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BUSINESS INCUBATORS IN CROATIA

Sanja Pfeifer Igor Medić Anamarija Mandić

Introduction
Anamarija Mandić; Ms.S. Chief of Operations, Centre for Entrepreneurship Osijek, Croatia Sanja Pfeifer; Ph.D. Professor, University of J.J. Strossmayer, Faculty of Economics, Osijek, Croatia Igor Medić; Ms.S. Chief Operations, Business incubator, d.o.o. Osijek, Croatia I THE DEVELOPMENT OF BUSINESS INCUBATORS, SCIENCE AND TECHNOLOGY CENTRES / PARKS

II BENCHMARKING OF BUSINESS INCUBATORS

III BUSINESS INCUBATOR OSIJEK - BIOS

Objectives and the Scope of the Study
To provide empirical evidence of the business incubators strategy, structure, processes, and performances in the Republic of Croatia, as the starting point for longitudinal analysis To benchmark BI in Croatia with the business incubators practice in the Countries in Transition To design a framework for more effective developing programmes and governance of the business incubators and incubation processes

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Methodology and data
Methodology provided by the ERENET and SINTEF Questionnaire sent to business incubator managers in the Republic of Croatia (March/April, 2006.) 16 usable questionnaires returned; response rate 64%

I THE DEVELOPMENT OF BUSINESS INCUBATORS, SCIENCE AND TECHNOLOGY CENTRES / PARKS The Role of SME sector within the overall economic performance of Croatia The process of establishment of a small enterprises in Croatia SMEs support infrastructure in Croatia

Croatia context
Number of enterprises 1% 4% Number of employees Large Medium Small

95% 33% 48% Large Medium Small

19%

SMEs sector generates around 38-55 % of GDP, SME’s sector share of total Croatian exports cca 25 %.

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SME - process of establishment
Crafts: 20 procedures, 5 days, 100 Eur L.L.C.: 31 procedures, 49 days, 3.200 Eur

SME - infrastructure
Macro SME Policy Center CEPOR Mezzo University programmes Graduate program “Entreprene urship” ICES Business Centres for entrepreneur incubators, technology ship parks; Ministry of economy Croatian Bank for Reconstruction and Development HBOR Croatian Association of Business Support Institutions Croatian agency for SME’s HAMAG Croatian Chamber of Commerce , Crafts Croatian Employers’ Associatio n

Micro

Development agencies

Microfinanci ng institutions

Forums, fairs, networks

II BENCHMARKING OF BUSINESS INCUBATORS
Type of incubators Initiators Purpose Critical factors of succes Services Operations Manager Sustainability

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Business incubators in Croatia
General information: Average BI in Croatia is 5,63 years old Initiated as public incubators (15), or private incubators (1): Established as L.L.C. Formal business plans: mission statement; service description; market assessment, management and financial plan (94%)

Type of incubators
export young entrepreneurs women entrepreneurs technological services specialized class ical others

1 3 1 4 1 1 12

1 0 2 4 6 8 10 12

number of incubators

Initiators
University University ;5 ;5

Local Local authoritie authoritie s; 14 s; 14

Business Business sector; 1 sector; 1

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Purpose
Main purposes: Knowledge transfer Job creation Innovations Indigeneous industries Attraction of FDI Promotion of clustering

Critical factors of success
Secure, stable financial support Education of the management staff for providing consulting and networking roles

Services
Services:
consumer protection quality management technological accounting access to finance other coaching mentoring training shared office consulting fixed lease marketing 0 20 40 60 80 100

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and operations
Incubation period: Production: 5 years Services: 4,14 years Size: Available average: 1445 sqm Occupied by tenants on avarage: 1273 sqm
Average number of tenants: 11 (min.4 – max.20) Networking: BIOS d.o.o. Osijek Printing and publishing cluster

Management
3-5 persons in the Supervisory Board elected for 4 years Head of the incubator: 70% have Bs.S or higher degree 25% have entrepreneurial background Staff: average 3,31 employees Includes: administrators, receptionist, consultants

Performance outcomes (1)
Program growth and sustainability:
Growth of budgets; space; facilities, tenants; no. of programs Average self financing 43% (min.10%; max.90%)
renting renting cons ulting s ervices cons ulting s ervices s pecial s ervices s pecial s ervices governm ent // local contribution governm ent local contribution grants grants other other

14 14

8 8 6 6 15 15 7 7 8 8 0 0 5 5 10 10 15 15

no.of incubators no.of incubators

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Performance outcomes (2)
Tenants survival and growth:
Survivability Viable/Graduated ratio
average = 81%

Graduation Graduated/Tenants ratio
average = 59%

Tenants growth
Financial statement of tenants, product range; no.of employees; quality assessment

Performance outcomes (3)
Community impact:
Economic: tangible (higher survival rate, new jobs, faster product development, time to market, yet to prove…) Social: intangible (promote trust, collaboration, learning, visibility of the local entrepreneurs) Political: targeted to underdeveloped regions, disadvantageous groups (young, female, high tech)

Effectiveness of management policies and practices
Goals: extent of accomplishment of the stated goals – strong commitment Financing: level of funding – need for more stable financing Operational policies: selection, exit policies; tenants review; alumni organization – still not standardized; first come – first in basis Shared incubator services – regularly monitored; utilization of the services good – marketing, rentals, consulting, training, mentoring

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SWOT – analysis
S organization wide range of services - human resources
- unsufficient -

W space, financing weak cooperation with educational, business sector and professional infrastructure

-

O EU projects cooperation with banks

T economy - changes in institutional support - addiction to donations
-

Further assistance

financial assistance financial assistance consulting consulting educational educational technical technical other other 0 0 2 2 3 3 4 4 6 6 8 8 10 10 12 12 8 8 8 8 9 9

13 13

14 14

no.of incubators no.of incubators

BIOS
Business incubator strategy Structure Performance

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BIOS General information
Business Incubator BIOS Ltd. Osijek www.inkubator.hr land size: 9000 m2, building: 1000m2, 95% of the available space occupied by tenants classical business incubator initiated by Local Authorities and Centre for Entrepreneurship owned by- City of Osijek first tenants- March 2003.

Mission and main purpose
MISSION- to enhance and participate in the development of the local economy, to decrease the unemployment rate in the region and to support creation of the entrepreneurial climate. MAIN PURPOSE- Supporting small and medium entrepreneurship by providing preferential business facilities lease price, providing organizational and business consulting assistance in the most critical phase of business development.

BIOS tenants and projects
In average BIOS has 14 tenants (max 16) Eight businesses left, and five of them are still operational and viable. Projects:
Printing and Publishing Cluster Radio show- "The First Step" "Entrepreneurial notebook" "Student entrepreneurship" Education for ex Croatian soldiers Entrepreneurship research

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Incubator performance
BIOS reached 35% of self sustainability 65% comes from institutional support and donations BIOS would welcome all kind of assistance in order to upgrade and improve the operation and services of incubator: financial, technical and educational BIOS plans to reach sustainability with the construction of additional 2000m2 of business space for technology oriented production- PHARE 2005?

BIOS future

BIOS key elements of success
support of the local community, interest of the target group, clearly stated mission and operation goals, quality of the management – proactivity and engagement directed to the tenants, permanent supervision of the hosted firms, continual education of the management and the tenants, management flexibility, collecting feedback from the tenants about the incubation process and their needs, creating network with other institutions and organizations working on the regional development, as well as the business community.

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Osijek case
University – ICES – education

CENTRE - training

NOA - microfinancing

BIOS - incubating

Links and network

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