scientific business plan

Research And Development Business Plan Template & Guidebook

Are you interested in starting your own research and development company but unsure of where to start? We can help with our sample and how-to manual for business plans for research and development. You can simply construct a business plan that details every facet of your enterprise, from market analysis and financial predictions to marketing plans and operational tactics, with the help of our comprehensive template and professional advice. Our step-by-step process makes it simple to start a prosperous research and development company, enabling you to realize your dream. With the help of our tried-and-true template and direction, you can confidently start the process of creating a successful research and development company. Start now to join the ranks of prosperous R&D business owners!

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• How to Start a Profitable Research And Development Business [11 Steps]
• 25 Catchy Research And Development Business Names:
• List of the Best Marketing Ideas For Your Research And Development Business:

How to Write a Research And Development Business Plan in 7 Steps:

1. describe the purpose of your research and development business..

The first step to writing your business plan is to describe the purpose of your research and development business. This includes describing why you are starting this type of business, and what problems it will solve for customers. This is a quick way to get your mind thinking about the customers’ problems. It also helps you identify what makes your business different from others in its industry.

It also helps to include a vision statement so that readers can understand what type of company you want to build.

Here is an example of a purpose mission statement for a research and development business:

Our mission at the Research and Development company is to drive innovation and advance the state of the art in our field. We are committed to conducting rigorous and cutting-edge research, and to developing new technologies and products that have the potential to make a positive impact on the world. We strive to foster a collaborative and creative environment where our researchers can thrive and make meaningful contributions. We are dedicated to responsible and ethical practices, and to sharing our knowledge and findings with the broader scientific community. Through our passion for discovery and our pursuit of excellence, we aim to be a leader in research and development.

2. Products & Services Offered by Your Research And Development Business.

The next step is to outline your products and services for your research and development business. 

When you think about the products and services that you offer, it's helpful to ask yourself the following questions:

• What is my business?
• What are the products and/or services that I offer?
• Why am I offering these particular products and/or services?
• How do I differentiate myself from competitors with similar offerings?
• How will I market my products and services?

You may want to do a comparison of your business plan against those of other competitors in the area, or even with online reviews. This way, you can find out what people like about them and what they don’t like, so that you can either improve upon their offerings or avoid doing so altogether.

3. Build a Creative Marketing Stratgey.

If you don't have a marketing plan for your research and development business, it's time to write one. Your marketing plan should be part of your business plan and be a roadmap to your goals. 

A good marketing plan for your research and development business includes the following elements:

Target market

• Who is your target market?
• What do these customers have in common?
• How many of them are there?
• How can you best reach them with your message or product?

Customer base 

• Who are your current customers? 
• Where did they come from (i.e., referrals)?
• How can their experience with your research and development business help make them repeat customers, consumers, visitors, subscribers, or advocates for other people in their network or industry who might also benefit from using this service, product, or brand?

Product or service description

• How does it work, what features does it have, and what are its benefits?
• Can anyone use this product or service regardless of age or gender?
• Can anyone visually see themselves using this product or service?
• How will they feel when they do so? If so, how long will the feeling last after purchasing (or trying) the product/service for the first time?

Competitive analysis

• Which companies are competing with yours today (and why)? 
• Which ones may enter into competition with yours tomorrow if they find out about it now through word-of-mouth advertising; social media networks; friends' recommendations; etc.)
• What specific advantages does each competitor offer over yours currently?

Marketing channels

• Which marketing channel do you intend to leverage to attract new customers?
• What is your estimated marketing budget needed?
• What is the projected cost to acquire a new customer?
• How many of your customers do you instead will return?

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4. Write Your Operational Plan.

Next, you'll need to build your operational plan. This section describes the type of business you'll be running, and includes the steps involved in your operations. 

In it, you should list:

• The equipment and facilities needed
• Who will be involved in the business (employees, contractors)
• Financial requirements for each step
• Milestones & KPIs
• Location of your business
• Zoning & permits required for the business

What equipment, supplies, or permits are needed to run a research and development business?

Research and development businesses provide services to help organizations create, develop, and improve products, processes, and systems. The equipment and supplies needed to run a research and development business can vary depending on the specific services offered and the preferences of the business, but may include:

• Laboratory equipment, such as microscopes, centrifuges, and beakers, to conduct experiments and tests
• Computer equipment, such as computers, laptops, and tablets, to manage data and communicate with clients
• Software, such as data analysis and modeling programs, to analyze and interpret results
• Protective equipment, such as gloves, goggles, and lab coats, to protect against potential hazards
• Supplies, such as chemicals, reagents, and consumables, to conduct experiments and tests

In addition to the equipment and supplies needed to run a research and development business, it is important to obtain any necessary permits and licenses that may be required by local regulations. These permits and licenses may vary depending on the location of the business and the specific services offered.

In summary, the equipment, supplies, and permits needed to run a research and development business can include laboratory equipment, computer equipment, software, protective equipment, and supplies, as well as any necessary licenses and permits.

5. Management & Organization of Your Research And Development Business.

The second part of your research and development business plan is to develop a management and organization section.

This section will cover all of the following:

• How many employees you need in order to run your research and development business. This should include the roles they will play (for example, one person may be responsible for managing administrative duties while another might be in charge of customer service).
• The structure of your management team. The higher-ups like yourself should be able to delegate tasks through lower-level managers who are directly responsible for their given department (inventory and sales, etc.).
• How you’re going to make sure that everyone on board is doing their job well. You’ll want check-ins with employees regularly so they have time to ask questions or voice concerns if needed; this also gives you time to offer support where necessary while staying informed on how things are going within individual departments too!

6. Research And Development Business Startup Expenses & Captial Needed.

This section should be broken down by month and year. If you are still in the planning stage of your business, it may be helpful to estimate how much money will be needed each month until you reach profitability.

Typically, expenses for your business can be broken into a few basic categories:

Startup Costs

Startup costs are typically the first expenses you will incur when beginning an enterprise. These include legal fees, accounting expenses, and other costs associated with getting your business off the ground. The amount of money needed to start a research and development business varies based on many different variables, but below are a few different types of startup costs for a research and development business.

Running & Operating Costs

Running costs refer to ongoing expenses related directly with operating your business over time like electricity bills or salaries paid out each month. These types of expenses will vary greatly depending on multiple variables such as location, team size, utility costs, etc.

Marketing & Sales Expenses

You should include any costs associated with marketing and sales, such as advertising and promotions, website design or maintenance. Also, consider any additional expenses that may be incurred if you decide to launch a new product or service line. For example, if your research and development business has an existing website that needs an upgrade in order to sell more products or services, then this should be listed here.

7. Financial Plan & Projections

A financial plan is an important part of any business plan, as it outlines how the business will generate revenue and profit, and how it will use that profit to grow and sustain itself. To devise a financial plan for your research and development business, you will need to consider a number of factors, including your start-up costs, operating costs, projected revenue, and expenses. 

Here are some steps you can follow to devise a financial plan for your research and development business plan:

• Determine your start-up costs: This will include the cost of purchasing or leasing the space where you will operate your business, as well as the cost of buying or leasing any equipment or supplies that you need to start the business.
• Estimate your operating costs: Operating costs will include utilities, such as electricity, gas, and water, as well as labor costs for employees, if any, and the cost of purchasing any materials or supplies that you will need to run your business.
• Project your revenue: To project your revenue, you will need to consider the number of customers you expect to have and the average amount they will spend on each visit. You can use this information to estimate how much money you will make from selling your products or services.
• Estimate your expenses: In addition to your operating costs, you will need to consider other expenses, such as insurance, marketing, and maintenance. You will also need to set aside money for taxes and other fees.
• Create a budget: Once you have estimated your start-up costs, operating costs, revenue, and expenses, you can use this information to create a budget for your business. This will help you to see how much money you will need to start the business, and how much profit you can expect to make.
• Develop a plan for using your profit: Finally, you will need to decide how you will use your profit to grow and sustain your business. This might include investing in new equipment, expanding the business, or saving for a rainy day.

Frequently Asked Questions About Research And Development Business Plans:

Why do you need a business plan for a research and development business.

A business plan is a document that outlines the goals and objectives of a business, as well as the strategies and tactics that will be used to achieve those goals. It is important to have a business plan for your research and development business because it helps to focus the efforts of the company, communicate the business's goals and objectives to potential investors, and provide a roadmap for the business to follow. Additionally, a business plan can be used to help secure funding from investors or lenders, who will want to see that the business has a solid plan in place before they provide funding.

How to write a business plan for your research and development business?)

To build a business plan for your research and development business, start by researching your industry, competitors, and target market. Use this information to define your business's goals and objectives, as well as the strategies and tactics that you will use to achieve those goals. Next, create a financial plan that outlines your projected income, expenses, and profit. This should include a projected income statement, cash flow statement, and balance sheet. Once you have all of this information, you can use it to create a comprehensive business plan that outlines the goals and objectives of your business, as well as the strategies and tactics that you will use to achieve those goals. A well-written research and development business plan contains the following sections: Purpose, Products & Services, Marketing Plan (including Marketing Strategy), Operations/Management Plan (including Operations/Management Strategy), Financial Plan (including Financial Forecasts), and Appendixes.

Can you write a research and development business plan yourself?

Yes, you can write a research and development business plan yourself. Writing a business plan is a valuable exercise that can help you clarify your business idea, identify potential challenges and opportunities, and develop a roadmap for success. While there are many resources and templates available to help you write a business plan, the process of creating one is ultimately up to you.

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I'm Nick, co-founder of newfoundr.com, dedicated to helping aspiring entrepreneurs succeed. As a small business owner with over five years of experience, I have garnered valuable knowledge and insights across a diverse range of industries. My passion for entrepreneurship drives me to share my expertise with aspiring entrepreneurs, empowering them to turn their business dreams into reality.

Through meticulous research and firsthand experience, I uncover the essential steps, software, tools, and costs associated with launching and maintaining a successful business. By demystifying the complexities of entrepreneurship, I provide the guidance and support needed for others to embark on their journey with confidence.

From assessing market viability and formulating business plans to selecting the right technology and navigating the financial landscape, I am dedicated to helping fellow entrepreneurs overcome challenges and unlock their full potential. As a steadfast advocate for small business success, my mission is to pave the way for a new generation of innovative and driven entrepreneurs who are ready to make their mark on the world.

How to Write a Business Plan for Your Biotech Startup

Last Updated on 

August 9, 2022

Do you always need a written business plan? Keeping track of every part of your business in your head is an impossible task, and the components of cash flow–sales, costs, expenses, assets, liabilities, capital, and profits–are much easier to understand and manage when laid out in an organized way.

Not only that, having everything documented will help show others that you have a good idea on your hands, one worthy of investment—whether that be labor or capital.

There are many different types of business plans, however, each type generally falls under one of two categories: traditional or lean startup. Whichever you choose, writing a business plan can give you a roadmap, guiding you through each stage of starting and managing your company, and can help convince people to invest in or lend to you.

That said, does a business plan guarantee success? Sadly, it does not. If all you needed to succeed was a business plan, then everyone with a business plan would be successful. Nonetheless, it is an excellent exercise and decision-making tool, and will help you flesh out a solid business strategy. In fact, scientific studies have shown that many successful businesses planned ahead.

In this article, we’ll review the traditional business plan format used to outline the company’s mission statement, structure, products or services, growth strategy, and more—information that will all be necessary if you’re going to secure outside investment, such as investor funding and business loans. Furthermore, we’ll provide a few examples of business plan templates we stand behind.

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How Does a Business Plan Help?

If you’e starting a small business, your business plan can be a highly useful tool to help you run your business. It can be the blueprint for how you structure, run, and grow your company.

They’re also an excellent way to flesh out key elements of your company, such as capital needs, product-to-market fit, competition, marketing plans, and potential to make a profit. Documenting all this will give you a much better grasp on your chances for success.

