Thinking of Becoming Your Own Boss? Here’s How You Start in 9 Steps
5 min read
Budgets for science and academic research are being cut all around the world and many people are thinking about alternative careers.
Starting your own business is one such alternative that also offers scientists and researchers an opportunity to commercialize their own discoveries and bring them to the market. Funding for small businesses is increasing and biotech is a great industry for hi-tech start-ups.
It should all start with that “Oh, I could make a huge business with this!” moment. To be an entrepreneur is to want change, to want to make something better, faster, cheaper, more beautiful or comfortable. However, if you are going to become a successful entrepreneur, it is very likely that the original idea will not be the reason for it, at least not in its full, original form.
Take Home Message: An idea is important as it will drive your initial train of thoughts and actions, but things that follow below are more important.
TALK ABOUT YOUR IDEA
If you have a brilliant idea, it’s highly likely that there are 10 people in the world thinking about it already (and probably 10 companies selling it in Asia). Don’t worry so much about keeping everything secret: talk to your friends about it and see what they think. And don’t listen to people that tell you “Why don’t you get a serious job instead?” When you are successful these same people will come to you and say “I always knew you’d make it!”
Take Home Message: See what other people have to say as they might give you some great advice and help you think out of the box.
PUT THE NUMBERS IN THE SPREADSHEET
Once your idea is more than just a thought, start putting numbers together. Open a spreadsheet and create a tab for each milestone in the process (e.g. screenshots/drawings, prototype, webpage/design, release, 6 months of sales …). For each of these milestones put down all the costs and any potential revenue you can think of. You should focus on the first year and use data which is as accurate as possible and do the same with the estimates for years 2 and 3, but there is no need for a longer plan at this point. Create at least two scenarios, one optimistic (best case) and one pessimistic (worst case). As a rule of thumb, there should be more cumulative revenue than costs after 3 years in both scenarios; if not, try to think of different business models.
Take Home Message: Even the best ideas come down to costs and revenues. Make sure your plan has a positive outcome.
ARE YOU THE OWNER OF INTELLECTUAL PROPERTY?
If you came to your idea through your research work, the organization you are working for probably has some intellectual property rights over it. If that’s the case there are two general models you can use to gain full rights to commercialize the idea; either the organization gains shares in your future company (spin-off) or you sign a licensing agreement with the organization (spin-out). Talk to your organization’s technology transfer office, as they are usually very helpful.
Take Home Message: Make sure that you have the rights for the idea. It’s better to deal with this early on.
DON’T BE AFRAID TO PIVOT
Usually there is a phase of disappointment after talking to a few potential customers. Don’t worry, that happens to everyone. Make changes to the parts of your hypotheses that deal with business models, pricing, licensing, perfect customers, etc. It should all be based on feedback you’ve received this far. Once you’ve pivoted, start calling again and repeat this process until customers start saying yes. It’s a scientific process of creating a hypothesis and testing it.
Take Home Message: There are many different ways to pack your idea into a product. Find the one that is most suitable for your target customers.
Starting your own business can be very expensive and before you’ve made some sales you’ll have problems convincing banks or investors to give you money. However, you’d be surprised how many costs you can avoid at this stage if you just put your mind to it. A lot of software is free and openly available online, there are things you can borrow from your colleagues and you can ask friends for favors. Try to tie some costs to revenue as royalties and ask potential customers for payment in advance for some extra discount.
Take Home Message: Instead of trying to find money early on, try to find ways to generate first sales with as few costs as possible.
It’s very difficult these days to do things alone, especially in science as there is always a need for multidisciplinary work. Asking people to join your company is also one way to reduce costs. But be careful! Don’t ask people you like when everything is great, but people you want to have around when things go south as you might have to stay with them for years to come. You’ll also have to decide how to share the ownership of the company. There are many ways to do this, but the best practice is to divide it according to the commitments of team members over the next 1-3 years and not on the basis of what some people are currently bringing in. Sharing early costs proportionally is also a good idea.
Take Home Message: It’s easier to succeed as a team. 10% of something is more than 100% of nothing.
FAILING IS PART OF SUCCESS
It’s a cliché, but don’t be afraid of failure: it’s just a matter of getting back on the horse. Failing is inevitable and when it happens, the most important thing is to react fast. One smart way of dealing with failure is to talk to mentors, experienced entrepreneurs who have failed many times and they will be able to warn you about upcoming traps and point you in the right direction. Business is about reacting to change and survival of the fittest. If everything went according to plan, businesses wouldn’t need managers.
Take Home Message: Failing is not the reason to quit. The only reason to quit is when it stops being fun.