How to open a medical research lab?
Are you keen to open a medical research lab but don't know where to begin? Then you're in luck because this guide will lead you through all the steps required to check if your business idea can be profitable and, if so, turn it into a reality.
Our guide is for prospective entrepreneurs who are thinking about starting a medical research lab no matter how far they are in their journey - whether you’re just thinking about it or in the middle of market research this guide will be useful to you.
Think of this as your blueprint: we cover everything you need to know about opening a medical research lab and what key decisions you’ll need to make along the way.
Ready? Let’s get started!
Understanding how a medical research lab works
The very first step when exploring a business idea such as starting a medical research lab is to make sure you understand how the business operates and makes money (which is what we call the business model).
This will not only give you an initial idea of how profitable the business can be, but it will also enable you to make sure that this is the right business idea for you, given your skills, start-up capital and family or personal lifestyle, in particular.
The best ways to get to grips with the medical research lab's business model are to:
- Talk to medical research lab owners with experience
- Work a few months in a medical research lab already in operation
- Take a training course
Talk to medical research lab owners with experience
Experienced medical research lab owners have valuable insights and can provide practical advice based on their firsthand experiences.
They've likely encountered and overcome challenges that a newcomer might not anticipate. Learning from other’s mistakes can save you both time and money and potentially increase your venture’s chances of succeeding.
Work a few months in a medical research lab already in operation
Obtaining work experience in the industry can be a crucial factor in confirming whether you truly want to start a medical research lab, as it provides insight into the day-to-day activities.
For instance, if the working hours are longer than expected or if other business requirements don't align with your personal lifestyle or preferences, you might reconsider your entrepreneurial goals.
Even if you've decided that this business idea is a good fit for you, gaining work experience will still be valuable. It helps you better understand your target market and customer needs, which is likely to be beneficial when launching your own medical research lab.
Take a training course
Obtaining training within your chosen industry is another way to get a feel for how a medical research lab works before deciding to pursue a new venture.
Whatever approach you choose to familiarise yourself with the business, before going any further with your plans to open a medical research lab, make sure you understand:
- What skills are required to run the business (compare this with your own skills)
- What a typical week in the business is like (compare this with your personal or family life)
- What is the potential turnover of a medical research lab and the long-term growth prospects (compare this with your level of ambition)
- Your options once you decide to sell the business or retire (it's never too early to consider your exit)
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What is the ideal founding team for my medical research lab?
The next step to opening your medical research lab, is to decide whether to assemble an ideal team or venture solo.
The failure rate for business start-ups is high: almost half don't make it past the five-year mark, and setting up a medical research lab is no exception.
Starting with a group of co-founders helps reduce this risk as each of you brings complementary skills and enables the financial risk to be spread on multiple shoulders.
However, managing a business with multiple partners comes with its own set of challenges. Disagreements among co-founders are quite prevalent, and they can pose risks to the business. That's why it's essential to carefully weigh all aspects before launching a business.
To help you think things through, we recommend that you ask yourself the following questions:
- Do you need more co-founders for this venture?
- Do you share the same vision and ambition as your potential partners for this project?
- What is your plan B?
Let's look at these issues in more detail.
Do you need more co-founders for this venture?
To answer this question you will need to consider the following:
- Are there any key skills missing for which you would rather have a business partner than recruit an employee?
- Do we have enough equity? Would the company benefit from more capital at the outset?
- Will the proposed number of founders make it easy to make decisions (an odd number of partners, or a majority partner, is generally recommended to avoid deadlock)?
In simple terms, co-founders bring skills, money, or both to the table. Having more partners is beneficial when there's a lack of either of these resources.
Do you share the same vision and ambition as your potential partners for this project?
One of the main sources of conflict between co-founders comes from a lack of alignment on the long-term vision.
To avoid any risk of disagreement, it is advisable to agree on ambitions from the outset and to provide an exit mechanism for one of the partners in the event of disagreement.
What is your plan B?
We hope your medical research lab takes off and thrives, but it's smart to have a "plan B" just in case things don't go as expected.
How you tackle potential failure can vary broadly depending on the type of co-founders (close friend, spouse, ex-colleague, etc.) and the personal circumstances of each of them.
