It’s common for 80% of small businesses to collapse within the first 5 years. This includes all manner of industries and sectors. For some industries, it’s a lot harder to succeed because of some inherent challenges, which cannot be avoided. You can do all the planning in the world but if you don’t have the right kind of employees in a biochemical company, you won’t make it. It’s a highly specialized and focussed industry, and since it’s a healthcare field, it’s incredibly risky in the day to day running of things. Safety has to be of the utmost priority, employees must remember to stick to very strict practices and an abject understanding of hazard prevention is crucial. Aside from the specific challenges, what other risks are there for biochemical companies to avoid like the plague?
The financial flaws
What many entrepreneurs don’t understand is, how long trials and tests of the latest biochemical products take to create. This can lead to long and lengthy periods of spending, which as you can imagine, is very financially straining on your startup. Making sure that you are utilizing a number of different financial avenues will ensure your survival past the normal period of time when startups collapse.
- Fundraising: whether you’re trying to gather money for a trial period, development phase, or equipment acquiring, you need to remember fundraising is non-stop. Keep going to biochemical dinners and events, where you’ll meet investors of all kinds. You’ll be able to make face to face pitches, gain the trust of some very wealthy people and spread your intentions among biochemical circles.
- Don’t be afraid to give away equity: Some investors will not settle for anything less than equity of your business. If you are desperate you could give majority control away, but you severely limit your control over the business. You can, however, give temporary equity in exchange for funding. Phased buy-back of equity is something many small businesses do. Give away equity in your business until the time you start making a profit above a certain threshold, then buy back your shares, replacing a client’s shares with higher profit percentages.
- Don’t stop: Even if you gain the funding required, you must never stop looking for more funding. The issue is, you may not have equity to give away and the return to the clients might be limited. Even still, this shouldn’t stop you.
Hiring the right people
The healthcare industry is not incestuous. Even though the professions are closely linked, they cannot replace one another. That’s why you must hire the right kind of people for your company. If you are a biochemical company, making drugs for elderly people, only hire healthcare professionals that have experience and the expertise to work with them. Using a company like careasone.com is thus, highly recommended. They are an online jobs board, where you can post your openings to a set group which is in the exact type of talent pool you need. They offer live interviews, via their video software called App-a-minute. The interviews can take place within their platform. Since many people fail to show up to interviews that are outside of their normal commuting limit, this is an excellent and modern way to find the right talent.
They also provide employee onboarding services, which is incredibly useful for startups. The reason being, startups don’t have a lot of funds, to begin with, and creating an onboarding program is time-consuming and involves a decent amount of funding. If you have job-specific training videos, you can upload them to your company profile on the same platform. This allows employees to access your content and become familiar with the standards you expect of them.
Working with manufacturers
To make a strong relationship with a pharmaceutical manufacturer as a biochemical startup, should be simple right? Well, it should be, but it isn’t. Remember, you’re in a healthcare field and when things go wrong, we’re usually dealing with the quality of life of another human being. Hence why manufacturing companies want to know you are on top of your game. Thus, they will want to read your product report before they agree to manufacture anything for you.
The report will need to indicate and include a few things.
- Ingredient list: You must include a full list of all the things you have in your product. Whether it’s a pill, capsule, powder or liquid, you need to give the manufacturer a detailed list of the ingredients as well as the measurements. This might seem obvious, but this is also to protect them from liability claims. They will perform their own research to see if all the ingredients you’re using, are safe and also if the quantities are safe.
- Extrapolated prediction: The manufacturing company will want to know what your prediction is for the increase in demand? This is so the manufacturing company can know if it needs to increase production in a phased manner or just briefly in the occasional growth spurt. Usually, companies are given a ‘minimum requirement’ contract. However, if the demand rises, the contract to make the additional product number can be given to another manufacturer. Hence why you need to indicate your prediction in demand increase.
Among a whole host of other things, your report will need to be detailed in terms of risk assessment and financial growth potential for the manufacturing company.
Don’t be afraid of risk
Risk is inherent to any business. It’s something that you have to learn to live with and thrive under. Risk in the biochemical industry is unique in that, you are largely funneling your money into research and development only. Very rarely will you need large test facilities and offices as most of your work will be lab-based. However, the majority of your financial risk will be with employees and equipment. You need to hire the best employees possible, who can multi-task and not rely on one specialism. This is of course if you aren’t focussing on a niche, as specialist employees always have higher salaries.
The additional risk to your business is, taking too much time between production batches. It’s estimated that close to 40% of drugs will fail to even make it past initial development stages. This is because the results that are predicted are not worth the financial cost and gain. It’s also estimated that around 70% of drugs don’t make it past the secondary and or middle stages of development. It’s usually for similar reasons but it could also be due to the drugs not being as efficient in their roles as current already available drugs.
Under lock and key
Corporate espionage is a very real danger to any company. However, in the biochemical industry, it’s especially sensitive as the formulas for drugs are easy to recreate in any lab around the world. Hence why employee confidentiality is a policy which every startup should invest in and create a tight ship. Loose lips sink ships as they say and your biochemical company must have all its secrets under lock and key.
It may take years to develop a single product, so it’s a constant challenge but you must meet it head-on. Employees should be checked for suspicious activity, make sure they don’t have any hidden cameras, they are not writing things down for their own benefit and they are not privy to inside information.
The biochemical industry is an amazing area of the global economy. You’re helping to save lives and that in itself is worth starting a business. But remember to hire the right people and look for talent in specific industry-focussed areas.