Starting a new business generates excitement, expectations and hope. Not only for the entrepreneur who is taking the initiative and risk, but also for coworkers, friends and family. To some, entrepreneurs are an inspiration. Others, namely those who are risk averse, see launching a new company or technology as an invitation to fail.
The truth is, rarely do first-time founders understand the complexity of starting a new venture. They often don’t take into account all of the hurdles they will face. In the average entrepreneur’s mind, the path to a successful startup consists of recruiting co-founders and team members and maintaining control of their company. After that, they plan to apply for grants and pitch for investors and this magically will provide all of the resources they need. Then, in a few years, they will exit the company with millions of dollars in their pockets.
The romance surrounding entrepreneurship makes this thought process understandable. However, it’s a huge misconception of reality as most don’t have the experience, let alone the whole vision, of building a company on their own. Most of the time, first-time founders find themselves having to do things they do not have experience or expertise doing. Having to shoulder the multiple responsibilities of a new company can disrupt a founder’s true passion: their technology.
If you are an entrepreneur with a good idea and thinking of starting a new venture, please don’t fall into the fantasy of “build it and they will come.” The hurdles to building a successful life sciences business venture are large but not insurmountable. It is my intent with this blog to help you improve your chances of succeeding. Consider these words of wisdom:
- An idea (or a scientific discovery) is not a product, a product is not a business and not all business are viable. Between 70-90% of startups fail.
- Your competitors will defend their market position fiercely.
- Raising money with investors is hard, stressful, and will consume a tremendous amount of your time. You are not the only one asking for capital. Lots of entrepreneurs have their hands out.
- Attracting and retaining talent is getting more and more competitive.
- Financial projections don’t kill companies, bad cash flow management does.
- You will need to learn to listen to other people and most important, how to separate good from bad advice.
- Your ego is your worst enemy.
- 30% or 40% ownership of a successful company is better than 100% of a struggling one.
- And please remember, you don’t know what you don’t know.
You may think these “pearls” don’t apply to you; your venture will surely beat the odds. Here is some additional science-based content from Indiana University Kelley School of Business professors Kim Saxton, Todd Saxton and entrepreneur Michael Cloran, authors of The Titanic Effect—Successfully Navigating the Uncertainties that Sink Most Startups. In the book, the trio details the reason why ventures failure is the result of a series of errors, most of them not obvious, and most important, avoidable if you are aware of them.
Diving a little bit into their content, they separate “hidden depths, issues that you accumulate that are potential hazards for the development of your company, in four different oceans. Each ocean has it owns seas full of Icebergs ready to sink your boat. But, once you understand they exist, it is possible to navigate through them.
- The Human Ocean. Details how people related to the endeavor can create hidden depths. Its seas include founders, investors, advisors, and employees.
- The Marketing Ocean. Shows how customers and competitors can create hazards. Proper segmentation, positioning, and tactics can keep your startup afloat.
- The Technical Ocean. Yes, your technology base for product, service, or software can create hidden depths. Validation, design, and development are the seas in this ocean.
- The Strategy Ocean. Here they show how the overall direction and the interrelations between the three other oceans can play against you. Integration, measurement, and accountability are the elements of these waters.
Life as an entrepreneur is sink or swim. And you have to be mindful of that going in. The first step is to know what you are going to face once you start rowing in startup waters. Build a plan stating where you want to go, why you want to go to that place, does that place want or need what you have to offer, what your skills are, what skills are needed and you don’t have, how much it will cost to get there, what equipment you will need, who your competitors are, and what are you going to do once you get there.
Once you have the road map, find a coach, preferably someone who has already done what you’re planning to do. Your coach will help you. Sometimes this means letting you know that your plan is incomplete and that you have more work to do before you start to navigate. A good coach will challenge you and take you out of your comfort zone over and over.
Once the plan is acceptable (believe me, the plan is never done) it is time to find your teammates. In the book Traction, author Gino Wickman shows that a company needs five basic seats each one with different skill sets in order to operate properly. They are:
- Visionary. This seat is the ideas generator, with problem-solving mind set. It is responsible for product/service innovation and setting the company culture.
- Integrator. This seat manages and keeps everybody accountable. It encompasses profit and losses, planning, and removing obstacles and barriers.
- Sales/Marketing. This seat drives sales and revenue.
- Operations. This seat is responsible for process management, the making of the product or service.
- Finance. This seat handles budgeting, reporting, HR/administration, and office management.
For life sciences companies, I like to add a sixth seat and that’s R&D. These skills sets are critical, and it is very difficult to find someone that can fill all of these roles at the same time.
Now as a founder, you need to know what your seat is. Take your time, be honest with yourself and make your call. No pressure, but remember, having the right person in the right seat is a key element for you company’s success. Once you know your seat, find the other people that will occupy the seats you have left.
Founding, finessing, and scaling a company is a long journey, one full of hazards and learnings. You will need time, patience, and capital to make your dream come true. As challenging as it is, enjoy the ride. For the ones who succeed, you will be rewarded in many ways. For those who hit the icebergs, you still have acquired knowledge and you will start your next endeavor with more wisdom and strength.
The startup ecosystem has different programs that can help entrepreneurs increase the odds of success. One of them is a venture studio such as Boomerang Venture Studio, which is totally focused on assisting entrepreneurs in launching successful companies in the life sciences and health care space. The venture studio concept is becoming increasingly popular, yet more entrepreneurs need to know such a resource exists and is within grasp.