For example, launching a family business with your spouse might seem exciting, but if it fails, you risk losing all of your household income at once, which might be stressful.
Likewise, starting a business with a friend might strain the friendship if things go wrong or if tough decisions need to be made.
Before diving in, make sure to thoroughly think about your choices. This way, you'll be ready for whatever might come your way when starting up.
Conducting market research for a medical research lab
The next step in launching a medical research lab is to carry out market research. Let's take a look at what this involves.
The objectives of market research
The objective here is very simple: to assess the level of demand for your business and whether there is an opportunity for it to thrive in your chosen location.
The first step will be to check that the market is not saturated with competing offers and that there is room for a new player: your medical research lab.
Your market analysis will also help you identify a concept and market positioning that has every chance of being successful in your target market, thereby helping increase your business's chances of success.
Carrying out market research for your medical research lab will also enable you to better understand the expectations of your future customers and the most effective ways to communicate with them in your marketing plan.
Analyse key trends in the industry
Your market research should start with an industry analysis in order to gain a good understanding of the main players and current trends in your sector.
Once you've delved into the current state of the market, it will be time to assess what proportion of your target market can be seized by your medical research lab. To do this, you will need to consider both the demand and supply side of the market.
Assess the demand
After checking out the industry, let's shift our focus to figuring out what your potential customers want and how they like to buy.
A classic mistake made by first-time entrepreneurs is to assess demand on the global or national market instead of concentrating on their target market. Only the market share that can be captured by your company in the short term matters.
Your demand analysis should seek to find answers to the following questions:
- Who are your target customers?
- How many are there?
- What are their expectations?
- What are their buying habits?
- How much budget do they have?
- What are the different customer segments and their characteristics?
- What are the main distribution channels and means of communication for reaching each segment?
The aim of the demand analysis is to identify the customer segments that could be targeted by your medical research lab and what products and services you need to offer to meet their expectations.
Analyse the supply side
You will also have to familiarize yourself with the competing medical research labs on the market targeted by your future business.
Amongst other things, you’ll need to ask yourself:
- Who are the main competitors?
- How many competitors are already present?
- Where are they located?
- How many people do they employ?
- What is their turnover?
- How do they set their prices?
- Are they small independent businesses or national players?
- Do they seem to be in difficulty or are they flourishing?
- What is their market positioning?
- What types of products and services do they offer?
- What do customers seem to like about them?
The aim of the competitive analysis is to identify who your competitors will be and to gather information that will help you find a differentiating commercial positioning (more on that later in this guide).
Regulations
Conducting market research is also an opportunity to look at the regulations and conditions required to do business.
You should ask yourself the following questions:
- Do you need to have a specific degree to open a medical research lab?
- Do you need specific licences or permits?
- What are the main regulations applicable to your future business?
Given that your project is at an early stage, your focus should be to ensure that there are no roadblocks from a regulatory standpoint before you deep dive into the planning process.
Once your project is more advanced, you will have the opportunity to talk about regulation more in-depth with your lawyer.
Concluding your market research
By the time your market research is completed, you should have either:
- Pinpointed an untapped business opportunity,
- Or arrived at the realisation that the market is saturated, prompting the search for alternative business ideas or models.
If the conclusion is that there is an opportunity in the market to cater to one or more customer segments currently underserved by competitors, that's great!
Conversely, if you come to the conclusion that the market is already saturated, don’t panic! The good news is that you won’t spend several years working hard on a project that has little chance of success. There is no shortage of business ideas either - at The Business Plan Shop, we have identified more than 1,300 potential business ideas!
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Choosing the right concept and positioning for your medical research lab
Once your market research is completed, it's time to consider the type of medical research lab you want to open and define precisely your company's market positioning in order to capitalise on the opportunity you identified during your market research.
Market positioning refers to the place your product and service offering occupies in customers' minds and how they differ from competing products and services. Being perceived as the premium solution, for example.
There are four questions you need to consider:
- How will you compete with and differentiate yourself from competitors already on the market?
- Is it better to start or buy a medical research lab already in operation?
- How will you validate your concept and market positioning?
Let's look at each of these in a little more detail.
How will you compete with and differentiate yourself from competitors already on the market?
When you choose to start up a medical research lab, you are at a disadvantage compared to your rivals who have an established presence on the market.