Most importantly, traditional business plans are an essential part to securing funding or bringing on new business partners. By providing in-depth detail on how you plan to operate your business, you make it that much more attractive to prospective investors or lenders.

This is because any investor is more likely to put their money and resources into someone who has made the effort to think out and document how the business will run—the business owner is more likely to be viewed as committed, thoughtful, and strategic.

Furthermore, creating a business plan lets you spot opportunities and challenges as you grow. This is due, in large part, to the fact that business plans have become less static.

(It used to be the case that many business plans were long, formal, and static documents that did not change much.)

Nowadays, many business owners revisit and revise their business plan as the company grows, as they gather new and different information and experience, and as the market changes. This allows for more flexibility and strategic planning and pivoting.

Now, some people may see writing a business plan as a chore or necessary “evil” required to attract financing or investors.

It may be seen as a chore, but it should also be seen as a low-cost—if not free—way to explore the viability of your potential business and avoid costly mistakes. At the end of the day, it’s not just about funding, it’s about the process.

By writing a plan out, you show not only yourself but those around you that you have a good idea on your hands, one worthy of time, effort, and money.

What Does Your Business Plan Need to Include?

Traditional business plans, or standard business plans, are highly detailed and provide a comprehensive look at the inner workings of your business.

These types of plans are necessary when requesting funding from an prospective investor or lender. They can be dozens of pages long, and usually take more time to write than other types of business plans, such as a lean startup plan.

Lean startup plans are typically shorter, focusing on key elements from a high-level. They are useful tools for measuring performance regularly and tracking your financials and milestones against what you projected so you can respond to opportunities and react to challenges quickly.

This type of business plan is faster to write, but doesn’t always provide enough information to potential investors or lenders. Nonetheless, it is a great option for startups looking to move quickly and decisively.

When writing a traditional business plan, the outline should include these topics:

Executive summary

Company description.

• Company structure & management
• Products or services
• Market analysis
• Sales & marketing plan
• Funding request
• Financial plan & projections

The order in which the topics are included is not incredibly important. The level of detail is what investors are looking at. Let’s briefly review each section.

This is one of the most important sections of your business plan, as many investors will make a decision to invest in your business based on this summary.

Often, these investors won’t read the rest of the business plan unless your executive summary is convincing enough. It shouldn’t be longer than one page, and should provide a high-level overview of your business idea that persuades an investor to continue reading.

Your executive summary should include every section described below, but condensed to include the most important information so a busy reviewer can get the idea quickly.

This is where you’ll go into detail about your business concept and company, explaining what you do, why you do it, and the problems you plan to solve.

You should include information regarding your business’s structure, goals and objectives, as well as the consumers or businesses you plan on serving. You can also include your cultural philosophy, principles, and ideals.

All this should be written to explain why your business is a good investment bet.

Company Structure & Management

If you plan on raising money from investors, they will want to know how you structure your business and who runs it. This means determining how your business is structured legally, and including that information in your business plan.

State whether or not you are or plan to incorporate as a C-corporation, S-corporation, or limited liability company (LLC), and show who will be running each part of the business and describe how each member will contribute to the company..

Documenting the legal structure and management team in your business plan regardless of fundraising strategies will ultimately be helpful, as you will have all your business entity information recorded for any future needs.

Products or Services

Explain what you plan to sell and why. How will it benefit your customers or the businesses you plan to serve? In the life sciences sector, sharing how you plan to handle intellectual property is incredibly important.

If you’re performing research and development, you’ll want to include comprehensive details.

Market Analysis

Many investors will want to know an analysis of your target market, the size and growth of that market, and why you’re targeting it.

Market research—specifically, researching your competitors—should give you a good idea of what your target industry and market looks like. It will show you what other businesses are doing and whether or not it’s working.

This type of competitive analysis will also help you understand their strengths and weaknesses, and how you can position yourself.

Looking for themes and trends can help you get an idea of what successful companies do, why they do it, and how you can improve on it. Including this information in your business plan will help investors see how your business fits into the target market, and whether or not you have any competitive advantages.

Sales & Marketing Plans

Creating these two documents is extremely important because it will define how exactly you will market to customers, as well as how you will convince them to purchase the product or service you’re offering.

While sales strategies and marketing strategies are somewhat different, they are often talked about together, as sales and marketing departments work closely to achieve business goals.

Although there is no single way to approach creating a marketing strategy, there are some best practices that many entrepreneurs in various industries typically follow. These best practices include:

Include your marketing and sales strategy in your business plan by outlining your current marketing plan. Explain what your ideal customer demographics are and why, show how your strategy fits that actual or potential customer, and include your value propositions. Incorporate how you plan to attract and retain their business as well.

As well, this section should also describe how you’ll actually make a sale. Refer back to this section when describing your financial projections.

Funding Requests

If you’re looking for outside investments to fund or finance your company, you’ll need to include a funding request section. If you’re not planning to ask, you can skip this section entirely.

Although investors are an excellent resource (large cash injections, wide network to leverage), there are other ways to fund your business without using investors.

Use this section to include important information on your business’s funding needs, as well as future financial plans and projections.

Include how much funding you may need and when you’ll need it, whether you prefer equity or debt, the terms you’d like, and the length of time this request will cover. Furthermore, describe how you’ll use your funds.

Specify whether it’s for hiring and salaries, equipment and supplies, or bills that need to be paid. (It could be for all of these.)

Include a description of your future financial plans. It should include any loan repayment schedules and plans to sell the business. You’ll also want to include your exit strategy , letting investors know how they will be able to exit the deal should they wish.

An exit strategy can be a number of things, from initial public offering (IPO) or merger and acquisition (M&A) to a management buyout.  

Financial Plan & Projections

The financial plan section is used to illustrate your projected financial position, as well as a number of financial statements.

It can be used to supplement your funding request and should show your company’s stability.

You’ll want to include the most important views of your financials, to showcase your business’s financial health. If you have income statements , balance sheets , and cash flow statements you can provide, make sure you do.

Depending on your audience, it may also be helpful to provide a financial forecast for the next five years. Include projected income statements, balance sheets, cash flow statements, and capital expenditure budgets, and describe your projected cash-flow statement.

It can identify gaps or negative cash flow, helping you adjust your operations accordingly. Lastly, match these projections with your requested funding so investors understand why you’re requesting that specific amount.

Business Plan Template Examples

You can use a business plan template to write an effective business plan. These templates typically provide step-by-step instructions, or enough detail about each section, to help guide you through the process.

We’ve gone ahead and collected a few resources we believe in, and have provided them here for you:

• USBA Business Plan Template
• Bplans Business Plan Template for Small Business and Entrepreneurs
• Shopify Free Business Plan Template
• My Own Business Free Business Plan Template
• Score Business Plan Template for Startup Businesses

In conclusion

As tedious as it may sound, writing a great business plan can help convince others that you have a viable business idea on your hands.

With an excellent business plan, you’ll likely have an easier time getting people to work with you, whether as a fellow founder, an employee, or as an investor.

Lastly, even if you’re not actively seeking out funding, it’s an excellent exercise that will leave you understanding your business inside and out.

These articles are designed to be informational and do not represent legal advice. Before making any legal or financial business decisions, you should consult with a professional who can advise you based on your individual situation.

Don't bother with copy and paste.

Get this complete sample business plan as a free text document.

Laboratory Business Plan

Start your own laboratory business plan

Fargo Medical Laboratories

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">.

Fargo Medical Laboratories (FML) is a start-up company committed to providing the most convenient, friendliest blood testing service to the physicians of the Main Street Professional Building and the surrounding area. Fargo Medical Laboratories has been founded as a single member L.L.C. registered in North Dakota by Dave Gigsted. Fargo Medical Laboratories will quickly gain market share serving the Fargo medical community.

Objectives Fargo Medical Laboratories has established three significant objectives to pursue. The first is securing 60% of the physicians in the Main Street Professional Building as customers. The second objective is to develop 20% of their revenue from physicians who practice in the nearby vicinity. The third objective is the desire to reach profitability with 12 months. This is especially important since Fargo Medical Laboratories will be using bank debt would like to see a positive ROI fairly soon.

Market Fargo Medical Laboratories has identified two market segments they will serve. First is the large number of physicians that have a practice in the Main Street Professional Building, where Fargo Medical Laboratories will lease space. This customer segment has 128 potential customers with a growth rate of 3%. The second group is physicians that have medical practices in other nearby facilities. There are 115 potential customers in this segment with a 5% annual growth rate.

Services Fargo Medical Laboratories offers a comprehensive battery of blood tests for physician’s patients. Several tests will be done in-house including:

• CBC- A complete test of red blood cell count, white blood count, and a platelet count. Each of these three can be ordered individually if needed.
• Blood sugar test- Frequently requested for diabetics or possible diabetics.
• Electrolyte testing- For patients who are on diuretics and there is concern that they may be losing too many of their electrolytes.
• Creatine- Often used to check kidney functioning or to determine if there is heart or kidney problems.

Other types of blood analysis can be done with the specimen sent to a central lab for testing.

Management Fargo Medical Laboratories has been founded and will be led by Dave Gigsted. Dave received an undergraduate degree in small business management.  After graduation Dave got his laboratory technician certification and went to work for a laboratory. He was eventually elevated to lab manager, staying with the lab for five years.

Dave then moved with his wife to Fargo where he worked for a year in a lab. Surveying the business environment with the thought of opening up his own blood laboratory, he recognized the great need for a lab in the Main Street Professional Building, and developed a plan and secured financing for the venture.

1.1 Objectives

• To gain 60% of the Professional Building’s blood testing work.
• Develop 20% of the revenues from offices outside the Professional Building.
• Reach profitability within 12 months.

1.2 Mission

It is Fargo Medical Laboratories’ mission to serve local physicians with fast, accurate, private, reasonably priced blood testing services. Fargo Medical Laboratories exists to exceed all of their customer’s expectations. 

1.3 Keys to Success

• Lease space in the Main Street Professional Building, the location of our primary target market.
• Set up a strong contract with a large local laboratory to outsource the more difficult tests, ensuring fast service and good rates.
• Follow a strict regime of accounting controls to help ensure profitability.

Company Summary company overview ) is an overview of the most important points about your company—your history, management team, location, mission statement and legal structure.">

Fargo Medical Laboratories has been formed as an L.L.C., registered in North Dakota. Fargo Medical Laboratories is a single member entity owned by Dave Gigsted. Fargo Medical Laboratories will lease office space in the Main Street Professional Building. This building has over 120 offices, 93 of which are leased by medical professionals. Of the 93, a high percentage of those are primary care physicians or general practitioners. There currently is no laboratory within this professional building, and doctors are forced to send their patients across town to have blood drawn and analyzed.  

2.1 Company Ownership

The owner of Fargo Medical Laboratories is Dave Gigsted. Dave has received bank debt financing and will have a long term loan to pay off.

2.2 Start-up Summary

Fargo Medical Laboratories will require the following equipment for the start up of the business:

• Waiting room furniture
• Two computers with QuickBooks Pro, Microsoft Office, and insurance billing software, sharing a laser printer and a broadband Internet connection.
• Five portable ice coolers.
• Four chairs for the blood drawing rooms.
• Latex gloves, syringes, needles.
• Autoanalyzer.
• Complete blood testing machine.
• Centrifuge.
• Refrigerator/freezer unit.

Fargo Medical Laboratories offers routine blood tests on-site and more complex blood tests outsourced to a central lab. FML will be located inside the Main Street Professional Building which is home to numerous physicians. Currently, when the doctors need blood work done, they have to send their patients to an off-site laboratory, a 15 minute drive from the doctor’s office.

Once Fargo Medical Laboratories is up an running the doctors will be able to send their patients to FML’s offices, within the building. For simple tests Fargo Medical Laboratories will do the analysis in-house, for more complex blood work the specimens will be sent to an outsourced central laboratory.

