In the last year, I have been working on starting a company. The company is developing a very scientific/technical product, which requires a lot of help from grants, investors, professors at top institutions, and even industry leaders who we have been honored to receive help from. In the midst of working around these individuals, we have had to prepare significant documentation and plan for every inch of the next few years — this included studying the problem, the end consumer, quantifying the competitive advantage, capital needs, getting letters from potential consumers, strategic partners, investors and credible advisors, commercialization strategy and timeline, intellectual property, short and long-term impacts, scalability, research and development, testing, arguing the credibility of the team to accomplish these goals, background research as to why we believe it should work, potential revenue projections, pricing, market research… I mean, you name it, and we did it.
It may look like this can take someone around 3–4 months to do, but a really good analyzation of what we were getting into (not just writing it, but bringing it to life) takes a company like ours roughly a year to plan for (specifically because we are going into research as well). Bringing it to life means getting actual customers to write letters showing that they are interested, getting strategic partners to commit to investment if you reach certain milestones so that you can have a more successful commercialization, building a strong board and team before you begin, getting any letters from companies or people you wish to license technology from, writing up the details of your patent claims, etc. Some companies may take half the time or so, but since I spent so much time going through this, I figured I’d share some lessons I’ve learned along the way that may help future entrepreneurs/founders.
- Determine what type of business you are starting: There are two main reasons that people start businesses — either there is a real problem and you aim to solve it OR because you want to have more control over your life, passions and finances. I’m going to focus on those who want to solve a real problem since that’s the aim for my company. The reason I think that solving a real problem is more beneficial both from a societal/broader impacts perspective and as a business woman/man is because when there is a real problem that your company solves, you don’t have to try as hard to sell your product, to fund your business or to recruit a strong and credible team. It’s also easier to develop projections and actually meet them (since the problem sells for itself). And to add, you feel great when you actually solve it!
- Have an initial target market: Before you do anything, you should have a size-able market in which you know your product/service will sell in. The best companies are platforms and products/services that can solve problems in many markets, but having one market that you have deeply studied, built relationships with, established credibility with, and possibly even developed *potential* strategic partnerships in will help you have a successful launch. This is the market you will focus on early in your development and establishment, and this is the main market that you want to validate. Having at least one market that you’ve validated and plan to develop your company alongside will also help reassure you that you aren’t building your product/service for nothing… it also allows you conduct realistic market research so you can project the next few years of revenue, making sure your company will be able to financially stay afloat early on.
- Quantify the problem: Recognizing a problem is one thing, quantifying it is another. You can find hundreds of problems in any market, but the real question is, what is that problem costing people? If the alternative solutions are free, even if they take a few extra minutes to use, perhaps your solution won’t make someone pay to replace to current state of the art. However, if you can come up with a solution that is cheaper as well as solving the problem, you have quite a competitive advantage that ALSO solves the problem. Now you can quantify this advantage, and state that the difference in price is what this problem is costing people. That is quite a strong selling point.
- Novelty/IP: If you plan to develop a global product/service that solves a real problem, you want to make sure you have some sort of intellectual property. When we were navigating this aspect of our work, we had to speak with lawyers, inventors of technologies, and do a ton of googling. The first thing we did was define exactly what our product would entail — the intended use, the design, the technology that makes it work, and the aspects of the technology that we invented and developed. We made sure to look up what currently existed, to look at the claims and patents that were filed for the previous inventions, to speak with a lawyer about what we can at least file a provisional application for, to outline the claims of our product in details and make sure to update the applications when new ideas were introduced, and we had to speak with inventors of technologies that we needed to make our product come to life (for licensing purposes). This allowed us to protect ourselves early on and make sure we could operate in the market, protect ourselves against competitors, and license anything that we needed to develop the technology before investing any money into it.
- The team: Many founders like to do things alone, and I highly suggest otherwise. Doing everything alone is hard. I don’t necessarily recommend giving away equity early or to bring on employees; however, I do recommend putting together a strong board that you can pay as consultants to help inform your decisions. If you truly have a good idea, you wan to attract talented and credible advisors who can help you avoid risks and save time in your efforts. You also want someone who has industry-relevant relationships (strategic partners, potential consumers, angel investors and venture capitalists) and is willing to introduce you to them when you are ready. I can’t express how much easier it is to convince people that your business has promise when you have these credible people, or even better actual consumers/partners, supporting your efforts. This support can come in the form of a letter, resources, capital, a commitment to help you enter the market, etc. Having the right team (not just advisors but even the right investors) can help position you to be successful, whereas doing it alone, you may not have access to these. Don’t bring people on just because they WANT to join… bring them on because they have something that can contribute to an important outcome/milestone for your business. They should help move the needle forward.
- Milestones: Defining the milestones that will help you get from idea to launch will help you realize what you will need in order to actually start your business. For example, when I looked ahead and realized that our product will need FDA approval, I took the time to look into what that would actually take. In doing so, I realize that in order to gain FDA approval, the strategy and communication with the FDA should happen much earlier than when we are actually ready to test the product. In fact, I realized I needed to call them *today* to begin discussing our aims and to build a relationship so they can stay informed on what is being developed, how it is being developed, what the intended use of the product is, etc. I realized that in developing the product early on (even pre-prototyping), many things like the design, materials used, development processes, etc., should be considered and documented. To add, I realized that getting approval would require a significant amount of capital that would need to be raised and that I would need to begin building strong relationships with investors months and even years in advance to build the right chemistry and trust. I would have never done these, or even looked into this, had I not planned ahead and set FDA testing and approval as a milestone. Do your work and know what it will realistically and actually take to bring your idea to the market, and be ready to start working on milestones set for year 2 and 3 as early as *today*.