The global healthcare industry is in flux like never before. It is one of the first few industries to embrace digital technologies such as artificial intelligence, big data analytics, mHealth, wearables, telehealth, and robotics.
Not only that, but global equity funding to digital health companies reached $3.67 billion in 2017 YTD (as of May 22, 2017). It was expected to reach over $9.4 billion in funding by the end of 2017, a record-breaking 5-year high.
As the healthcare industry continues to adopt digital technology, the number of healthcare startups is also growing. In other words, there is a fierce competition. You are going to need a lot more than just a brilliant idea to launch and survive the aggressive competition.
Here are seven factors that you must take into account to build a successful health startup and keep it afloat forever.
1. Stay flexible
Every business needs to adapt to emerging market trends, and your health startup is no exception to this rule. In fact, startups have to stay one step ahead of the changing market conditions.
Unfortunately, the healthcare industry is one of the most complicated, with tons of health regulations, licenses, rules, and marketing gimmicks. That’s why your startup needs to be flexible from the beginning.
However, being flexible doesn’t necessarily mean your goals should keep changing too. Build and commit to your long-term growth plan, while keeping your approach flexible. You and your team must know how to think about problems from new angles and adapt to changing market and customer demands.
Flexibility will also allow you to acquire unique talent from different areas of the world. For example, having flexible work hours means you can hire talented candidates from different time zones, which will increase your productivity while keeping the costs down.
2. Have a comprehensive growth strategy
Your health startup business plan should be a tool to guide your growth. If you’ve never written a business plan before, take a look at these sample medical startup business plans. An efficient growth strategy is a must for a startup. At first, you need to focus on developing your business model and validating it. Just claiming your product or service is revolutionary isn’t going to be enough. You will need to demonstrate the results as well. After the validation, your startup will need to concentrate on gaining traction.
Having a well-defined target market is also necessary to develop a sustainable growth strategy. Targeting a specific niche doesn’t mean you should abandon the ones that don’t fit your criteria. However, you should avoid having a very general or overly broad market segment. For example, you shouldn’t say you will target “any hospital interested in the product.” Instead, find out if you can just focus on hospitals specializing in cancer treatments or Alzheimer’s. Once you understand when and how customers will buy from your business, you can then scale your startup accordingly.
Of course, you will need a killer product—but, you will also need a competent growth strategy that will encompass comprehensive marketing, sales, research and development, technology, and beyond. You may need to add more members to your team, expand your customer service, and incorporate new technologies, and improve information exchange among others.
3. Pick the right team members
Setting up a successful startup and keeping it afloat is a team effort. You will need to choose people who can complement your skill set and realize your vision as your core team members. Expertise is one skill your core team can’t do without; you will need people with both startup and healthcare experience on your founding team.
Your core team members should be able to handle any challenge or task thrown at them, and quickly switch the roles based on their skills and expertise. Besides experience, they will also need to have a combination of leadership, communication, and presentation skills, plus financial and technical knowledge.
4. Know thy customer
It may seem obvious, but this well-known factor plays a critical role in building your startup. If you don’t have the right customers, your business simply won’t survive. So, knowing your customers is your number one priority. As a startup, you have the opportunity to ingrain a customer-first mentality in your organization right from the beginning.
Your potential customers will be patients, healthcare professionals, and medical organizations. However, you will need to create more specific customer segments. For example, if your product focuses on cancer treatments, your target segment will include cancer patients, oncologists, equipment manufacturers, and cancer research organizations.
The first step is to find out as much as you can about your customers. What makes them tick? What are their pain points? How will your product or service make their lives easier? Will it save them money or make a particular process or treatment easier? Where do they hang out? Once you understand all these points, you can start networking with them.
5. Get your end-users involved
You cannot develop deliverable healthcare products without involving your end-users directly in the process. Most healthcare professionals, organizations, and patients have a fair idea of what they want. Keeping them in the loop means you can collect accurate and most relevant patient data which can speed up your development process further. With this insight, you can bring products to market faster than your competitors.
Make them a part of your process from the very beginning. It will save considerable money, time, and efforts in the long run. As you can see, this aligns with the previous points. Knowing your customers will make it easier to get them involved in the development process.
6. Pay attention to healthcare regulations
The healthcare industry comes with a complex web of regulations. If you are planning to enter the international market, the complications further increase as every country has different health regulations. Not only patient safety and privacy laws but patent and intellectual property laws are also regulated heavily. You need to be aware of the latest amendments to the relevant regulations to make sure your company doesn’t inadvertently break them.
Along with the laws and regulations, you also have a few ethical responsibilities. Health care ethics are the moral principles and values that allow you to make the right choice while promoting, distributing, and operating your product to healthcare organizations or patients directly.
If you want to find success in the healthcare industry, you will need to abide by these rules right from the beginning. Hiring an in-house legal counsel or consulting with an experienced law firm specializing in healthcare law is probably the best solution. Spending a few hundred dollars today may end up saving millions tomorrow.
7. Secure timely funding
Because of complex government regulations and a lengthy incubation period, funding a healthcare startup is more difficult compared to financing a tech startup. Your prototype must be ready and fully functional before you start knocking on the doors of potential investors. That’s why having a revenue-minded focus from the early stages helps to secure funding.
Bootstrapping or self-funding a healthcare startup is very difficult, as most healthcare starts require considerable investment. However, you can certainly raise some of the capital through bootstrapping and the rest via seed funding. Venture capital, angel investors, and equity investment platforms (crowdfunding) seem to be the most popular options in the healthcare industry. Publicly traded hospitals and healthcare organizations have also started offering venture funds to healthcare startups.
Usually, these investors have the resources and the medical expertise to validate your business model. Still, you can’t ignore the possibility of securing non-dilutive capital from sources such as SBIR (Small Business Innovative Research) or business development grants from state and local governments. SBIR often offers grants to projects that are deemed risky by the VCs or equity investors. Initially, you get up to $150,000 to establish the commercial potential of your startup idea. In the second phase, you can get up to $1 million over two years, to expand your services further.
The healthcare industry is one of the rapidly developing industries globally. Although the industry is known for embracing innovative ideas, it is also renowned for having an extremely competitive and volatile business environment. Plus, the stringent healthcare regulations make it difficult to launch products and services quickly.
Hopefully, the above tips will help—now suit up and disrupt the industry with your astounding business idea!