The advantages to the physicians and their patients include: convenience (blood can be drawn within the same building), and faster service (there is no driving or transportation time to get the blood drawn), and for the most commonly requested tests the analysis occurs in-house guaranteeing results within 24 hours.

Fargo Medical Laboratories will offer the following tests in-house:

• Red blood cell count- $15
• White blood cell count- $15
• CBC (a more complete test that counts platelets in addition to white and red blood cell counts)- $30
• Blood sugar (suited for diabetics or people who are trying to determine if they have a blood sugar problem)- $15
• Electrolytes (for people on diuretics)- $20
• Creatine (tests for heart or kidney difficulties)- $15

If more extensive blood work is needed, blood with be drawn in our offices and sent to a central laboratory. Fargo Medical Laboratories will use a courier service that transports the samples in an ice cooler. The specimens are tested within 24-36 hours of receipt at the central lab and the results are returned to FML via encrypted email.

Market Analysis Summary how to do a market analysis for your business plan.">

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4.1 Market Segmentation

Fargo Medical Laboratories will provide services geared to two distinct customer segments.

• Main Street Professional Building physicians – This segment is made up of physicians that practice medicine in offices that are located within the Main Street Professional Building. There is a wide range of specialties represented, but predominantly primary care and general practitioners. Most types of doctors need blood work done on their patients with some regularity. The Main Street physicians have always just had to send their patients to another area of town to have blood drawn and analyzed. This is not convenient for their patients and is time consuming, so physicians in the building would generally be quite happy if there were a blood laboratory within the building.
• Nearby physicians – These physicians practice near the Main Street Professional Building. These doctors also have to send their patients out to a different location to have blood work done. Fargo Medical Laboratories’ services would be attractive to this group because FML would be located closer to their offices than the blood lab currently used. The advantage to this group of physicians would also be convenience.

4.2 Target Market Segment Strategy

It is fairly intuitive as to why physicians within the Main Street Professional Building will be targeted, they are the customers who would have the most demand for Fargo Medical Laboratories’ services. Almost all types of doctors regularly have patients who need blood testing done. Assuming that the lab accepts most of the common types of medical insurance, the lab is generally chosen by being the most convenient for the patient since they are the ones who must travel to the lab to have the blood drawn.

For physicians who work within the Main Street Professional Building, Fargo Medical Laboratories would be the most convenient laboratory, being located within the same building as the physician’s offices. No longer would the doctor have to ask the patient to travel to have blood drawn. For the second target market, the nearby physicians, the reasoning is similar, convenience for the patients. While it is not quite as convenient as sending the patient to another office within the same building, Fargo Medical Laboratories would still be closer than the current lab.

4.3 Service Business Analysis

Blood laboratories all provide similar services. Most accept a wide range of insurance plans. Some do the tests in-house, others will outsource the tests. Where the tests are completed is not really that significant. To be competitive the labs need to have the tests completed within a couple of days at the most. This means it all comes down to convenience. Labs serve the physicians and doctors that are closest in terms of geographic proximity. In most cities/towns, you will see labs placed throughout the city serving the different clusters of physicians.

Fargo is different, or at least Main Street is. Main Street Professional Building has for years been trying to have a laboratory locate within the building to serve the large population of doctors. The trouble has been that South Dakota is experiencing an exodus of people. As college students have completed school, they have left the state. Fargo has had difficulty attracting qualified technical people, in this instance phlebotomists (blood drawing technicians) and chemical analyzers. This is the explanation for the absence of a blood laboratory in the Main Street Professional Building. The need has existed, just no one has “stepped up to the plate”, at least not until now.

4.3.1 Competition and Buying Patterns

In Fargo, there is a total of seven blood drawing laboratories. Of the seven, two only serve their specific clients and do not do work for other physicians. Of the remaining five, three offer basic tests done on-site, like Fargo Medical Laboratories, and the remaining two are full service laboratories that do work complex for the other labs.

The closest competitor to Fargo Medical Laboratories is Mednet, located four miles away. This is the facility that 95% of the physicians in the Main Street Professional Building currently use. It is used by these physicians because of convenience, it WAS the closest laboratory. As mentioned earlier, blood testing service providers are chosen based on convenience, how close they are to the patients. Hours of operation (i.e. longer hours/evening hours) are insignificant since physicians are only available during traditional daytime office hours.

Strategy and Implementation Summary

Fargo Medical Laboratories will leverage their competitive edge of a convenient location within a large medical facility to help it quickly gain market share. FML has developed a strategic marketing plan that will use several different methods to develop local awareness of itself and the benefits offered. Fargo Medical Laboratories has also developed a sales strategy to help turn the qualified leads into clients by emphasizing the significant benefits that physicians can offer their patients by sending them to Fargo Medical Laboratories. Sections 5.1-5.3 offers more detail regarding the competitive edge, marketing and sales strategies.

5.1 Competitive Edge

Fargo Medical Laboratories’ competitive edge is convenience. In the blood analysis industry it is hard to differentiate yourself from competitors assuming a few basic levels of care and performance:

• You accept several popular insurance plans, otherwise many patients could not use your service.
• You provide fast analysis, tests are completed and reported within 48-60 hours at the most.
• You provide accurate, precise results.

If these basic, foundational levels of performance are met, then you are competitive. This is why convenience is so important and why it is an effective way of distinguishing one lab from another. The physician is looking for a way to get a blood sample from a patient that is easiest from the patient’s perspective.

Other factors include maintaining a high level of customer satisfaction. If these were not met it would not “kill the deal” but would decrease sales. Here are some important customer service elements that all employees of Fargo Medical Laboratories will emphasize:

• The receptionists and phlebotomists are friendly.
• A satisfactory specimen is secured on the first try.
• Patient discomfort is minimized.
• The phlebotomist was able to personify the laboratory and promote a positive impression between the lab and the patient.

These customer service factors will certainly be taught to all employees to ensure the most positive patient experience.

5.2 Marketing Strategy

Fargo Medical Laboratories will undertake a marketing strategy employing three means of communicating its new service offering:

• Direct mail . Local physicians will receive a flyer announcing the opening of Fargo Medical Laboratories and detailing the services offered. A list of physicians is easily obtained through the local licensing board.
• Personal introductions to Main Street Professional Building tenants. A representative from Fargo Medical Laboratories will visit all of the medical offices within the building as a way of introducing FML to the doctors. This will provide FML with an opportunity to develop a personal relationship with doctors, something that is useful and valuable for service providers within a licensed industry.
• Advertisements . Ads will be placed in the regional flyer that all licensed physicians receive as members of their local chapter of the American Medical Association (AMA). 

5.3 Sales Strategy

Fargo Medical Laboratories’ sales strategy will be used to convert a qualified lead into a client by emphasizing three important services:

• Most forms of insurance accepted – This is important because the vast number of patients that will have their blood tested will not be self-paying, they will be using insurance. FML would not be a viable alternative if they did not accept popular insurance plans.
• Quick turnaround – A doctor’s diagnosis and treatment is often based on the results of the test. It is not reasonable to expect the patient to wait an excessive period of time for the results. Fargo Medical Laboratories will deliver results fast.
• Convenience – There is no other alternative that is more convenient than sending the patients to an office within the building.

5.3.1 Sales Forecast

Fargo Medical Laboratories had developed a conservative sales forecast for the three years of this business plan. A conservative forecast was chosen because the venture is being funded by bank debt, which is fairly risk-averse, and therefore, it is in Fargo Medical Laboratories’ best interests if they are able to meet the monthly sales goals. If the forecast was more aggressive it would be far easier for FML to miss sales targets and find themselves hurting financially due to inaccurate assumptions and forecasts. This would then cast doubt on the survival of the business.

5.4 Milestones

Fargo Medical Laboratories has identified several milestones for the organization to achieve. The achievement of the milestones will be instrumental in the success of the the venture. By enumerating the milestones it provides the organization with clear goals that everyone can focus their energy on.

Management Summary management summary will include information about who's on your team and why they're the right people for the job, as well as your future hiring plans.">

Dave Gigsted is the founder and manager of Fargo Medical Laboratories. Dave received his undergraduate degree in Small Business Management from the University of Illinois. While in college, Dave worked at a bicycle shop, initially as a mechanic, moving up to assistant manager by the time he graduated. This provided him with hands-on business experience to combine with his business degree. 

Upon graduation, Dave began his job search, including opportunities in the medical profession. His mother and aunt are both registered nurses who shared with Dave that, at that time in Illinois, lab technicians were in short supply. So Dave enrolled in an eight-month program through the community college for a degree in Laboratory Technology. After completing this degree, Dave went to work at a laboratory. Within two years, he had been promoted to Lab Manager. Dave found this work challenging, enjoyed the medical aspect and worked hard in the business end of the job.

After five years, Dave and his wife moved to Fargo for a job opportunity for his wife. He immediately began working at a laboratory and worked there for a year. During this time Dave began looking into different business opportunities, recognizing that he had now developed sufficient business skills to operate his own business. Dave found there was a high concentration of physicians in a professional building with no nearby lab. In talking with people, he learned the physicians were looking for a lab to relocate to the building but but had been unable to find any. Armed with this information, Dave began to draft a business plan confident that with a solid strategy and comprehensive plan he would be able to find financing and begin his new venture.  

6.1 Personnel Plan

• Dave will handle business development, sales, marketing, accounting, courier, customer service, and assorted lab tech work.
• Two phlebotomists on staff at any one time to draw blood
• One Lab technician will be responsible for doing onsite blood tests. This will be a part-time position. Dave will be able to fill in as needed in this capacity

Financial Plan investor-ready personnel plan .">

The following sections will outline important financial information.

7.1 Important Assumptions

The following table includes important financial assumptions.

7.2 Break-even Analysis

The Break-even Analysis indicates what will be needed in monthly revenue to reach the break even point.

7.3 Business Ratios

The following chart provides business ratios for Fargo Medical Laboratories as well as for the blood-related health industry, SIC Code 8099.01. Fargo Medical Laboratories’ ratios are consistent with the industry, with the exception of liabilities because it is a start-up organization that is relying on financing for its start-up costs.

7.4 Projected Profit and Loss

The following table will show annual projected profit and loss. A net loss will occur the first year, with well developed profit in year two and year three.

7.5 Projected Cash Flow

The following chart and table describe the projected cash flow. Because we will have a large starting balance because of our initial bank loan, our cash flow should be strong enough to cover our expenses as the business becomes established. The only concern will be to monitor the accounts receivable balances, since the majority of our revenue will be in receivables.

7.6 Projected Balance Sheet

The following table will indicate the projected balance sheet. We will achieve positive Net Worth in the second and third years.

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Open Access

Ten simple rules for building a successful science start-up

* E-mail: [email protected] (TR); [email protected] (CYE)

Affiliation Maximon AG, Zug, Switzerland

Affiliation Laboratory of Extracellular Matrix Regeneration, Institute of Translational Medicine, Department of Health Sciences and Technology, Swiss Federal Institute of Technology (ETH Zürich), Schwerzenbach, Switzerland

• Tobias Reichmuth, 
• Collin Y. Ewald

Published: April 7, 2022

• https://doi.org/10.1371/journal.pcbi.1009982
• Reader Comments

Citation: Reichmuth T, Ewald CY (2022) Ten simple rules for building a successful science start-up. PLoS Comput Biol 18(4): e1009982. https://doi.org/10.1371/journal.pcbi.1009982

Copyright: © 2022 Reichmuth, Ewald. This is an open access article distributed under the terms of the Creative Commons Attribution License , which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.

Funding: CYE is funded by the Swiss National Science Foundation SNF P3 Project 190072. The funders had no role in study design, data collection and analysis, decision to publish, or preparation of the manuscript.

