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by Daniel Gloade on September 1, 2014

I was reading about Industry Specific Virtual Business Incubators (IS-VBI).  They are similar to Franchise Agreements.  I believe that they are a great innovation and a way to the future.  Let me explain.

In this case, let us say that the IS-VBI deals with print shops.  They do research as to what business conditions are necessary to sustain a print shop (number of people, demographics, types of local businesses etc.).  They divide a given area (eg. provinces) into commercial territories.   Each territory can sustain one print shop.  The IS-VBI gives once licence per territory so that there is no conflict of interest.

The IS-VBI provides guidelines to a commercial real estate agent about a suitable location within the territory. There are guidelines for the shop’s physical needs (square feet, amount of electricity, parking) but also what is needed from the surrounding area (near parking, on a two-way street, within X number of feet of the commercial core of the city, etc.)

The IS-VBI provides training to the Entrepreneur as to how to run the print shop.  It also provides the software, the equipment and universal advertising that that be customized for each individual shop.

The IS-VBI provides conferences, webinars and other guidance to improve sales.  It provides tech support for all software and equipment and industry-knowledgeable consultants for struggling entrepreneurs.

Unlike Franchises, Entrepreneurs using an IS-VB I can call the business whatever he or she likes and can operate the business as he or she wishes.

The Entrepreneur pays the IS-VBI a start-up fee and then pays a percentage of future profits.  This ensures that the IS-VBI has “skin in the game” so that it continues to provide ongoing support and it gives the IS-VBI a financial incentive to ensure that the initial start-up advice is accurate.

  1. This type of business start-up has several advantages:
  2. It provides expertise that is unavailable otherwise;
  3. Reduced costs to entrepreneur because he or she is not buying the right to use a “name brand”
  4. The entrepreneur can customize and innovate;
  5. There is greater customer control and feedback with this method’s flexibility.
  6. The risk of failure is reduced which may be reflected by lower priced financing at start-up.

By way of disclosure, I am not part of any IS-VBI and I am not trying to sell anything.  I just thought this innovation was interesting.


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