For a lot of people starting their own company is a daunting experience, especially in the current economic climate where funding is hard to get. On the other hand if you succeed in starting your company now, it can only get better when the capital situation improves. To provide some guidance, if you are thinking about taking this step this article will provide you with some ideas on creating your own business.
Why start a company?
According to the Chamber of Commerce (KvK) half of the entrepreneurs give up within five years. Some because of personal circumstances, others because they miss the comfort of having a monthly pay-check; but the majority because they don’t succeed in attracting enough clients and to generate enough income. Considering all the risks and uncertainties, what motivates certain people to start their own company? The most important motive for many entrepreneurs is independence, being able to work autonomously and to determine one’s own path, being one’s own boss.
Also the financial rewards can be an appealing motivation. Setting up your own business requires a lot of time and effort, years of hard work and perseverance, but if it goes well, the rewards can be substantial.
Is there an entrepreneur in you?
Before starting a company you should first evaluate whether you have the necessary entrepreneurial traits and skills. One of the most important traits is being a self-motivator, and you also need to be ambitious and hardworking, because starting entrepreneurs easily work more than 60 hours a week. Another striking characteristic of entrepreneurs is the ability to innovate and to turn that innovation into business opportunities. Furthermore you (and also your family) should be able to live with (financial) insecurity, and you should make sure they support your ambition before starting. Lastly, being persuasive and good at networking is important to connect with possible investors, employees and clients.
Start alone or in a team?
You can either start a company alone or in a team. What is the best option for you not only depends on your own personal preferences, but also on the complexity of your business. If your main product is yourself, then you could start as a freelancer, which is relatively easy. With a laptop, internet access and a pile of business cards you are ready to go. A registration at the Chamber of Commerce as sole proprietor (Dutch: eenmanszaak) is sufficient, and of course, you also need to have a clear business proposal. What services are you offering and to whom? Your strongest asset is yourself, and you need to put yourself out there.
If your ambition is a technology-based start-up, then most likely you will need to build a team composed of people with complementary strengths. Usually the scientist who initially starts the company takes on the role of the Chief Scientific Officer (CSO), and an experienced businessman or entrepreneur becomes the Chief Executive Officer (CEO). Sometimes the team is completed with a Chief Financial Officer (CFO). An obvious advantage of team-based entrepreneurship is that a team possesses more skills and resources and has a larger network, the start-up company therefore has a greater chance to succeed and can take off faster. The disadvantage is that you will have to share the profits and that team consensus is needed, and this may lead to conflicts.
What type of company do you want to start?
There are three main business models, service based, product based and platform based. The service based companies are the easiest to found because they require relatively little start-up capital. Examples of service based companies are consultancy companies and clinical research companies.
The product based company aims to develop a specific product, such as a drug or a diagnostic test and includes the whole process from discovery to development and marketing. Therefore this is often the most capital-intensive business model.
The platform based companies develop a specific technology platform, such as a drug delivery system or a viral transfection vector that can have many applications. The company generates revenues by licensing the technology platform out. Freedom to operate is essential for both platform companies and product companies. This can be achieved by either filing patents or taking (a) license(s)
The fear of failure is something that may hold people back from taking the first step to entrepreneurship. But whether you succeed or fail in your entrepreneurial quest you will have gained a tremendous amount of experience, and that will be invaluable for your future career, whether in employment of as self-employed professional.
If you are interested in exploring whether entrepreneurship is something for you, here are some recommended websites with more information and tips:
The entrepreneurs guide to a biotech startup: http://tinyurl.com/nday6kj
Determinants of academic entrepreneurship: http://tinyurl.com/qazeetd
Ten step plan to starting your own business: http://tinyurl.com/43y8kpp
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