Competing interests: I have read the journal’s policy and the authors of this manuscript have the following competing interests:TR is a co-founder and shareholder of Maximon AG. CYE is a co-founder and shareholder of Avea Life AG, and is on the Scientific Advisory Board of Maximon AG.

Certain rules do apply when building a start-up company. The core principles of these rules are fundamental across industries, including academia. The following 10 rules guide academic researchers and business-trained entrepreneurs who want to take a leap of faith to adopt the recent advances in sciences for commercialization. These rules provide an entry point and raise challenges to be thought about for a starting entrepreneur. We believe that these rules apply to any innovation-based start-up and help prioritize the most impactful tasks. Understanding these rules will help the founding team, investors, and other stakeholders to launch a successful start-up.

Introduction

Each start-up addresses a specific problem to which the solution is of value to the customer. While building a company can be fun and rewarding, at each step in developing this solution, there are decisions to be made that have consequences that either lead to failure or success. Some mistakes made early in this journey can be fatal and are hard to correct. Therefore, a founder must think about many issues to mitigate potential pitfalls. The complexity, the different constraints, the dynamic landscape of this journey, and practical step-by-step how-to advice are beyond this 10 simple rule format. They are captured in several excellent books [ 1 – 4 ] written to address many obstacles on this journey, which are referred to in the specific rules. However, while there is no one-size-fits-all advice, the rules introduced in this paper are general and apply to most founders.

There are several important topics for academic founders that are relevant and must be addressed before founding a science-based company:

• What are the university’s constraints for a start-up led by a student, postdoc, or faculty? Some universities allow 20% of the employee’s time to take on an operational role in a start-up for some time, while others might not be accommodating for extra activities.
• If you stay as a faculty, how do you manage conflict of interests? Are you allowed to be a board member of the company?
• Have you filed a patent application? Usually, the IP or patent stays at the university and is licensed out. Have you talked to your tech transfer office about the licensing terms? Do you get exclusive rights to your patent? What are the licensing fees? Or do you want to keep your knowledge as a trade secret to be sold to your company? If so, did you disclose everything to your tech transfer office?
• Do you have the freedom to operate? Is there a patent on a procedure that would block you from building your product or commercialization?
• For e-commerce or software-based companies, do you distribute your software under an open-source license, or do you want/need to license it?
• As an academic, do you understand the business aspects, and are you familiar with the start-up culture?
• Are you aware of legal company structures and equity dilution versus capital raised?

To address these questions, universities provide courses and practical workshops for students. Several online courses cover specific details and technical hurdles to transferring technology or knowledge from academia to a start-up. Beneficial are classes on how to write a business plan or develop and pitch an idea, and we encourage researchers to take up such offers.

With this 10 simple rules paper, we take a step back and provide an overview of challenges known by serial entrepreneurs, venture capitalists, and investors that are, in our view, essential but likely would not have been considered by an academically trained person. The 10 rules are not meant as a step-by-step guide, and they are not exhaustive. Although we start with the most common misconceptions, the listed order of the 10 rules does not necessarily constitute relevance. A limitation of our proposed rules is that since we aimed to capture the core principles that would apply to a broad range of company settings, they do not include several specific and fundamental issues that arise, e.g., for biotech versus e-commerce start-ups. Thus, the rules are more conceptual and abstract but central for innovation-driven start-ups. In each rule, we briefly provide more specific issues, questions, and advice for the founders to be aware of and overcome potential challenges. As Louis Pasteur once pointed out, “… chance favors only the prepared mind” [ 5 ].

Rule 1: The team is more important than the idea

Some words to start with: This rule might seem counterintuitive for a scientist. An idea could be a novel hypothesis to explain a set of observations and then use this idea to determine the underlying mechanism(s). Here, by an idea, we refer to an invention or technology, service or product, or some sort of IP. As an innovation-driven entrepreneur, you aim to commercialize your invention. Innovation can be defined as invention multiplied by commercialization [ 1 ]. If you have an invention but zero commercialization, the end product is zero. Similarly, there will be no end product if you have no invention but commercialization. Thus, to bring your idea to the market, you need a highly effective team to develop your innovation into a product wanted by your customers.

Given that you have secured unique technical knowledge either as patents (own IP or exclusive rights) or as trade secrets, building a start-up is not a straightforward exercise. It needs constant adaptation, sometimes pivoting from the original business plan. This asks for a great deal of flexibility from the founders: Original assumptions may be changed, new tasks and responsibilities may arise, and the duties and priorities of the team members can change. Due to the initial budget constraints—a reality for pretty much all start-ups—tasks cannot be delegated but must be taken on by the founders. Therefore, the founding team must represent a diversified set of qualifications, not limited to scientific know-how, but also business know-how, sales spirit, manager qualities, and industry knowledge. Based on the authors’ experience, the only thing that can be delegated is the legal aspect. It is essential to have legal expertise available; however, a start-up budget cannot typically finance an in-house lawyer. Moreover, lawyers might be too much of a devil’s advocate. A founding team needs to focus on why things can work and not why they might not.

One key challenge is that the mindset of technical versus business founders is entirely different [ 3 ]. A scientist is trained to share his/her discoveries in peer-reviewed journals, drive innovation, improve technology, and work on novel and unique aspects of a given problem. By contrast, the business driver tries to keep the research focused on the commercialization of the core technology [ 3 ] or does not invest too much time in research but follows his/her gut feeling or copies from other business models. The value system and ethics of scientists and business drivers often are different. Generalizing, one can say that scientists care about what their peers think—i.e., the impact of their latest discovery. By contrast, business drivers care about bringing the technology to the market to make money. Thus, frictions in mixed founder teams can stem from the clash of 2 cultures. If founders have not experienced the 2 different worlds, it becomes crucial to understand the motive and thinking of the other “point of view.” Proper conversations and frequent communications are vital.

The founders often work long hours and spend a lot of time together: It is, therefore, vital that team members embrace different viewpoints and respect each other. Similar to a marriage, it will need compromises, and not so different from marriage, it also might not work out. In comparison, this should be avoided by carefully selecting your cofounders preparing for such a scenario. Like a marriage agreement, which protects the partnering individuals and potential offspring, a partnership or shareholders’ agreement to safeguard the company’s interests is a must (here, we suggest consulting a start-up experienced law firm). In this context, it is vital to avoid a potential deadlock situation: Should the founding team consist of only 2 founders, a 50/50 shareholding might represent a danger for the company. Therefore, we advise defining clear rules on decision finding or avoiding the 50/50 shareholding situation.

The next critical point for forming a founding team is the individual founder’s long-term motivation: Why are you building a company? Is a fast exit the goal or rather the formation of a market leader over the next 10 to 20 years? Do you want to solve a problem for society or the planet, or is making money your main driving force? Whatever it is, the team members must be aligned with the time horizon when they embark on their venture.

In summary, it is easy to understand that building a founding team is no trivial task. The following parameters are therefore key when building a great founding team:

• Heterogenous background: Team members should complement each other and bring all needed skills together. A theory coined by Rei Inamoto (AKQA) [ 6 ] posits that for a successful science start-up, you need the “3H” team-building strategy for founders: a hipster, a hacker, and a hustler [ 7 ]. The hipster—the chief marketing officer (CMO)—is the creative genius who adopts the technology to make it cool and appealing (i.e., covers design and user experience). The hacker or nerd—the chief technology officer (CTO)—is the brain behind the technology and creating the actual product (i.e., covers technology engineering and developing). The hustler—the chief executive officer (CEO)—moves the project forward, makes sure to hold the course with the vision, builds awareness and a network, is key to selling the product, and, of course, raises the necessary funds (i.e., covers finances, marketing, and business). Note for academics. Usually, science-based start-ups are founded by PhD students at the university, consisting of the researchers involved in the science and the professor, who developed the technology and generated the IP. Although, as an intelligent scientist, you can learn all about running a business, the business mindset will not come naturally to you, like learning a new language as an adult. Thus, a team consisting of only scientists might fail without an entrepreneur with profound business training. Furthermore, it is essential to learn how the business mindset approaches the same problems to prevent miscommunication.
• Homogenous motivation: Team members should have a similar long-term reason for building the company and, more importantly, share the same vision and time horizon.
• Partnership or shareholders’ agreement: While founding team members must get along well, it is necessary to have a partnership or shareholders’ agreement in place, safeguarding the company’s interests.
• A 50/50 shareholding should be avoided, or clear decision-finding rules must be defined upfront in case of a deadlock.

Thus, a great team can succeed with a mediocre business idea, while a mediocre team will fail even with a great business idea.

Rule 2: Hire slow, fire fast

It is hard to sack people. This is even harder if they have become friends and given their best efforts (which was not good enough). How can this be avoided, and why does it have to be done fast if the situation arises?

Hiring the right talent is key to the success of any company, but even more so for a start-up: In a start-up setting, you simply don’t have enough time to work with the wrong talent. There should be no redundancies, and every team member must work independently. A team is performing only and its weakest member [ 8 ]. As a founder, it is critical for your company’s success to spend enough time recruiting the right talent.

Even if you did invest a lot of time in recruiting the right talent, inevitably, at some point, some team members will not live up to their tasks. As the company grows, responsibilities grow. A team member who might have been a perfect fit in leading a 3-person team might lose the oversight when managing 30 team members. It is then crucial to act fast: Either you find a new and suitable position for this person or you must say “goodbye.”

In academia, this is a familiar situation: One of the most common beginner mistakes as a newly appointed group leader is to ignore the red flags indicating that the PhD student or postdoc is not up to the challenge [ 9 ]. After providing support and help, it is hard to let people go, mainly since such decisions are based on a few indicators, like the decline in performance and increased stress levels. But acting fast is vital. Stressed-out lab members will negatively affect and stress out other lab members (i.e., like a dominant-negative mutation) and bring down the entire team’s mood, optimism, performance, and drive.

Similarly, an entrepreneur must follow his/her gut feeling: If there are signs that a team member is not up to the task, then this is probably the case. Do not wait to resolve this situation. You will not do this person a favor by keeping him/her longer in this position or the organization—he/she will do better in a new place tailored to his/her skills. Hence, the wrong person for the job will slow the company down, and time is of the essence in a start-up environment. In short, hire slow, fire fast.

Rule 3: It costs more and takes longer

Anyone who has ever planned and taken on a science project will undoubtedly experience that it always takes longer than planned. No matter how elegant, simple, and straightforward the well thought through research grant proposal looks on paper, breaking new research grounds is more complicated in reality. Similar to a research proposal, writing a business plan is an excellent exercise for founders. Next to being a persuading tool in getting team members and investors on board, it helps to understand dependencies, set priorities, and provide a rough idea of the resources needed to build the company. However, compared to a research proposal, the complexity of the moving parts in a business plan is significantly higher, and, therefore, the capital needed is more difficult to establish.

Most companies fail not because the idea is inherently bad but because they run out of funds [ 3 ]. Having enough capital is therefore critical to overcoming the “Valley of Death” (i.e., from the initial capital to generating revenues [ 10 ]) and becoming a successful market leader.

As a founder, you aim to give away as few shares as possible while at the same time securing the necessary capital to build the company. Two aspects are of importance:

• Various financing rounds are the norm. It is unnecessary to secure all the financing up to break even on day 1, as this would dilute the founders too much. Instead, it is advisable to split the capital needs based on the company’s current stage. When milestones are reached, the company’s valuation can be increased, and additional capital can be raised at a minor dilution.
• At the same time, the founding team should not be distracted by constant fundraising but instead should focus on product development. It makes sense to raise enough capital (i.e., more than you think is needed) to deal with delays in the future.

Balancing these 2 aspects—the wish for a minimal dilution and the need for sufficient financing—is not an easy exercise. Do not raise too much money in the beginning. However, the following has universal truth as a guiding rule for seed rounds: It costs more and takes longer. We, therefore, suggest raising double the amount you think is needed—at least in your first seeding round. Furthermore, it is unlikely that things work the first time perfectly, so set your timeline to have at least 12 to 18 months of buffer time that is financially secure for each milestone.

