It’s one to thing have an idea; it’s another to turn that idea into a product. But there’s another element to starting a business based on this – how can you expect the unexpected?
Having a good idea in the safety of a lab or university is one thing. Translating that good idea into a successful life science business is something else. And then there is a final question that many fail to see; what happens to your good idea and your business if disaster strikes?
Developing something from an academic project into a business idea requires a wider range of considerations than some might imagine. You have to buy or hire property, convert the relevant parts of that property to suit your new business, buy equipment, hire a workforce and then produce a product according to a business schedule set by the needs of the customer.
Most people recognise the need for cover, and buy insurance. But more often than not, it’s standard insurance for fire, flood and other perils – and this may not be sufficient for specialist risks.
Risk management is a complex area and one that many companies – especially small start ups – may not fully understand. They might have an innovative product, but they might not necessarily have the foresight to fully anticipate the range of potential risks ahead.
You need to be aware of all the issues and not rely purely on risk transfer mechanisms. Even if the insurance policy responds to a disaster, you need a plan for your wider business. You have to identify what the true risks are.
Some organisations overlook the time period between the event itself and the claim being fully paid out. It can take time for insurance companies to assess the damage and issue a payment. Or, worse, they might fail to consider that the product they have been developing or producing is so unique that getting production back on track might be more difficult than anticipated.
Think about the chances of one of the following happening. A production schedule might need to be recalculated because the wrong equipment was delivered. A leaking roof may damage specialist equipment, meaning it has to be replaced. Key research material might be lost, which will take time to be recreated. And premises, such as a clean room, that have been damaged might need to be recertified by a regulatory body, something that again might take more time than was initially anticipated. Time is an element that needs to be carefully considered – the best-case scenario for the time it takes for a pay-out or a delivery might be too optimistic.
Continuity planning is needed to complement your business interruption cover, so you can properly identify any potential risks. Bigger companies tend to have the resources to deal with this issue. Smaller ones often don’t – and can pay the price.
Individual insurance polices can look reassuring, but they have to be framed within a larger plan. Just having insurance is never enough – clients nee to address the possibility of a major disruption dislocating their overall business plan. Business continuity planning can help to address that dislocation and protect an organisation from the potential risks that might threaten its very existence.
Posted by Bethany Davies on
15 May 2017 at 12:00 AM
Business, Insurance cover, Life science
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