Your first start-up. A new company. A new life.
Identity. Validation. A most excellent answer to “what do you do?” (Or “What does your son/daughter do?”)
But your investors, collaborators, creditors and future partners and employees can’t eat validation or identity. We want to see you transform your idea into a business. So crack your knuckles, roll up your sleeves and prepare to do battle on four fronts:
4) Proof of concept
Part one: Identity.
Part one step one: choose a name. “Sara’s project” isn’t a company. It’s a hobby. Give your project a name. Print business cards. Open a bank account. Get a credit card. Register a URL. Create a twitter identity but do not tweet. Do not start a Facebook page.
Choose a corporate form. Learn the differences between single proprietorship, partnership, limited liability company, S corporation and C corporation (try www.nolo.com for an overview) and choose one for your company. Key issues include limiting your personal liability and avoiding double taxation. But the most important issue is making your company an easy entity in which to invest.
Approach one of the usual suspect law firms that have biotech practices and ask them to prepare your paperwork, and ask them to do it for free, in exchange for being paid for the more extensive work that you will need to be done later.
Approach an accounting firm that has biotech experience and ask them to set up your QuickBooks files so that later, when you start paying them, it will be really easy for them to pull in your data. Call ADP or Paychex and get your payroll set up. It will be easy since you are the only employee.
Part one step two: start writing your script. You need to develop:
1) A quick description of your company. By quick I mean five or six or seven words, a way that you can quickly separate those people who may want to a) collaborate with you or work for you or invest in you or partner with you from b) the rest of the world. Group a) will respond to your quick description with “Cool. Tell me more.” Group b) will respond by changing the subject.
2) An elevator pitch. More on elevator pitches here: http://www.forbes.com/sites/davidsable/2014/04/16/investors-diary-intentionally-bad-elevator-pitches-problem-first-solution-later/
The goal for the elevator pitch? Eliciting “I’d love to hear more.” More is the…
3) Business plan. My first business plan was a 150-page Word document; others have created successful businesses on the basis of 20 slide Powerpoint presentations. For the new entrepreneur the most important role for the business plan is to convince you that the business is really worth doing. For everyone else the business plan is your road map from abstract idea to profitable exit, with stops at validation of concept, proof of ability to attract future investment, and ability to evolve as the environment changes.
The business plan moves from the words-only descriptions and elevator pitches and into quantitative market models and pro forma financial statements. Writing a business forces you into accounting. Not “latest update to subtopic 205–40 FASB accounting standards” fluency — more the “Où se trouvent les toilettes?” (“Where is the bathroom?”) sort.
So between naming, incorporating, describing, pitching and papering your business, and learning some basic accounting — the new entrepreneur should be able to stay busy for the first day or two.
More to come.