Rule 4: A unique business idea is not required

Many founders believe that a start-up company can only be successful if the business idea is unique. This misconception is hard to understand as a scientist, where uniqueness and novelty are key for scientific success. Of course, for patenting your technology, it has to be nonobvious to prior knowledge [ 11 ]. You need unique technical knowledge either as patents (own IP or exclusive rights) or as trade secrets to set your science start-up apart from competitors (i.e., IP is central for ensuring competitive advantage). Furthermore, your idea needs to meet the real-win-worth (R-W-W) criteria [ 12 ]: Is it real? Can we win? Is it worth doing? However, the uniqueness of the business idea is less crucial. Peter Thiel classified start-ups into 2 groups: from 0 to 1 (creating something new) or from 1 to n (adding more of something familiar) [ 2 ]. Most successful companies were seldom the first ones in the market (e.g., Google was not the first search engine, Tesla was not the first electric car producer, and Apple Macintosh was not the first personal computer). The first company introducing a new service or product must pave the way: It takes a certain effort to explain to the general audience that a new solution for a (maybe not even yet known) problem exists. Surfing the wave of a newly emerging market that just started to grow might be the easier way to succeed. Often very successful companies are copycats from abroad: a business idea that works in the United States of America or Japan might work in Europe. Copying a business idea represents, therefore, risk reduction. If you copy a business idea in the same markets as your competitors are already active in, this market either needs to grow fast or you need to have a better approach to serve the customers’ needs. That said, it might be easier to find investors for a venture that is based on an already successful business idea from another market. From that perspective, the competition allows for a certain validation of a business idea.

Rule 5: Better share than stealth

Many founders think that their business idea is unique and nothing short of ingenious. They, therefore, might think that talking about their business idea is risky: The idea might be copied or, even worse, stolen by an evil and, of course, financially powerful conglomerate. With this in mind, they do not talk about their business idea, and if they do, they ask to sign a nondisclosure agreement (NDA) firsthand. They forego many potential opportunities with this: Nobody is aware of what the founders are working on and cannot offer advice. Maybe other teams have worked on the business idea and found it impossible to succeed for structural reasons? Perhaps the founder’s network could provide connections to much sought-after team members or investors?

No professional investor will sign an NDA before reaching a general understanding of the business idea (it would simply constrict an investor’s future activities too much). In general, it is highly unlikely that another entrepreneur has (a) the know-how, (b) the time, and (c) the resources to copy (steal) a business idea. More likely, such a person would want to join the venture or at least offer critical feedback that might help improve the business idea. Therefore, we advise you to talk about your business idea with as many people as possible and execute it quickly. You will get support from many unexpected sides, and your business idea will be sharpened and optimized on the way. As in science, discussing the “killer” experiment with your peers to disproof your hypothesis, it is important to identify this weak spot that could collapse your idea, like a house of cards. Hence, if you fail, fail fast. Moreover, as you strive to derisk your technology in the early stages of commercialization, bouncing back your business ideas with others helps to derisk and improve your path forward with your business idea.

In practice, you have 2 pitch decks: a confidential and a nonconfidential version. The nonconfidential pitch deck states the importance of the problem and how you are able to solve it. This pitch deck indicates the market and customer you will address and covers the conceptual idea without any technical secret but highlights your competitive advantage. With the confidential pitch deck that you share under an NDA, you will dive more into the nitty-gritty of your proposed idea/solution and can share data. Make sure you know your audience to adjust these pitch decks targeted to the audience interest/expertise (e.g., more technical versus financial).

Rule 6: Focus, focus, focus (on time to market)

Start-up entrepreneurs usually are short of everything: time, money, and personal resources. It is, therefore, of existential importance to generate returns as early as possible. In other words, it is essential to reduce the “time to market,” i.e., the time span between the foundation of a company and its first turnover generated by making its product available to customers. This can be reached by one elementary exercise: focus.

Similar to your success in science that depends on your publication output, i.e., the “publish or perish” principle, a founder team should have only one focus: how to bring the product to the market or customer—fast. This is hard to internalize by researchers who do research for the sake of research [ 3 ]. It is crucial to focus only on the research necessary to generate the pilot [ 3 ], i.e., no overengineering is needed. The general path for technology-driven ideas is first to have the proof-of-concept in the form of a prototype (i.e., the technology works in the lab), then transfer the technology from lab equipment to commercial equipment (i.e., the pilot). Hence, “start with the end in mind” [ 13 ] and then work yourself backward to outline the most critical steps required for the shortest path to develop your idea into the pilot, derisk the technology, develop up-scaling and manufacturing capabilities, and bring it to the market. For a biotech or pharmaceutical start-up developing drug candidates (either derived from living organisms or on a chemical basis, respectively), your customer is likely to be a bigger pharma company. Your goal is to minimize the time it takes to develop your drug candidates to Phase I or II clinical trials. The same principle applies: FOCUS on pushing your candidate through your drug development pipeline and presenting a so-called minimal viable product (MVP).

As explained in Rule 3 above, it is essential not to be distracted by constant fundraising. Neither should too much time be invested in participating in business plan contests—you are not successful by winning awards, but by generating revenues! This also means that many other topics must be pushed back: The company’s brand name is not worth spending weeks on. As long as the name has no negative connotations, you can name, e.g., a computer company after a fruit and be successful with it. Moreover, neither should too much time be spent on logos and corporate identity nor on the furnishing of your office. The focus for the first 2 to 3 years is the product or service, which also must not be overengineered. The MVP is what you should bring to market fast. Aim for the 80/20, the Pareto principle [ 14 ]. Identify the 20% of activities that result in 80% of the desired outcome [ 15 ]. Once you know what to focus on, such as how to get the minimum viable product, set short deadlines to execute the plan according to Parkinson’s law [ 15 ]. Based on the customers’ reactions, you can then improve the product and enhance your design and other features.

Rule 7: Customers do not tell you—you need to analyze their needs

Market research is generally a good idea; however, you cannot expect your future customers to tell you how your product should look or how it should perform. As Henry Ford is famously quoted for, “If I had asked people what they wanted, they would have said faster horses” [ 16 ]. As an entrepreneur, it is not necessarily a must to do extensive surveys, but rather to identify problems and needs and quickly come up with an MVP and test it in the market [ 4 ]. Analyzing the issues people suffer from can provide excellent insights into the potential market size for your product. As for developing a drug, you need to know which disease you address and which indication to target. It is essential to segment the market and identify the targeted customer groups for your solution. Getting feedback from these initially identified customers on whether a solution is wanted and of value is essential [ 1 ]. However, once you have defined your product, it does make sense to ask customers for their opinion. This ensures that you do not (over) engineer your product away from market needs while fulfilling the regulatory standards. The situation is not different in a research-based start-up: The general audience is typically not informed well enough to bring suggestions for new products and services to the table.

Rule 8: No dead equity

Founders feel great upon securing the first financing round for a company. People entrusting capital at risk to you and allowing you to build a company is an important milestone. Mainly, those early investors are recruited from the entrepreneur’s existing network. These investors qualify as the “Triple-F-Investors,” i.e., Family, Friends, and Fools. It is questionable, though, whether this type of investor is helpful or—at least—not a burden for the development of your company.

Triple-F-Investors typically do not know much about your industry. Most of them will be quietly proud of what you achieve, but they cannot help you build the company. However, while they might be quietly observing initially, there is a risk that they start to be protective about their investment once the company generates the first successes. Later, these investors can begin to show more interest in your daily business than would be healthy. While they do not understand your industry and the company’s needs, they want to have a say over the strategy or even the operational management of the start-up because they fear for their now much more valuable investment. This can lead to problems and can slow down the firm’s development.

It is, therefore, essential to invest some time in the structure of your capitalization (cap) table. A cap table is a spreadsheet showing the distribution of ownership of the company, the equity dilution, and the value of equity for each financing round. It tracks the company’s equity ownership by the owners, founders, and investors. A note of caution for academic founders to manage expectations: Usually, investors rebalance your proposed cap table. Furthermore, you should be asking the following: What qualifications must investors bring along with their money? Is the investor helpful to envision your company’s future? At what stage is which experience and network useful? Will at least some investors from your seed round be able to invest in future rounds? If no existing investor is investing in future rounds, it might be hard to raise additional capital from new investors. Thus, you grant your investors the chance to invest in something that potentially becomes big—while you should be thankful that they entrust their money to you, you can also be asking for other relevant input.

As a general rule, avoid “dead equity,” never grant board seats to not savvy minority investors, and make sure that your early investors can both invest in future rounds and help the company with their experience and network.

Rule 9: Modesty comes later

Modesty is a good trait. However, while it is noble to be modest once you are successful, it is not the first thing you should think about when building a company. Academics are usually cautious with their statements and avoid hyperbole of their scientific findings or idea. You need to learn how to sell your idea. Do not shy away from telling the world why you are not just different but superior. Immediately say what your unique twist is. Investors and customers alike must hear about you: being present in the relevant media, being talked about, etc. These are essential assets when building a company. A steady stream of good news will achieve this. Having good news can prove difficult when you create a start-up, which also involves suffering from setbacks. However, there is always something positive to talk about: outstanding new team members, a successful product test, an article about your company, or the last team event you have organized. Make sure people hear of you and never hold back with positive news. If you have to communicate something positive, do it now! There is no reason to wait, and it does not make sense to gather good news and share them all at once. It is much more effective to repeatedly have good news, which will anchor you in people’s memory. While there is the familiar quotation “fake it till you make it,” you should never communicate something that is not true or nonfact based. However, it is helpful to adopt the most positive wording to describe a new achievement in the early days of your company.

Rule 10: Credibility via advisory board

Why should customers (and investors) trust you that you really can build the product you plan to? And are you sustainable for the long term? It might be difficult for customers—especially for business-to-business (B2B) customers—to build a business relationship with you if they cannot be sure that you are still around some months from now. How to overcome this?

One effective and not too costly way is to install a top-notch advisory board. For a biotech start-up, ask Nobel prize winners, national science academy members, previously successful veteran entrepreneurs, and professors providing core expertise to complement your team. There is a ranking of scientific advisory board members, probably in the order, as we had listed them above. For a business advisory board, ask seasoned industry veterans to support you publicly by appearing on your homepage and by giving their advice to you. While this can seriously improve your company, it also sends a strong signal to your customers and investors. If this highly regarded professional has joined your advisory board, then certainly there must be something worthwhile about your company.

Usually, it is not difficult to recruit a great advisory board—successful industry veterans might like the idea of supporting a dynamic start-up, and they might even learn something they can use in their careers. Similarly, ask professors and experts with technical knowledge and expertise in areas your company lacks. As a rule of thumb, you can attribute around 0.5% to 1% of your shares to a top-notch advisor over 3 years, depending on what value they bring to your company (time commitment sharing their expertise, network, access to capital, etc.). In many cases, it is worth doing.

Conclusive remarks and perspectives

Many factors contribute to the success of building a start-up. Based on our experience, we identified some common patterns that we incorporated into 10 simple rules. We think these rules are the 20% that covers 80% of the success. However, simply applying these rules does not guarantee success. Take these rules as direction or advice. As applies to many things, too much or too little of a good thing is bad. The key is to find the right balance. Understanding the concepts and principles of these 10 rules will help entrepreneurs avoid mistakes commonly made by first-time entrepreneurs. As the last suggestion—if we may—we advise you not to wait too long with founding your company. Your opportunity cost will only rise, and the decision to start a company will become more challenging to take. The best moment to become an entrepreneur is now!

Acknowledgments

We thank the Ewald Lab and Maximon Team for critical comments on the manuscript. We listed sources and materials that discuss the concepts that we mentioned in more detail.

