
larger cities to study or to find jobs, and are not turning back to their roots. The migration of
human capital to outside regions has lead to a weaker economic perspective for the entire
region due to loss of high educated potential. Furthermore, an increase in intensified
agricultural activities are a risk in preserving the areas identity, the environment, and relating
tourism. The dependency on touristic activities can be seen as a monoculture and is mainly
based on the areas main strength; cultural heritage and biodiversity.
In order to strengthen the survivability of communities, biodiversity and agriculture situated in
the area a new initiative is necessary. Not only to focus on economic development, but also to
create new opportunities for young people. however, for many starting companies the
business risks in the first years are high due to a lack of entrepreneurial competences, lack of
(financial) capital and a proper network. This can lead to early bankruptcy or a high barrier to
enter the market. To overcome the first most risky years for a starter a plan is needed. The
rural Business Incubator is a business initiative which focus on assisting start-ups via the
provision of various facilities mainly focussing on low potential rural areas (in current
perspective) like Western-Iberia. In the following chapters the incubator idea is elaborated.

Business description
What is a business incubator?
Definition: A business incubator is a comprehensive business assistance program targeted to
start-up and early stage firms with the goal of improving their chances to grow into healthy,
sustainable companies.
Thus; an incubator is an organization designed to accelerate the growth and success of
entrepreneurial start-up companies through an array of business support resources and
services that could include physical space, coaching, common services, and networking
connections(source; entrepreneur.com, 2014)
Main product of an incubator (Evans, 2010):
A team of professionals which dedicate their expertise to support new and existing
entrepreneurial ideas.
Service provision(hardware);
- Shared building (office for entrepreneurs)
- Computers, Internet, Printers
- Office furniture (optional)
Service provision(software);
- Entrepreneurship education and training
- Technical assistance and counseling
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- Access to capital
- Entrepreneurial networking
- Creating supportive culture and policy
The business incubator idea is developed more than 20 years ago in the US already to
stimulate healthy business development (Evans, 2010). In many cases it worked out as an
success and the idea spread to other western countries as well. In the late nineties the
incubator was more or less not interesting anymore due to easy access to loans and investors.
Due to the financial crisis starting in 2007 many start-ups were not able to get loans and funds
easily. The incubator idea was born again and made its return in market oriented economies.
In our case we will use a rural version of the incubator since Western-Iberia is mainly rural in
origin. In practice this means the participants are situated in villages or rural areas.
The stages of the incubation process can be compared as the development of a human being.
As we all know every adult developed from the stage of an infant or baby to child, teenager,
adolescent into a full grown more or less independent adult. This process from baby to adult is
guided mostly by parenting. In the early years a child needs almost permanently guidance to
reduce the risks caused by physical boundaries and lack of experience. While growing older the
risks are reduced due to maturing and increased experiences. Furthermore, the amount of
freedom and responsibility increases during the same time. This is exactly what an business
incubator is doing. Parenting or breeding an early stage business to become stronger and less
vulnerable for risks to increase success rates.

Impact on the target area.

An successful rural business incubator will have the following out-put drawn below. The blue
arrow shows in which way an incubator can support local communities in various ways. The
orange arrow shows how it will support the environment, strengthening local initiatives, invest
in culture, empower local economy, increase job opportunities and attract young people to
rural areas. Supporting the environment in economic development is a not commonly
addressed issue. In our opinion the environment is for rural areas one of the more important
aspects for economic development. Especially when we make the connection with tourism and
agriculture. Many tourist go to places with beautiful nature which contains many species of
animals and various landscapes. Due to heavy industrial and agricultural exploitation many of
the unique value of areas are lost in the last 50 years. Therefore, we want to insist that
incubators who are willing to make use of this idea model are putting sustainability in regard
to environmental protection in their core business values. In this way new enterprises will
create a sustainable long term perspective for their new born companies and the nearby
environment which lead to a sustainable use of resources, increased biodiversity. All in all, this
way of doing business is important to maintain attractiveness of the area and relating tourism.

Support
Strengthening
Invest
Empower
Increase
Attract

Environment
Local innitiatives
Culture
Local Economy
Job Opportunities
Young People

Figure 1: Effects of Incubator on target area.

