Marketing and
Positioning the Idea,
the Product and You
True Stories from a Serial Entrepreneur
North Coast Medical Products, Inc.
My first big sale (selling “me”): Converting from being an
employee to being an entrepreneur.
The company: NCMP eventually sold and serviced the
products of six different major medical manufacturers to
hospitals in five different states: Ohio, Michigan, Indiana,
Pennsylvania and West Virginia.
The products: Operating room equipment, including surgical
tables and accessories and supporting supplies, and also
radiological equipment (fluoroscopic C-Arms).
North Coast Medical Products
► What
was good about the business model:
- Start up costs were almost non-existent
- Revenues came quickly (if you could sell)
► What
was bad about the business model:
- The hospital market is a VERY tough market to
break into; but once you’re in, you’re “in.”
- Lack of control over your destiny
BE RELENTLESS! USE THE
ADVANTAGES YOU HAVE TO GET THE
JOB DONE.
Why was NCMP was a success?:
We allowed our salespeople to make a lot of money (and,
therefore, they made US a lot of money!)
We were one of the few companies who sold BOTH operating
room and radiological equipment (dual specialization). We
sold ourselves as not only having the best products, but as
being “one less vendor” for the hospital to deal with.
Last, I used my accounting background and played up the
expertise associated with my being a CPA to “prove” to
hospitals – on paper – how they could save money by
buying the products I was selling.
ALWAYS BE LOOKING FOR THE NEXT
OPPORTUNITY.
►
We ended up selling NCMP to a medical manufacturer who
then shut it down. Why do you think we sold it?
►
The most important result of NCMP: The product ideas for
my NEXT company were a direct result of my experiences
at NCMP.
Because we sold to two different hospital departments when
few others dared to do so WE SAW PRODUCT DESIGN
PROBLEMS OTHERS DIDN’T.
Some of the Product Design Problems We Saw at
North Coast Medical Products
The “C” didn’t fit around the surgical table.
Existing products produced poor radiological images (white lines and white
noise in the images) due to bad materials and bad design.
The tables were difficult to adjust so the C-Arm had to be moved instead
of adjusting the table:
- Extra person in O.R. ($$)
- Slower surgeries
- Less surgeries ($$$)
- Negative effects on patients
350 lb. weight limit of tables was too low.
SO NOW THAT YOU SEE THE PROBLEM/OPPORTUNITY
WHAT DO YOU DO WITH IT?
►
At NCMP, we tried to get the medical manufacturers to
improve their products.
►
Opportunity Recognition: We could make a better product
ourselves and be medical manufacturers – the folks in the
industry who had control over their own destiny.
►
My First Business Plan (why I did it):
- I didn’t know how to manufacture – anything!
- I didn’t know how much money I needed – or where the
that money would come from.
- Note: I did my first business plan to talk myself
out of starting my second business – ATM.
American Table Manufacturing, Inc.
► Q:
►
How did we start it?
A: We mortgaged our houses, found ourselves a good engineer and
some industrial space and got going (a garage shop start-up and a
lesson in humility).
► Q:
How did we develop the products?
► A: From simple to increasingly complex tables (we developed two
solid platforms that worked and then added to them). We
subcontracted out or used off-the-shelf parts at first, but eventually
built our own computers and fabricated certain other parts internally.
► Q:
Where did we get our product ideas?
A: From our customers and from our own observations.
WHEN YOU WANT TO CONVINCE SOMEONE
TO DO SOMETHING, YOU NEED TO THINK
ABOUT WHAT WOULD MOTIVATE YOU TO
DO IT.
Who wants to buy the first surgical table ever manufactured
by a brand new medical manufacturer?
(How did I get hospitals to buy my product?)
IF YOU’RE GOING TO GIVE SOMETHING
BIG AWAY – BE SURE TO GET
SOMETHING BIG BACK!
The Cleveland Clinic
The Mayo Clinic
Massachusetts General Hospital
(where the students from Harvard Medical School
learn their trade)
Johns Hopkins
(Why did we target these particular hospitals?)
WHEN YOU HAVE THE OPPORTUNITY TO DO
“MORE THAN YOU HAVE TO DO” IN ORDER
TO HELP YOUR FELLOW ENTREPRENEUR, DO
IT. YOU NEVER KNOW WHEN YOU’RE GOING
TO NEED A FAVOR IN RETURN.
► The
Call (“I need help!”)
► The Decision (a begrudged, “ok”)
► Why it turned out to be one of the smartest
things I’ve ever done……
SOMETIMES YOU HAVE TO DO THINGS
YOU REALLY DON’T WANT TO DO.
McCormick Place in Chicago: The RSNA trade show.
Booth space was $10,000 per “space.” We
needed at least 4 “spaces” to attend and debut
our spectacular new ATM 6000 surgical table!
I decided in order to attend, I’d need to be in
SOMEONE ELSE’s booth space (an example of
classic bootstrapping). Ideally a C-Arm company
that didn’t have a surgical table line. (Who’d I
have to call?)
TRUTH REALLY CAN BE
STRANGER THAN FICTION
ESPIONAGE at a trade show (I had been
warned)……what’s a “little guy” to do?
GUARDING against further espionage and
sabotage at a trade show………
Well….THAT didn’t work…Now what do I do?
“Hello, now I need a favor………..”
ATM’s successes within 2-1/2 years:
We had developed a diverse line of surgical tables
and surgical table accessories.
We had solved design problems other
manufacturers couldn’t - or wouldn’t – solve.
We had product placed in major teaching
institutions like Massachusetts General, etc.
We had applied for our patents.
Our products were UL-listed.
-- So, what’s next?
WHAT WAS NEXT
“What do you mean it’s time to sell the company?”
And by the way, HOW do you sell a company like
ATM? (NCMP vs. ATM)
Repercussions of being an FDA compliant company:
- Compliance vs. approval.
- Being subject to surprise audits and site visits.
WHEN IT COMES TO MARKETING ANYTHING,
AN OUNCE OF PREVENTION IS WORTH A
POUND OF CURE
Potentially the largest difficulty in marketing and selling ATM? My early
research showed it was convincing our potential buyers we were FDA
compliant.
Luckily we had planned ahead (we had decided our exit strategy was to sell
the company when we prepared the business plan) and, by the time we
were ready to sell, we had already addressed the issue.
How do you know you’ve satisfied the FDA?
- Code of Federal Regulations
- Look at what other companies are doing
- FDA website………?
The Answer
FDA Auditor Training!
HOW TO SELL YOUR SMALL COMPANY
TO A BIG COMPANY
- Investment bankers (fee negotiation)
- Attorneys (experience counts!)
- Develop the Management Presentation
- Sales Approach:
The concept of the Strategic Buy (selling your
PRODUCT vs. your revenue/profit record).
- The due diligence process……………….
DUE DILIGENCE
- Massive amount of paperwork!
- Problem: How do you give your potential buyer
(a competitor) enough information to want to
BUY your company, but not enough information
to destroy you if they don’t? (In my opinion,
the answer is NOT a confidentiality agreement.)
SOMETIMES THE BEST OPTION, THE ONLY
OPTION, IS TO SIT DOWN, SHUT UP AND
…..WAIT.
►
So it’s September 10, 2001 and we’re in the very final
stages of negotiating the sale of ATM to a much larger
corporation….
►
…..Nothing can go wrong now, right?
►
What I learned AFTER the sale
►
Trust your gut and do everything in your power to protect
your company’s reputation: The Story of “Big Jim.”
►
Imperial Luxury Home Builders: How do you market
yourself as a new luxury home builder?