• 1. Aulet B. Disciplined Entrepreneurship: 24 Steps to a Successful Startup. Wiley; 2013.
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• 15. Ferriss T. The 4-Hour Workweek. Crown Publishing Group; 2007. Available from: https://en.wikipedia.org/wiki/The_4-Hour_Workweek

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• NATURE CAREERS PODCAST
• 09 June 2021

Business of science: The setbacks that can help your start-up succeed

• Adam Levy 0

Adam Levy is a science journalist based in London.

You can also search for this author in PubMed   Google Scholar

Credit: Getty

Adam Levy hears about the setbacks that can help your science start-up succeed.

The road to commercializing research is strewn with challenges, but how can science start-ups prepare for developments that are harder to predict, such as a global pandemic?

Daniel Batten, an investor and business coach in Auckland, New Zealand, describes strategies to prepare for unexpected events as well as more common crises, such as failed funding rounds or supplier problems.

Barbara Domayne-Hayman, entrepreneur in residence at the Francis Crick Institute in London, says the path to commercialization seldom runs smoothly, which is why it is important to have a ‘plan B’, together with a network of trusted mentors.

“Things never go exactly as you expect, even when things are going well. There’s usually some bumps along the road. Resilience is the single most important thing that you need to have,” she says.

“You have to be the one that actually continues to keep the faith. You just have to keep picking yourself up and carry on.”

This episode is part of Business of science, a six-part podcast series exploring how to commercialize your research and launch a spin-off.

The series looks at investor pitches, patents, technology transfer and how to survive the inevitable setbacks along the way.

Never miss an episode: subscribe to the Working Scientist podcast on Apple Podcasts , Google Podcasts , Spotify or your favourite podcast app.

doi: https://doi.org/10.1038/d41586-021-01007-w

Adam Levy 0:09

Hello, I'm Adam Levy and this is Working Scientist, a Nature Careers podcast.

This six part series, Business of Science , helps you commercialize your research.

Throughout this series, we've looked at what you can do to stack the odds in your favour, whether that's refining the perfect pitch or planning how you'll scale up your business once things are going smoothly.

But the truth is that things often don't go smoothly. And with the help of personal stories from entrepreneurs and expert advice, in this episode we're looking at how to deal with setbacks when you're setting up a research-based business.

Patrick Anquetil is founder and CEO of Portal Instruments, commercializing a technology to allow needle-free injection of drugs.

He explains that there are a wide range of setbacks that you are likely to come across in the business world.

Patrick Anquetil: 1:07

I think the technical ones interestingly, I mean, they're almost expected.

I mean they're never pleasant, but they're almost expected.

I think the ones that are harder is when there's other stakeholders involved.

For example, if you cannot get the financing, or the next financing of your company, and now you have, you know, your whole team, maybe 40-50 people who depend on you, you know, who just may have no job the next day.

I think these are the hard facts of startup life. And you know, you may have many days where it's just like one thing after the other, but then you have also extremely high highs.

Adam Levy 1:46

Of course, this past year a very different kind of setback emerged, the coronavirus pandemic.

This has affected every aspect of our lives, from the professional to the personal. And keeping things as normal as possible in this time has presented its own challenges.

Patrick Anquetil 2:05

I mean there was no plan for what to do in the pandemic. And I think if I look at what we've done. It's kind of being alert and understanding, really, beyond just a business, what is happening in the world in general, level headedness, calmness in a crisis, and logic.

All of these are very important values to have that will, in the end, actually help us through those unexpected crises.

Adam Levy 2:34

And Patrick has a tip on how you can prepare for setbacks by starting to think about what kinds of risks are out there, so that when the unexpected happens, it's as expected as possible.

Patrick Anquetil 2:46

I like the idea of contingency plans on things that you've realized are weaknesses. I think that's important. I think it's not only in business, and in any part of life, that I think that that's important too.

Like if this happens, then this is the time we should do that, such that you don't waste time, you know, trying to problem solve while you're also managing the crisis as well.

Adam Levy 3:09

And Patrick isn't the only one to recommend running through these kinds of hypotheticals.

Daniel Batten is an investor with Exponential Founders Fund and coach with Beyond the Ceiling..

Daniel recommends hoping for the best and preparing for the worst.

Daniel Batten: 3:26

The best way to be successful is to look at what you can do well, and you focus on that, and you do everything in your power to reverse engineer towards the success you want to create.

But then you do the second part. And you go, "What's the worst that can happen?"

And this is super important. You don't have to do much of it. You only need to do it once or twice, but you do it and you look at "Okay, so what let's imagine a global financial crisis event. Let's imagine, you know, a pandemic or that it lasts for another three years. What would we do in that situation?"

So these really fun scenarios, they are quite doom and gloom, but the funny thing is, they don't depress you.

So the moment you actually go here, and think about what's the worst that can happen, you go "Okay, well, you know, if the worst happens, you know, it would suck, but we'd still be around.

Adam Levy 4:09

This can of course help you prepare for setbacks like supplier failures, or a sources of funding falling through.

But Daniel argues he can even help businesses prepare for the much more hard to predict possibilities, like a pandemic.

Daniel Batten: 04.25

Now, this is not just a theoretical exercise.

One person, a woman who I was talking to recently, she had a product, it relied on having large events, and suddenly they were no large events anymore.

She had anticipated this was possible. She didn't know why that would happen. But she anticipated "What if we can't do large events?" and she had another strategy.

And so she immediately pivoted to that other strategy. She kept the investor who said they weren't reinvested updating and told them what she'd done.

The investor came back and said "I like the way you've responded to this. I'm interested in reinvesting in this new business plan that you have." And actually ended up coming back.

What occurs in life is not because of a fence. It's a confluence between the event and your response to it. We do have absolute control over our responses and our responses change the outcome.

Adam Levy: 05.15

Not every setback is on the scale of a planetary pandemic. And for many businesses, the pandemic didn't drastically disrupt operations. For Wei Wu, COO of Helio Heat, commercializing a solar energy technology, having to think carefully about finances is one of the biggest departures from when she was a PhD researcher.

Wei Wu 5:36 I think the most challenging part is that actually, well, worrying about the money. Yeah, you have to be much more a marketing person to do that, to convince the people to give you the money, then you have to be in the research field.

There you can show your list of publications and most of the time, it's enough right. But in the real world, it works somehow different.

Adam Levy 6:03

Perhaps money is the biggest difference between the real and the academic worlds. Of course, funding is crucial in both domains, but securing and managing it works fundamentally differently.

Chemist Javier Garcia Martinez is based at the University of Alicante, as well as Rive Technology, using nanotechnology to improve catalysts.

He explains that as a startup, looking for funding from big corporations, he's painfully familiar with financial setbacks,

Javier Garcia Martinez 6:34

I would have been set back it was many times clients were committed and willing to buy our catalyst. But the last minute they changed their mind. And those contracts were very important for the company. The main misalignment that I felt was between the urgency of a startup and the slowness of a corporation

Adam Levy 6:59

For Javier, preparing for these issues is both a practical and a personal process.

Javier Garcia Martinez 7:06

Yeah, the first thing you need is to be ready for that. Success is very rare in a startup. Most of the times they are setbacks, with clients, with customers, with actually your own employees, with investors.

So you need to be ready for that emotionally, to make sure that your team feel that you are always there as the founder, as the leader of the company, with a message of hope and ambition, that you share your vision and you are emotionally prepared for that.

And also that you have raised enough money to run your company even with two or three or four unforeseen setbacks.

Because if you are just running dry with with very little money in the bank, because you are sure that that contract is going to happen you are running a very risky business.

Adam Levy: 7:20

If you've been listening to this series so far, then you will have already heard from this episode's interviewee Barbara Domayne-Hayman.

Barbara is entrepreneur in residence at the Francis Crick Institute in London, where she helps startups find their feet. But as with many guests on this podcast, her career journey started in academia.

Barbara Domayne-Hayman: 8:18

I did my doctorate in bioorganic chemistry at Oxford. But while I was doing that, I realized that I didn't think I was going to be cut out for a career in science at the bench.

I just didn't really have the patience that's needed to be a really great research scientist.

And I discovered this world of entrepreneurship, and venture backed companies and growth. And this is what I really loved, the idea of building a business,

Adam Levy: 8:46

Barbara has a host of experience in business, which means she also has a host of experience dealing with the unexpected. So we started out by discussing when she's encountered setbacks in her work,

Barbara Domayne-Hayman 8:59

I think the answer is when have I not had to? I mean, I think the thing about every single early stage company I've been involved with is that the path is never smooth.

And things never go exactly as you expect, even when things are going well.

There's usually some bump along the road. So it's really, I mean, resilience is the single most important thing that you need to have if you want to embark down this path of actually building a business out of your science.

You have to build a team. You have to inspire your team. You have to be the one that actually continues to keep the faith and to say "Yes, this is going to turn out fine in the end," even when things are going really, really wrong.

And it's really tough going. And then I think that the most the aspect where you need resilience, the most when it comes to fundraising, because you will just get knockback after knockback when you're doing fundraising because you have to I mean, as everyone says, you have to kiss a lot of frogs, before you find your prince, and, or princess.

Yeah, you have to just expect to get rejection after rejection. And you just have to keep picking yourself up and carry on.

And even when you have a massive blow-up and something goes really badly wrong, you can only allow yourself sort of half an hour of you know, "Oh, no, this is a disaster." And then you've just got to pick yourself up and just just carry on.

Adam Levy 10:45

I wonder if you have just an anecdote, or something about a time when you personally have had to deal with something where you really didn't expect it. And it felt like it set you back a bit.

Barbara Domayne-Hayman: 10:57

I think I mean, I've done a lot of work on business development.

And sometimes they turn around when things are going really well. And you think things are going really well.

And they say "Actually, you know, our strategies changed. And actually, we're not going to go forward with this deal." And that is absolutely gut wrenching. When you've put so much time and energy into something, and you're really you kind of had all the vibes that suggested that, you know, this was going to happen, everybody was really enthusiastic about it.

And then something happens in that other organization, which is a big company, so you've really got no visibility of it. And they just turn around and they say, "I'm sorry, but our strategies changed. And we're not doing this anymore."

And that happens. I mean, that has happened to me more than once. And what I would say is, you know, don't count your chickens until you've actually got the signature on the legal agreement from the other side. It is not done.

So yeah, it's, it's devastating when it happens. But you know, you've got to have a plan B basically..

Adam Levy: 12:06 Do you have any advice on what to do? When you do get these rejections? Is there any way to turn that around?

Barbara Domayne-Hayman 12:12

Investors are interested in things that align with their interests. So you may have the most fantastic proposition, but it may just not fit with them. Or it may be too early. And they'll just say, "Well, no, come back when you've got more data."

And you just have to keep going in the face of all the rejections that you get. But if they do say, you know "Not now," then the persistent people will say, "Okay, well, what would it take, then for you to say, 'yes, now is the right time.' What data would I need to generate? To turn thatnot now, but maybe later into ? "Yes, actually, this does fit? And this is interesting."

Adam Levy 12:55 Do you have any tips for dealing with, with unexpected setbacks?

Barbara Domayne-Hayman 13:00 You can't you don't have time to wallow in it. You just have to kind of think, Okay, this has now happened. I can't change that. But what can I do differently next, as a result. What have I learned from this latest setback? And what would I do differently next time?

Adam Levy 13:21 Are there any mistakes that you see people commonly making when they are dealing with setbacks?

Barbara Domayne-Hayman 13:27 I think even when you're really feeling pretty wretched in size, and, you know, perhaps pretty angry at the way somebody behaved or let you down. I think you just have to project a positive energy. Because that's how you build the business going forward.