Your competitors have a reputation, a loyal customer base and a solid team already in place, whereas you're starting from scratch...
Entering the market and taking market share from your competitors won't happen automatically, so it's important to carefully consider how you plan to establish your presence.
There are four questions to consider here:
- Can you avoid direct competition by targeting a customer segment that is currently poorly served by other players in the market?
- Can you offer something unique or complementary to what is already available on the market?
- How will you build a sustainable competitive advantage for your medical research lab?
- Do you have the resources to compete with well-established competitors on your own, or would it be wiser to explore alternative options?
Also, think about how your competitors will react to your arrival in their market.
Is it better to start or buy a medical research lab already in operation?
An alternative to opening a new business is to take over a medical research lab already trading.
Purchasing an existing medical research lab means you get a loyal customer base and an efficient team. It also avoids disrupting the equilibrium in the market by introducing a new player.
A takeover hugely reduces the risk of the business failing compared to starting a new business, whilst giving you the freedom to change the market positioning of the business taken over if you wish.
This makes buying an existing medical research lab a solid alternative to opening your own.
However, buying a business requires more capital compared to starting a medical research lab from scratch, as you will need to purchase the business from its current owner.
How will you validate your concept and market positioning?
Regardless of how you choose to establish your business, it's crucial to make sure that the way you position your company aligns with the expectations of your target market.
To achieve this, you'll have to meet with your potential customers to showcase your products or services and get their feedback.
Where should I base my medical research lab?
The next step in our guide on starting a medical research lab involves making a key choice about where you want your business to be located.
Picking the ideal location for your business is like selecting the perfect canvas for a painting. Without it, your business might not showcase its true colors.
We recommend that you take the following factors into account when making your decision:
- Visibility and foot traffic - In order for a medical research lab to gain recognition and attract potential partners and investors, it is important to be located in a visible and highly trafficked area.
- Parking space, road and public transport accessibility - A medical research lab may require frequent shipments of equipment and supplies, making it necessary to have ample parking space and easy access to roads and public transportation.
- Proximity to target customers - Being located near hospitals, clinics, and universities can provide a steady flow of potential clients and collaborators for a medical research lab.
- Competitor presence - While it may be beneficial to have some competitors nearby for collaboration and networking, it is also important to ensure that the location is not oversaturated with similar businesses.
This list is not comprehensive and will have to be adjusted based on the details of your project.
The parameters to be taken into account will also depend on whether you opt to rent premises or buy them. If you are a tenant, you will need to consider the conditions attached to the lease: duration, rent increase, renewal conditions, etc.
Lease agreements differ widely from country to country, so it's essential to review the terms that apply to your situation. Before putting pen to paper, consider having your lawyer look carefully at the lease.
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Choosing your medical research lab's legal form
The next step to open a medical research lab is to choose the legal form of your business.
The legal form of a business simply means the legal structure it operates under. This structure outlines how the business is set up and defines its legal obligations and responsibilities.
Why is your medical research lab's legal form important?
Choosing the legal form for your medical research lab is an important decision because this will affect your tax obligations, your personal exposure to risk, how decisions are made within the business, the sources of financing available to you, and the amount of paperwork and legal formalities, amongst other things.
The way you set up your business legally will impact your taxes and social contributions, both at a personal level (how much your income is taxed) and at the business level (how much the business's profits are taxed).
Your personal exposure to risk as a business owner also varies based on the legal form of your business. Certain legal forms have a legal personality (also called corporate personality), which means that the business obtains a legal entity which is separate from the owners and the people running it. To put it simply, if something goes wrong with a customer or competitor, for example, with a corporate personality the business gets sued, whereas without it is the entrepreneur personally.
Similarly, some legal forms benefit from limited liability. With a limited liability the maximum you can lose if the business fails is what you invested. Your personal assets are not at risk. However, not all structures protect you in such a way, some structures may expose your personal assets (for example, your creditors might try to go after your house if the business incurs debts and then goes under without being able to repay what it owed).
How decisions are made within the business is also influenced by the legal form of your medical research lab, and so is the amount of paperwork and legal formalities: do you need to hold general assemblies, to produce annual accounts, to get the accounts audited, etc.
