Which is more important to your success, the “business” or the “product” (I am using “product” to refer to a physical products, services, or technology – anything you are in business to sell)? The real answer is that they are equally important to your success. If you have marketable product, but are not able to reach your customers, get the sale, deliver the product, and collect your payment, then you won’t be in business very long. On the flipside, if you are in business, but do not have a product to sell or one that someone will buy at a profit, you won’t be in business long either.
For companies of all stages and sizes, finding the balance between investing in product (e.g., research, development) and the mechanics and structure of the business is often one of the most challenging tasks they will face.
One particular early-stage company comes to mind. They have been struggling to fund their research. The area of research is one that has a well-known and defined market need; there are customers for their product, IF they can develop it. The initial research has been promising. In fact, some of the technical/science reviews have been glowing about the potential impact of their research. It will literally save lives if they are successful.
But (and it is a very large “but”) they have been unsuccessful in getting funding. My conversation with them was about the business and the things they would need to obtain investors and other funding sources to support them. We scheduled a time to work on:
- Total budget for research, compliance, and business operations for next three years.
- Timelines, milestones, and deliverables for technology research and development.
- Identification of potential investors and funding sources (like research grants).
- Development of a business plan including opportunities, risks, management team, competition, commercialization strategy, etc.
With less than six months of funding remaining on a shoe-string budget in which only minimal operations would be maintained and research would be slowed to what could be “afforded,” resources would need to be devoted to moving the research ahead AND pursuing funding. One funding opportunity was already known, with a deadline to approach the funder less than one month away. The funder had specific information requirements including a commercialization plan and a minimum three-year budget. This funder clearly stated that the decision would be made on equal parts: the technology potential AND the business plan.
Would it surprise you that this company opted not to work on the business information and to focus only on the “science”? Would it be more surprising that they thought they could “wing it” and “make up” the business strategy and “get by” without putting in the work? It always surprises me, no matter how many times it happens that “businesses”—even when told what they have to do—will disregard what a potential investor or other funder (bank, foundation, government grant program, etc.) tells them is REQUIRED. A “well the science should be enough” attitude becomes the biggest obstacle to success. Your product is not enough if you are in business to build a business. If you are in business to do research and let someone else commercialize your product, well then you need a whole different business model and funding strategy.
If you are in business and want to develop a product to take to market (or more than one product), then you have to have the components that are necessary to succeed, which include a marketable product that fills a need or solves a problem AND can be sold at the necessary profit level, PLUS a business model that recognizes the who, what, when, where, how, and how much it takes to get a product to market, sell it, build it, deliver it, and collect payment.
Author: Lea A. Strickland, MBA CMA CFM CBM GMC
Copyright ©2012 Lea A. Strickland, F.O.C.U.S. Resource, Inc.
All Rights Reserved