Adam Levy 13:46 Are there any places or, or even people that people can turn to when things do feel like that, that beyond their capacity, and something's really felt like it's derailed them,

Barbara Domayne-Hayman 14:00 I think it's always a good thing to see if you can kind of build a network of sort of trusted mentors, or at least have one or two people that are kind of more experienced than you are, that have been there and done it before.

And that you can turn to just to ask for advice.

So it's good to have a mentor who is a little bit separate, who has no agenda, who doesn't have any kind of fiduciary duty towards the shareholders of your company, but who's basically able to give you kind of unbiased advice and just just a wise person you can turn to. I think it's always a very good thing.

And most people I know are very much prepared to give advice to the next generation of entrepreneurs that is coming through.

And so I think there are a lot of people out there that are actually very happy to chat to you. So I would say to people,"Don't be shy." You know, just ask people, you know, would you be prepared to have a conversation with me about this? I'd like to ask your advice. And I'd say most, most of the time you're going to people will say, yes. You then have to choose which advice you want to follow.

Adam Levy 15:21 Are there any strategies that businesses can take so that when the unexpected does happen, there is just a bit more resilience baked in to deal with that?

Barbara Domayne-Hayman 15:30 Well, one very important thing is obviously always having enough cash in the bank. I mean, that sounds really basic, but it's actually incredibly important. Because that will always buy you a bit more time. I mean, things will always take longer and cost more than you plan. Always, always.

And I mean, I'm, you know, hyper, hyper conservative about this, because I've been through this so many times before.

And I, you know, when I do my planning, I'm still surprised that things still always take longer than I expect. So the only way you can really mitigate that is by always making sure you've got enough cash in the bank that covers you for things just taking that longer period. But actually, you should bring all the money that you can, because the chances are that you're really going to need it.

Adam Levy 16:27 Do you have any tips for dealing with us,I suppose more extended issues? I'm thinking of things like COVID. But I suppose it could be anything but something which isn't just like a momentary, "Oh, this has been pulled out." Something which you're going to have to deal with over the course of months or years, even in the business.

Barbara Domayne-Hayman 16:42 I think one thing I would say is that, you know, this is it's a marathon and not a sprint, so you kind of really need to pace yourself. And it's very easy to work so hard on something and so intensely that you get really burnt out. And you just have to remember that you're going to have to keep on going. And actually you need to just find ways, and everybody has their own way of dealing with this.

But just kind of give yourself enough space, or just do enough other things with your life. But, you know, just give you energy from other things.

Because it's a long haul. So yes, and actually, I mean, because it's a long haul, you know, one of the things that is becomes very important is the, the sort of the interpersonal dynamics between you and your team.

And one of the things that you know, sadly often does cause problems for early stage companies is, you know, the, the dynamics between the founders.

And you know, because it's a long term relationship, it's like any any long term relationship, you know, people grow apart, or they have slightly different objectives.

And over time, that can become more and more problematic, and especially if you're all under a lot of stress that can become problematic.

And I've seen many, unfortunately, many, many startups that have had founder issues.

I mean, it's unfortunately extremely common. Nurture the relationships and just keep talking very openly about issues because it's much better to deal with things early on, then to kind of bottle them up and then have a big blow up later on.

Adam Levy 18:24 That was Barbara Domayne-Hyayman. And that's almost the end of our penultimate episode of this podcast series. We've looked at many different practical aspects of turning your research into a commercial success. But we've got something a little different plan for final episode. We wanted to look at the benefits of this commercial academic crossover. The skills academia offers you in business, and the skills business can offer you in academia.

Stay tuned for that discussion. And until then, this has been Working Scientist a Nature Careers podcast, I'm Adam Levy.

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Turn Your Science into a Business

• Reddi Kotha,
• Phillip H. Kim,
• Oliver Alexy

Reprint: R1411F

Commercial success with a new technology usually depends on the exclusive ownership of a critical asset or capability. But to create the technology, an innovator draws on knowledge from many different sources. Inventors who mismanage that tension often fail to successfully commercialize their innovations.

Inventors should carefully identify and protect the most profitable potential applications of an invention before competitors enter the fray.

To understand how to manage the tension, the authors carried out a comprehensive analysis of more than 1,000 inventions from the University of Wisconsin’s Technology Transfer Office. They interviewed the TTO’s senior leadership, IP managers, licensing and contract managers, legal counsel, and other staff to get firsthand knowledge of how inventions were evaluated for commercial potential.

From this research they identified seven IP traps that unwary inventors (individuals and companies alike) fall into when developing scientific discoveries and inventions for the commercial market. The traps include publicly disclosing information prematurely, neglecting to enforce patent infringements, failing to demonstrate sufficient originality, overrelying on known science, failing to stake out the best territory for applications of the technology, mismanaging attribution of contributors, and ceding too much control over IP to funders.

Drawing on examples encountered in their research, the authors describe these traps and offer advice on how to avoid them.

When commercializing scientific discoveries, inventors and firms face several potentially fatal traps. Here’s how to avoid falling into them.

Idea in Brief

The problem.

Many inventors struggle to commercialize their inventions or discoveries successfully. All too often large companies, investors, or others walk off with the fruits of a scientist’s work.

Why It Happens

Commercial success with a new technology depends on the exclusive ownership of a critical asset or capability. But to create the technology, innovators draw on knowledge from many different sources. Inventors who mismanage that tension often fail to successfully commercialize their innovations.

The Solution

To manage the tension, inventors must successfully avoid the following traps: prematurely disclosing proprietary information; neglecting policeability; failing to demonstrate originality; overrelying on known science; failing to stake out the best territory; mismanaging attribution; and falling into funders’ clutches.

The average adult human body holds about 40 liters of water to support its metabolic processes. Burn victims can lose nearly 37 liters of water a day because of the damage to their skin. Traditional treatment of burn patients involves painful surgery and often a grueling series of follow-up operations. After witnessing a procedure on a severely burned farmer, Lynn Allen-Hoffmann vowed to find a way to help these patients. She embarked on a decade of research and conducted more than 1,000 experiments, and in 1999 she patented a skin substitute derived from normal-tissue cell lines.

• Reddi Kotha is an assistant professor at Singapore Management University. His research focuses on entrepreneurship and technology commercialization
• Phillip H. Kim is an associate professor at Babson College.
• Oliver Alexy is a professor at Technische Universität München in Germany. His research focuses on how to organize effectively for innovation.

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Business Plans for Scientists

Every business plan is different, and you shouldn’t feel obliged to stick to any particular format. If you can make a better case for your business by changing the format, then do so. After all, the point of the business plan is to state what your business will be doing and why it will be successful. Making the document look and feel like a standard business plan is secondary. Whatever you do, just make sure you include all the necessary information.

In general, I like my scientific business plans to include the following sections:

• Company Overview – The company overview should be a one to three sentence description of your company. This should be very similar to your elevator pitch. It should be to the point, effectively get the readers attention, and explain the company as concisely as possible.
• Mission Statement – Your company’s mission statement should effectively state the purpose of the company. Don’t brush this off. Write a mission statement that will be able to guide the strategy and high-level decision making down the road. A mission statement is not a marketing tool, but it should read well.
• Management – Introduce your management team. Give some background on them and highlight their strengths as it pertains to the venture and their position within it. A poor management team can easily drive away investors, so be sure that your team looks good both on paper and in person. You should have enough talent on your team to realize your objectives. If there are any key skill gaps that will be addressed through outsourcing, be sure to address those in your operating plan.
• Market Analysis – This is where you really start to get into the meat and potatoes of the document, so to speak. The market analysis should give information on competition, market size, trends, challenges and opportunities the market presents, etc. As appropriate, you’ll need to be both descriptive and quantitative, and you will definitely need to back up your numbers. Do your homework, include references as appropriate, and make sure you back up your statements.
• Scientific Background – This is where you start talking about your product specifically. Since scientific products are highly technical in nature, you will need to show that your product will work as you claim and also that it will meet the needs of the market that you have just identified. If you can, reference published literature. If you’ve built a working prototype, show some results of testing.
• Marketing Plan – How will you market your product? How will you position your product within the marketplace to achieve the projected market share and hit your targets? What marketing channels will you use? You’ve addressed the market in your market analysis, but this is where you address how your company will interact with that market.
• Operating Plan – How your new biotech business will operate. You don’t have to go into minutiae, but if there are any important considerations, make sure to include them. Address operational difficulties and areas that would not be considered obvious. Again, if you plan on outsourcing anything be sure to address that here.
• Projections – The projections, which can also be referred to as the “financial plan”, etc., is where you will make the case that your venture is worth investing in. Extend your projections out to a relevant but not-too-distant time point. What should that time point be? That will be different for every company and would be based on your projected product development time, how long you project until your product goes to market, and what the life cycle of the product will be, and any other relevant factors. Revenues always involve some guesswork, but make sure that your cost estimates are very close. Also, don’t overestimate your revenues or no one will believe that you’re capable of hitting your targets. It’s better to have a slightly worse financial outlook that’s defensible
• Long Term Vision – Are there any important long-term goals or achievements for your life science start-up that would be important to partners or investors? Do you have plans for expansion into new markets to build on successes in your company’s early years? Those are some things to think about when writing a long-term vision.
• Disclaimer – Ever read a corporate financial statement where they give a disclaimer about “forward-looking statements”? You need to include something similar to protect yourself from liability. It won’t be a full section, per se, but it should constitute some small print at the end of the body of the document. Basically, your disclaimer should state that projections are subject to risks, not guaranteed, and that you nor your company are liable if they turn out to be incorrect.

Keep in mind this is just how I frame many of the scientific business plans that I write. I don’t even always stick to this format, so you shouldn’t feel obliged to either. This is merely a guideline.

A few other tips… Graphs, charts, and supporting data that is too long to put in the body of the business plan should go into figures and appendices. You’ll probably want a copyright notice in the footer. Don’t forget to include trademark symbols next to any slogans or names that you plan on claiming.

Some may want to include a section about risks and projected difficulties to show that you understand your limitations, are addressing them, and have contingency plans in case any of them become problems. I sit on the fence about this. While I certainly think you need to have thought about these issues in the event that they are asked, I don’t always think that including them in a business plan is a good idea. The business plan is supposed to sell people on the idea of your business, and listing all the drawbacks doesn’t do that. If there are obvious risks or obstacles, however, then you should definitely address them.

At the end of the day, your life science start-up should be able to create a business plan that is every bit as “bulletproof” as your idea. If you’re not a veteran at starting companies then there are likely issues you haven’t thought of. The creation of a business plan is a good way to expose those issues so you can address them before attempting to attract investors or launching your company and having unrecognized issues impact your bottom line. Remember that the business plan should show the value and merits of your idea, your understanding of the marketplace, and your ability to execute and realize commercial value. For maximum effect, don’t hesitate to modify the format and structure of the business plan to the unique needs of your biotech start-up and keep in mind what the purpose is and who your audience will be.

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What Actually is Scientific Business Management?

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The rise of inbound content has a created a wide, but shallow pool of business and sales advice . Everyone’s guilty of it on occasion. There’s many variations: think of the customer first, think of your employees first, be empathetic, be efficient, be 10x better. All of it boils down to the fact that if you do an all-round better job than your competitors and give your customers good experiences, you’ll do well. Commonsense advice. The trick comes from actually implementing it in your business. That’s why you have managers and consultants as the proverbial experts. But if all the common business advice boils down to “do your job, but better,” what do the experts know that makes them worth the high cost? Scientific Business Management. But what is that? We’ll look at the origin of the subject, see how it has developed, and inquire into the usefulness of today’s business management practices.

Frederick Winslow Taylor: A Man with a Stopwatch

Business management theory traces its heritage back to Frederick Wilson Taylor, a mechanical engineer who wanted to improve industrial efficiency in the early 1900s. He pushed for scientific study of work, specific training for employees, intensive supervision, and the split between those who design how the work should be done (managers) and those doing the work (everyone under the managers). These practices are common nowadays. But how did Taylor develop them? The story goes that while under contract with Bethlehem Steel Company, Taylor decided there had to be a faster way to load pig iron onto rail cars. He reviewed the books and estimated that each man was loading at a rate of 12.5 tons each day.