The legal form also influences what sources of financing are available to you. Raising capital from investors requires having a company set up, and they will expect limited liability and corporate personality.
What are the most common legal structures?
It's important to note that the actual names of legal structures for businesses vary from country to country.
But they usually fall within two main types of structures:
- Individual businesses
- Companies
Individual businesses
Individual businesses, such as sole traders or sole proprietorships, are legal structures with basic administrative requirements.
They primarily serve self-employed individuals and freelancers rather than businesses with employees.
The main downside of being a sole trader is that there's usually no legal separation between the business and the person running it. Everything the person owns personally is tied up with the business, which can be risky.
This means that if there are problems or the business goes bankrupt, the entrepreneur's personal assets could be taken by creditors. So, there's a risk of personal liability in case of disputes or financial issues.
It is also not possible to raise equity from investors with these structures as there is no share capital.
Despite the downsides, being a sole proprietorship has some advantages. There is usually very little paperwork to get started, simpler tax calculations and accounting formalities.
Companies
Companies are all rounders which can be set up by one or more individuals, working on their own or with many employees.
They are recognized as a distinct entity with their own legal personality, and the liability is usually limited to the amount invested by the owners (co-founders and investors). This means that you cannot lose more than you have invested in the business.
This separation ensures that in legal disputes or bankruptcy, the company bears primary responsibility, protecting the personal assets of the founder(s) and potential investor(s).
How should I choose my medical research lab's legal structure?
Deciding on the legal structure is usually quite straightforward once you know how many co-founders you'll have, whether you'll have employees, and the expected revenues for the business.
A good business idea will be viable whatever the legal form you choose. How businesses are taxed changes every year, therefore one cannot rely on specific tax benefits tied to a particular structure when deciding to go into business.
One easy way to proceed is to take note of the legal structures used by your top five competitors, and assume you're going with the most commonly chosen option. Once your idea is mature and you're prepared to formally register the business, you can validate this assumption with a lawyer and an accountant.
Can I switch my medical research lab's legal structure if I get it wrong?
You can switch your legal setup later on, even if it involves selling the old one to a new entity in some cases. However, this comes with extra costs, so it's better to make the right choice from the beginning if you can.
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Assess the startup costs for a medical research lab
The next step in creating a medical research lab involves thinking about the equipment and staff needed for the business to operate.
After figuring out what you need for your business, your financial plan will reveal how much money you'll need to start and how much you might make (check below for more details).
Because every venture is distinctive, providing a reliable one-size-fits-all budget for launching a medical research lab without knowing the specifics of your project is not feasible.
Each project has its own particularities (size, concept, location), and only a forecast can show the exact amount required for the initial investment.
The first thing you'll need to consider is the equipment and investments you'll need to get your business up and running.
Startup costs and investments to launch your medical research lab
For a medical research lab, the initial working capital requirements (WCR) and investments could include the following elements:
- Laboratory equipment: This includes items such as microscopes, centrifuges, and spectrophotometers. These are essential for conducting experiments and analyzing samples in a medical research lab.
- Computer hardware and software: Computers are necessary for data analysis and storage in a medical research lab. This includes both desktop computers and specialized equipment such as data analysis software or laboratory information management systems.
- Biological safety cabinets: These cabinets are essential for handling potentially hazardous materials in a medical research lab. They provide a contained environment for working with biological samples and preventing contamination.
- Freezers and refrigerators: Medical research labs often need to store biological samples and reagents at specific temperatures. This requires specialized freezers and refrigerators, such as ultra-low temperature freezers or -80°C freezers.
- Furniture and fixtures: This can include items such as lab benches, chairs, and shelving units. These are necessary for creating a functional and organized workspace in a medical research lab.
Of course, you will need to adapt this list to your business specificities.
Staffing plan of a medical research lab
In addition to equipment, you'll also need to consider the human resources required to run the medical research lab on a day-to-day basis.
The number of recruitments you need to plan will depend mainly on the size of your company.
Once again, this list is only indicative and will need to be adjusted according to the specifics of your medical research lab.
Other operating expenses for a medical research lab
While you're thinking about the resources you'll need, it's also a good time to start listing the operating costs you'll need to anticipate for your business.
