An increasingly popular economic development tool to improve the success rate of new firms is the small business incubator. These are buildings in which a number of new or growing businesses can locate and operate at a much lower overhead cost than in conventional space where market rates prevail. Incubator facilities are characterized by access to shared, centralized services such as clerical and administrative help, receiving and shipping facilities, conference rooms, computers and word processors, and business assistance resources. Incubator facilities are generally targeted toward small firms that may lack the management, technical, and financial ability to survive on their own. As an aid to potential incubator sponsors and developers, this booklet offers guidance in determining the feasibility of a small business incubator. Information is included on doing an incubator market analysis (accessing the level of entrepreneurial activity, analyzing characteristics of the economic base and of large business purchases, determining supply and demand for commercial space, and assessing the small business support network). Guidelines for incubator implementation include information on establishing a formal working group and an appropriate focus, locating and selecting a building, and developing a financial plan. Worksheets are provided for use in analysis. (KC)