So Taylor went down to the yard, offered a few of the best workers double wage for the day if they would participate in his experiment. Excited about the money, the workers loaded a whopping 16.5 tons in 45 minutes. Taylor calculated that over the 10 work day that would mean 75 tons per man. He had to adjust for rest and breaks, so he made a 40% cut. Each worker should load 47.5 tons of pig iron per day with extra pay for reaching the goal and penalties for failing. Unfortunately for Taylor, the workers were not excited about needing to work 4x harder than they had been. To prove it was possible, Taylor hired a new man with a 60% rise in wages. After an intense day, the new man loaded 45.75 tons, almost hitting the quota. Taylor decided he had succeeded. He went on to handle a variety of other methods of efficiency, and after being let go of by Bethlehem Steel Company, preached his “scientific management” across the country.

Did Taylor Discover What He Thought He Discovered?

Besides asking if Taylor’s systems were truly beneficial to the bottom line, you also have to ask if they’re beneficial to the company culture and lives of the employees. What social value is lost by placing someone under the constant control and gaze of an other? Should you treat people like components to modified to eke out more profit? When your entire work day is repetitive tasks disconnected from a holistic view of the company, what impact does that level of alienation have on a person?

How Management Has Developed

The overall debate is summarized as being between making work more efficient and cost effective (work harder longer) and between trying to have people engage and enjoy work more (more benefits and perks). There’s been a high focus on methods being the solution. Are you using the correct framework to view your problem? Have you followed all the steps for success from the presentation. Complexity is the enemy. Even though it’s arguably the reality. However, there is potential progress being made.

Future of Scientific Business Management

The rise of analytics and company testing has paved the way for studies that are designed to be more scientific than Taylor’s (though never completely unbiased). Deciding a specific hypothesis, testing it in isolation, and examining statistically significant results will improve your business. The tests and data hold more sway than the opinion and experience of single individual. This what scientific business claims to always be, even if it falls short at times. Optimization and analysis have become of major interests for businesses with the growth of available data in the last decade. There is an increase in the needed ingredients for science to take place. But will scientific business management ever move away from trying to force the most productivity out of employees in the way that seems most appropriately humane for the specific situation? Should it? That’s up to the managers of the world. Ultimately each business has its own tricks, lessons, and knowledge that comes with it, and no outside consultant or manager is going to know the full complexity of how to do your job better. Working harder and smarter is always good advice, but it depends on you and your company to realize how your business should be done.

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Start » strategy, how to write a business plan for inventions.

Attract investors and formalize processes by developing a roadmap for commercializing your innovation.

An inventor’s business plan is a framework for bringing a concept to market and achieving profitability. It’s similar to a regular business plan but adds details about intellectual property protection and prototypes. Ideally, a business plan for inventions builds upon a feasibility study. It should highlight your findings from a comprehensive competitive analysis and be tailored to its intended audience, such as investors.

An invention business plan is crucial for getting funding and securing strategic alliances. But you can also use it internally to guide operations, from marketing to hiring. Here’s how to craft an effective report.

Determine your audience and purpose

Although most business plans for a new invention follow a basic outline, you can tailor your approach to appeal to specific readers. Suppose you want to pitch your idea to investors or accelerator programs. In this case, it’s essential to mention funding requirements. But you should also emphasize the skills and experience your team brings to the table. According to Heer Law , “Often, investors and other stakeholders care as much or more about who the people are behind an invention than the potential of the invention on its own.”

However, if you’re looking for co-founders and employees, modify your document to clarify the skills required and long-term benefits for early joiners. Once you understand what drives your intended audience, you can write a business plan that excites them while answering their questions.

[ Read more: How These Innovation-Driven Startups Reached an Elusive Milestone: Profitability ]

Outline your invention business plan sections

The Small Business Association (SBA) said, “There’s no right or wrong way to write a business plan. What’s important is that your plan meets your needs.” You can use a basic template , take a free course , or start from scratch. Begin your process by outlining commonly used sections, then modify your document to include invention-specific content.

Often, investors and other stakeholders care as much or more about who the people are behind an invention than the potential of the invention on its own.

Christopher Heer, Annette Latoszewska, and Daryna Kutsyna, Heer Law

Consider adding the following components:

• Executive summary: Keep it concise but touch on each aspect of your plan. Remember to pique interest and compel your audience to read more.
• Company overview: Discuss your industry and niche, including what makes your invention and business stand out. Explain how you will commercialize your design (selling to consumers, wholesale, or retail).
• Organizational structure: This is where you describe your legal business structure (sole proprietorship, partnership, limited liability company (LLC), or corporation). Provide details about inventors, executive team, and current or prospective employees.
• Market and competitive analysis: Share insights from your feasibility study, including an analysis of your industry, competitors, and market. Add statistics about market size and growth. Plus, offer a customer profile and explain what differentiates your invention from others.
• Invention: Tell readers about your design (features and functions) and how it benefits customers. Mention your product research, prototypes, and intellectual property registrations .
• Marketing and sales: Explain how you will apply competitive and market insights to earn a return. Topics may include sales, pricing, promotional strategies, positioning statements, and marketing campaigns.
• Financial information: Show how your invention will be profitable and use spreadsheets, charts, and graphs. Include projected revenue , profit and loss, cash flow, and a balance sheet. Also, detail any funding needs, how you’ll get the money, and what you’ll do with it.
• Appendix: Add all supporting evidence for your invention business plan. For instance, Chron.com said, “Investors respond well to business plans that include endorsements of the product from potential customers.

Add sections for your new invention

In addition to these regular sections, you can expand your business plan to include research and development, intellectual property protection , and owned or future IP assets. According to Heer Law, the research and development component helps readers understand “future products that can be commercially exploited.” Likewise, details about your intellectual property protection ensure investors that you’ve taken action to defend your innovation from unwanted duplication.

Provide information about any assets going through the application process and how various trademarks, patents , and copyrights will impact profitability. Also, discuss if you plan on developing new inventions or have prototypes available.

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Science with a Business Plan

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We have seen in the previous chapter how the technology industries behaved when free from restraint to impose their values in the crucible of the Industrial Revolution. The leverage new inventions gave industrial entrepreneurs was magnified by the absence of a regulatory framework and supported by a moral crusade exhorting industrial discipline as a manifestation of godliness. The extent to which this served them in pursuit of profit and economic stratification, as they swept away the old stability of the agrarian economy and its associated technologies, can be measured by the disparity between their own acquisition of wealth and the misery this created for the rapidly urbanising poor. These latter were sucked into cities without the infrastructure to cope with such an influx and threatened with starvation lest they offer their labour at whatever rate may be arbitrarily set. They endured appalling conditions that eventually roused government into intervening as a matter of protecting itself from its own citizens, despite a disposition to do otherwise and a preference for allowing the market to operate freely. We have seen there is plenty of evidence to suggest this was a poor deal for those who were forced to accept it, but regardless of the concomitant problems, it was not without some seductive benefits.

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How One Family Lost $900,000 in a Timeshare Scam

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Michael Pollan's deliciously simple meal plan to avoid ultra-processed foods — and where it falls short

Michael Pollan is probably best known for the seven simple words of diet advice he first used to open a New York Times essay in 2007, which later became the backbone of a bestselling book :

"Eat food. Not too much. Mostly plants ."

He knows it's really not so simple.

"We all make compromises," Pollan told Business Insider ahead of the release of his latest documentary, Food, Inc. 2 , out April 12. "We do the best we can, and people pick out the issues they want to deal with, and can deal with."

At home, Pollan tries his best to avoid eating industrial meat, eggs, or any other product from big factory farms.

He and his wife have set up their life to make healthy eating easy and affordable. They keep a stash of well-sharpened knives, ready to chop and cook a rainbow of veggies for dinner most nights. Lately, his table's featured stir-frys and pasta dishes, as well as some wild salmon, since they happen to be running in Alaska this season. Pollan also enjoys cooking a firmer, more protein-rich form of tofu I'd never heard of called yuba, which is essentially a soymilk skin. Hearty stews , perhaps with Indian or Moroccan-inspired spices, are some of the other fan favorites simmering around his kitchen island in Berkeley, California.

It sounds very healthy, very delicious, very aspirational … and pretty impossible. Because it is.

The reality is that Pollan does participate in America's industrialized food system. He's spent the better part of two decades investigating the way food corporations combine chemicals, plants, and animals in some very toxic ways, and as a result he feels "really uncomfortable participating in a system that was so brutal, not just to the animals, but to the workers in it," he told BI. But he knows that, ultimately, if you want to participate in US society, some amount of toxic and unethical food is unavoidable.

"If you had me over to your house and you were cooking a pork shoulder, I wouldn't be rude I would eat it," he said. "I'm not so zealous about it."

Still, he might have some intrusive thoughts while eating store-bought sliced white bread or fruit salad. He worries about the glyphosate that's doused on industrial wheat right before harvest and the harsh pesticides often sprayed on thin-skinned fruits like strawberries (he opts for organic whenever he can, but even that's not a guarantee of safety). "I think that the more you know about food, the more it shapes your diet," he said.

'Plant-based' is just a marketing trick from Big Food

Pollan's new documentary (in select theaters now, and streaming on Amazon Prime) is a follow-up to his Academy Award-nominated 2008 release "Food, Inc." "Food, Inc. 2" focuses on the few mega-companies that dominate our grocery stores and often end up deciding what we put in our mouths.

The film explores what happened at a Tyson meat processing plant in Waterloo, Iowa, during the first days of the COVID-19 outbreak (spoiler alert: it wasn't great.) It also features the voices of tomato pickers in Florida fighting for fair pay, Taco Bell employees asking for the same, one inventive farmer bringing a regenerative gizmo called the "clustercluck " to his cornfields, and Democratic Senator Jon Tester, who (when he's not in Washington) works an organic farm in Montana.

Over 90 minutes, the documentary takes you on a rather bleak journey through time, highlighting the many ways our food system has actually gotten worse since the release of the first Food Inc. 16 years ago.

And yet, it ends on a head-spinningly optimistic note. The shift is so stark it's almost funny. Just before the credits roll, the film encourages viewers to join the "movement" on its website, which encourages us to (surprise, surprise) eat fewer ultra-processed foods, support our local farmers by shopping at their markets when we can, reduce meat and dairy consumption, and then in our spare time, lobby for more antitrust law enforcement against the handful of big food companies that dominate the market for baby formula , meat, cereal, and other staples. Simple.

"The industry has a strong interest in complicating our relationship to food, creating problems that it can then solve — but it's a lot simpler than people think," Pollan says.

Is it though? Speaking to Pollan made me feel even more strongly than before that, even in a best-case scenario , for the thin slice of Americans who have the time, money, plus institutional and cultural support to adopt all of these grand ideas, some of the worst parts about our big, bad food system cannot be avoided. The emulsifiers that may mess with our gut bacteria in weird and poorly understood ways are sorely needed to keep food shelf-stable. And even if we stick to organics, the soil quality ain't what it used to be around here, meaning we derive less nutrients from the foods we eat.

"If you do eat food, not too much, mostly plants, you're going to be fine," Pollan tells me, doubling down on his old phrase.

But even he admits some caveats with his next breath. He's frustrated by the misleading "aura of health" that has sprung up around everything plant-based. That's a whole new game of whack-a-mole we have to play in the grocery store aisles. After all, sugar cane is a plant, and so is the corn that so many of our stabilizers, artificial sweeteners, flavors, and added ingredients come from. Plant-based diets aren't necessarily a beacon of health.

"I don't regard a lot of the stuff in the supermarket as food," he tells me.

But it's what we have.

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