This is the second short article in our series on setting up a new business in the bio science space
Beyond the confines of a very small consultancy it is difficult to run a business all by yourself however in the early days you may be unsure of the sort of people you will need to help you and the extent to which you will want to use them and may well have concerns about your ability to pay regular salaries. The answer will generally be to buy in services as you need them from other organisations or the self employed. This is usually very cost effective as you only buy the hours you need but is also very flexible allowing you to buy more hours as business expands and to engage specialists who can do the work in a fraction of the time that you could do it yourself or have it done by a junior employee who seems the best you can afford. This principle can be used not just to access technical, business or scientific advice to help with a particular project but also to provide professional administrative support. Having someone answer your phones in the company name while you are off doing the actual work or still doing the “day job” will avoid missed opportunities and make your operation look much more substantial and professional. You can also engage “virtual PAs” or bookkeepers all of whom have different skills that can ensure the business runs efficiently while you concentrate on building it.
As you grow you may well want to raise finance for the business which for most companies in this space will mean equity investment. One of the first things the investor will want to know is whether you have the team to deliver on your business plan. Again this does not mean that you have to have hired everyone that you need to carry out the work but you will have to explain how you intend to access the necessary expertise. Where you only need someone for a short period of time or for occasional advice a consultancy contract whereby you pay for work done is ideal but there will be some people who you are going to need regularly and will inevitably have to join the payroll. If the investment money is going to be used to hire them you may be able to set up conditional contracts with them whereby you agree to hire them if you raise the money. One of the benefits of this is that the investor can see the terms of the hire and also the cv of the individual which may make them feel a lot more confident. You should expect to offer shares to senior hires coming in at this point in addition to salary – this ensures they share your interest in the success of the company but may also be necessary to persuade them to take a lower salary than they might otherwise expect and in a riskier business.
Finally as you grow you should expect to build a board of directors. Initially this may just be you or you and other senior staff but over time you will benefit from having non executive directors who are not involved in the running of the company on a day to day basis but who have business expertise and contacts that can help you see the bigger picture and grow the business. They are generally engaged on a consultancy contract for the equivalent of so many days a year. Another approach while the company is in an early scientific mode is to create a scientific advisory board of senior scientists in the field with whom you can bounce around ideas. This can be very inexpensive and although they do not take on the responsibilities of directors their involvement may encourage potential partners and investors to take you more seriously than they might otherwise have done.
By Patricia Barclay