Working model of a Rural Business Incubator

The business incubator company is formed by a core-team of residents and business owners of
a community or town who are concerned about the local situation.
Together they will form in cooperation with knowledge institutes in how to set-up the scene.
The team will form a task-force of professionals that will coach the start-ups for a couple of
years (depends on type of start-ups and opportunities) by making use of networks in business
world and partners.
Core-team and Task-force will form together smaller task-forces that fits each different
tenants. This increase the rate of success.
Task-force will guide the process of starting up new enterprises of tenants. The task-force is
busy with the support shown in the model below.
Start-ups will leave after a period of time when task-force decided the enterprises are strong
enough.
The core-team (incubator company) can decide on current situation to move and start-up a
new incubator somewhere else if the new enterprises are better off in the current building. Via
this system the benefits of the incubator company can be implemented at another place in the
area and the strong collaboration between the new enterprises will not be damaged (Evans,
2010).

Figure 2: Working model of incubator. Source; blog.earthgrid.com, 2012

The model above shows how the core team of an Rural Business Incubator works and which
core business activities of start-ups it will support.

Tourism

Nature
Conservation

Rewilding
Europe

Research

Green
Business
Incubator
Farmers

New Projects

ICT

Figure 3: Composition of Green Business Incubator

The model above shows how a rural business incubator can be arranged in a perfect situation.
There is also a possibility to add an field research office for different universities who can do
research in the area about the impact of the incubator, or collect and process data about
various other research topics. For example; Climate change, water management, demographic
research, agriculture etc. Furthermore, it can function to provide support to the start-ups and
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vice versa. in already existing incubators most of the smaller circles are mostly filled in with
more relating enterprises like retailers or service providers like ICT or web-design. This is
something the core-team can decide depending at their situation.

The Business Model Canvas

To make the idea of a business incubator more clear and overview is given via the Business
Canvas Model

Customer segments:
Customers of business incubator company:

Early-stages companies, new entrepreneurs whether they are locals or not, lone
eagles people who are well-educated entrepreneurs, often times they are tired of
dealing with the ills of the urban environment such as crime, traffic congestion, smog,
burdensome taxes, and the high cost of living. These people tend to be drawn to rural
areas by natural beauty, outdoor recreation, and lower crime rates.
Student entrepreneurs
Local entrepreneurial initiatives
Farmers

Customer relationships:

Supportive culture and policy.

create an enriched environment.
After incubation coaching.
Linking with partner businesses in other region.

Value Propositions:
A business incubator is a comprehensive business assistance program targeted to startup and
early stage firms with the goal of improving their chances to grow into healthy, sustainable
companies.
Entrepreneurship education and training; Technical assistance and counselling;
Entrepreneurial networking; Access to capital.
Services:
- Help with business basics
- Networking activities
- Marketing assistance
- High-speed internet access
- Support with accounting/financial management
- Access to bank loans, loan funds and guarantee programs
- Support in presentation skills
- Links to higher education resources
- Create linkages with strategic partners
- Access to angel investors or venture capital
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- Advisory boards and mentors

- Management team identification
- Marketing support
- Technology commercialization assistance
- Support on legal aspects
- Intellectual property management

Key activities:
Daily management of incubator
Form and facilitate professional task-force teams of volunteers
Business assistance
Creating coaching teams for each individual start-ups (formed out of task-force of volunteers)

Key resources:

Task-force of professionals.
Facility or building.
Start-up businesses.
Starting capital.

Key partners:

European Union, Spanish Government, Portuguese Government

Task force derived from:
Finance, Marketing, Advertising, Insurance, Legal, Real estate, Universities and
colleges, Chamber of Commerce, town and local, county government, Economic
development, Small business, management sector, rural development, environmental
science,

Channels:
Partners communication channel, media (e.g. Social media)

Cost structure:
Capital expenditure, administration costs, staff salary,Building rent, Utilities, Insurance,
Maintenance

Revenue streams:
Rental fees, fees for services, royalty agreement with client company, subsidies from European
Union, Investment percentages

Resources:
Evans, M., (2010), Rural Community Finds Small Business Incubator Leads to Downtown
Economic Development Success, Rural Research Report, Volume 22, Issue 2, Illinois Institute
for Rural Affairs, available at: http://www.iira.org/pubs/publications/IIRA_RRR_725.pdf
Adkins, D., Sherman, H.D., Yost, C.A., (2001), Identifying Obstacles to the Success Of Rural
Business Incubators, National Business Incubation Association, Contractor Paper 01-08,
available at: http://www.rural.org/publications/NBIA01-08.pdf
Kansas state university, PPT; Rural Business Incubators, Effects on Rural Economic
Development, available
at:http://aalto.arch.ksu.edu/jwkplan/ruralsem/Student%20Reports/Rural%20Business%20Incu
bators.ppt

Websites:
http://blog.earthgrid.com/accel/the-institutions-of-business-development/
Definition Business incubator: http://www.entrepreneur.com/encyclopedia/businessincubator