My last blog listed some preliminary steps: 1) pick a technology area, 2) obtain the appropriate IP by filing your own patents or licensing others, 3) start the formalization process by incorporating, creating a business plan and a corporate presentation, and 4) go on the hunt for money to fund the business. Actually, these are not exclusive to Biotechnology but rather general steps to most any new business. You have decided to take the plunge or maybe you are getting close.
First item to consider is YOU: 1) Are you a person that can find the positives in all situations and try to move forward?, 2) Can you keep your enthusiasm and stick to a business when the going gets difficult?, 3) Can you organize tasks and ensure proper and timely work flow?, 4) Can you attract and motivate staff to join in and work hard?, and 5) Can you manage finances to ensure you get the most efficient use of your funds? You need these attributes and yes; a little training or education helps too. That is why in this article, I would like to go over a few of the characteristics of the entrepreneur founder/CEO along with a few real life examples.
I have never met someone I thought was a failure as a business founder, but I have seen many business that have failed. Sometimes you can do everything by the book, but for reasons you could not have predicted the business failed. This is a common problem faced by biotech companies that conduct clinical trials and need FDA approvals. I know the founders of a biotech company that raised more than $300MM and spent several years developing a product. The company completed Phase 3 clinical trials (the last step in the development). On analysis of the data, the product turned out to have toxicity issues that were not seen in any of prior studies. You guessed it, $300MM spent and the company no longer exists. Management executed well and did nothing wrong, but the product did not live up to expectations. This is fairly common. Analyze trading histories of public biotech, pharma, or medical device company stocks. They rise and fall around announcements of clinical data. Can you keep your head on correctly, stay focused and and make important decisions? You may need to.
Having a successful business takes work and requires juggling a number of balls at the sometime. One of the differences between success and failure is luck! Your company needs to have enough money, and you need to retain your enthusiasm in order to keep going. Stick to your plan, change the plan if it may improve the situation, but try to not give up in the difficult times. Some of the best management teams have found ways to continue to reinvent their company and sell a new story to keep alive. Take a look at the history of Centocor for example. The company had a major clinical failure in the early 1990s and many thought the company would go under. The management team developed alternate plans, executed on them. Then their luck break came, they got a buyout offer from J&J and were acquired for a large sum of money. Management did not give up and they turned a bad situation to a good one. The team managed their finances, cut costs, kept the remaining staff motivated, and convinced investors to give it another go “WITH THEM”. Could you do this?
A friend of mine sold his hedge fund in the year 2000 just before the market fall off making a large sum of money. His comment to me was “I would rather be lucky than good!” Yes you have to plan and execute well, but there are many factors that contribute to your business success of failure. Having a number of balls in the air or strategies running in parallel can help capitalize on your “lucky break” when you get it. You do need to recognize it as well, so stay alert.
This actually happened with the founder of a company specializing in production of peptides. A number of years ago I sat in amazement listening to his story. He described his business as being near deaths door. He had spent all of his personal and company money keeping his business alive. One evening, he finally decided he had to close the company’s doors and let everyone go the next day. That evening, he got a call for an extremely large order. As he was telling me the story, his yearly income was $8MM. He later sold the business for a large sum of money. Do you have the ability to stick it out as long as possible? You may need to.
These stories relay a few simple thoughts; 1) you are not a failure for trying even if your company is not a success, 2) you must have determination, 3) you must stay upbeat and seek new ways to solve issues as they arise, 4) you need to be organized and be able to motivate your team, and 5) you need to be able to convince investors your business will make them money. Hard to do if you are down and depressed, I know I can’t do it then. Can you stay positive and focused on executing the business of your company in difficult times?
Over the last 5 years I have been a mentor in a local venture fair as well as having worked with a wide range of early and mid-stage companies and a not-for-profit foundation. I have had the privilege of working with founders with various education backgrounds, some old and some young. Their education backgrounds were varied. It has been a pleasure to see a number of these companies continue and stick to their plan. Just this year I spoke with several of the founders on seeing them in different conferences. Each had identified sources of cash to fund their companies and they were making progress. One of the founders sold all of his possessions and borrowed as much as he could to keep the company alive. He continued working for no salary and moved his family into rental space. When I saw him at the conference, it was a real pleasure hearing he raised capital and was trying to figure how much in taxes he would pay this year. His company is succeeding and growing. He did not give up. I hope he makes it! Do you have the strength to keep going in difficult times?
There are many technical skills you will need to learn. Those you do not have you will fix by hiring someone to help within your new business. But the ability to keep on going after taking a beating is something internal. Sticking with the business is essential. You really need to be aware and still on ongoing business when your “luck break” arrives.
If you do not have the ability to keep your enthusiasm and stick to a game plan in difficult times, creating your own company may not be for you.
Taffy Williams is the author of: Think Agile: How Smart Entrepreneurs Adapt in Order to Succeed to via Amazon