Two Microbusiness Incubator Models

As we've been talking to small town community leaders across the country, many have been quick to tell us their great idea to help their local microbusinesses...

“We want to buy an old downtown building… renovate it and turn it into an incubator with co-working spaces, meeting rooms, and retail spaces… turn it into the local entrepreneurship hub.”

We love that idea...in theory. But, does it make sense for small towns? We believe so...but with a slightly different model.

What is an incubator?

Incubators were originally designed for startups - high‑growth, high‑tech ventures. These founders usually need help validating a scalable idea, building a prototype, refining their pitch, and preparing to raise venture capital. Their incubator spaces include co-working space, offices, meeting rooms, lab space, and often a structured program that pushes rapid development and rapid growth.

Microbusinesses, on the other hand, aren’t building apps or raising venture capital. They don't need to learn how to build pitch decks or disrupt industries. They are makers, bakers, crafters, boutique owners, local service providers, food entrepreneurs, and home‑based businesses. They aren't looking to scale. They are trying to make a living while offering something valuable to their local community.

The microbusiness incubator should meet their unique needs: low barrier to entry programs, retail shelf space, real customers, hands‑on learning, confidence, community, mentorship, and a way to test ideas without signing a five‑year lease or buying $10,000 of equipment.

Two Models for Microbusiness Incubation

So, how do we create a microbusiness incubator? What does it need to include? What does that even look like? We could look to the traditional startup model with the large, dedicated building and all the bells and whistles, or we could take a far simpler and far more attainable approach.

Model 1: The Standalone Microbusiness Incubator (The Traditional Approach)

Renovating a downtown building dedicated to entrepreneurship would be amazing for any community. It would be fantastic to have a visible, easy to recognize spot in town where microbusiness owners know they can go to learn how to launch and grow their business. 

This building could hold shared offices or retail spaces, common equipment, meeting rooms, host workshops. A manager or coordinator would be on site to help entrepreneurs and customers alike.

Like I said above, this sounds amazing in theory. But...in practice, it just doesn't make sense for most small towns

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By the time you navigate feasibility studies, board approvals, grant writing, environmental reviews, contractors, change orders, inspections, and build-out… you’re often staring at a 6–7 figure investment and a 2–3 year timeline before the first entrepreneur even walks in the door.

Most small rural towns don’t have the budget, vision, or attention span for that. 

Model 2: The Shared Space Incubator (The SmartStart-Friendly Approach)

This model asks a simple question: Why invest in a multimillion-dollar incubator when Main Street already has entrepreneurs, buildings, and unused space waiting to be activated? 

Instead of spending hundreds of thousands of dollars and years in grant acquisition and construction on a single hub, communities could turn their existing businesses into microbusiness incubators simply by sharing space. 

This could be one shop owner who offers space in her shop for several microbusiness owners to test out their products while educating themselves on business ownership. This could mean shelf space for retail or back office space for service businesses. We’ve seen this work in small towns from tiny Delavan, IL to Great Falls, MT. 

Or you could turn your entire Main Street into an incubator. Think…

A boutique offering local jewelry makers a shelf or display.

A coffee shop featuring a candle maker.

A salon giving a new esthetician a chair.

A home décor store spotlighting the works of local artisans.

This model is fast, low-risk, and incredibly effective. It supports entrepreneurs immediately, adds new energy to downtown, and creates the momentum that small towns need to grow their microbusiness ecosystem. 

Because it’s so simple, this approach can get off the ground quickly - sometimes in days - and it comes with almost no financial risk. It puts microbusiness owners directly in front of customers and sparks collaboration between Main Street businesses. Your veteran business owners can take ownership of the incubator and become mentors. A microbusiness support system like SmartStart could be the education piece.

Using this method you can turn your entire downtown into a hub of entrepreneurship.

Where Growth Can Lead

So, lets say you get have 10–20 entrepreneurs testing products in local shops, success stories, rising foot traffic, collaboration, and a waitlist of people who want space. You are seeing microbusinesses move from the incubator spaces to their own storefronts. Your community suddenly has something it didn’t have before: proof.

When that happens, the traditional incubator model with it’s own dedicated building and staff stops being a dream and becomes a more realistic next step. It becomes an expansion - not a gamble.

The Bottom Line

You don’t need a big building to support small businesses. You need creative thinking, vision, collaboration, and a community of business owners who lift each other up.

Main Street can be the incubator. Shared shelves can be the incubator. Unused corners, spare rooms, and back walls can be the incubator.

Start small. Start now. Start together.