The main operating costs for a medical research lab may include:
- Staff salaries and wages: This includes the salaries and wages of all staff members in the lab, including researchers, technicians, and administrative staff.
- Accountancy fees: You may need to hire an accountant to help with bookkeeping, tax preparation, and financial reporting for your medical research lab.
- Insurance costs: It is important to have insurance coverage for your lab, including liability insurance and property insurance to protect against any potential risks or accidents.
- Software licenses: Your lab may need to use specialized software for data analysis, imaging, or other purposes, and these licenses can be a significant expense.
- Banking fees: You will likely have to pay fees for various banking services, such as wire transfers, check processing, and account maintenance.
- Lab supplies and equipment: These expenses include the purchase of necessary supplies, such as chemicals, reagents, and lab equipment, as well as maintenance and repair costs.
- Utilities: Running a lab requires a lot of energy, so you can expect to have high utility costs, including electricity, water, and gas.
- Conference and travel expenses: Attending conferences and presenting research is an important aspect of medical research, but it can also be expensive, with costs including registration fees, travel, and accommodations.
- Publication fees: When publishing research, there may be fees associated with journal submissions, open access publishing, and other publication costs.
- Marketing and advertising: In order to attract funding and collaborators, your lab may need to invest in marketing and advertising efforts.
- Consulting fees: You may need to hire consultants for specific projects or to provide expertise in a certain area of research.
- Lab safety and compliance: Ensuring that your lab is compliant with all safety regulations and guidelines can be a significant expense, including training, equipment, and inspections.
- Professional association fees: Joining professional associations and societies can provide valuable networking and educational opportunities, but there may be membership fees associated with these organizations.
- Facility rental or maintenance: If your lab is not located on a university or hospital campus, you may have to pay for rental or maintenance of your facility.
- Data storage and management: With the amount of data being generated in medical research, you will likely need to invest in data storage and management systems, which can come with a cost.
Like for the other examples included in this guide, this list will need to be tailored to your business but should be a good starting point for your budget.
Creating a sales & marketing plan for your medical research lab
The next step to start a medical research lab is to think about how you are going to attract and retain customers.
You need to ask yourself the following questions:
- What actions can be leveraged to attract as many customers as possible?
- How will you then retain customers?
- What resources do you need to allocate for each initiative (human and financial)?
- How many sales and what turnover can you expect to generate in return?
How you will attract and retain customers depends on your ambition, the size of your startup and the nature of your exact concept, but you could consider the following initiatives.
Your sales forecast may also be influenced by seasonality related to your business type, such as fluctuations during busy holiday periods, and your competitive environment.
Can your business idea be profitable?
Just enter your data and let The Business Plan Shop crunch the numbers. We will tell if your business idea can generate profits and cash flows, and how much you need to get started.
How do I build my medical research lab financial forecast?
Let's now look at the financial projections you will need to prepare in order to open a medical research lab.
What is a medical research lab's financial projection?
Your financial forecast will help you budget your project so that you can evaluate:
- Its expected sales and growth potential
- Its expected profitability, to ensure that the business will be viable
- Its cash generation and financing requirements
Making your financial forecast is the only way to determine the amount of initial financing required to create your medical research lab.
There are lots of business ideas out there, but very few of them are viable, and making a financial forecast is the only way to ensure that your project makes economic and financial sense.
Creating a medical research lab financial projection is an iterative process, as you'll need to refine your figures as your business idea matures.
You'll start with a first high-level version to decide whether or not to continue working on the project.
Then, as your project takes shape, your forecasts will become increasingly accurate. You'll also need to test different assumptions to ensure that your idea of starting a medical research lab holds up even if your trading environment deteriorates (lower sales than expected, difficulties in recruiting, sudden cost increases or equipment failure problems, for example).
Your financial forecast will be part of your overall business plan, which we'll look at in more detail later. Your financial partners will use your business plan to decide if they want to finance you.
Once you've launched your business, you can compare your actual accounting figures with your forecasts, to analyze where the discrepancies come from, and then update your forecasts to maintain visibility over your future cash flows.
Financial forecasts are, therefore, a financial management tool that will be with you throughout the life of your company.
What does a financial projection look like?
Your medical research lab forecast will be presented using the following financial tables.
The projected P&L statement
The projected P&L statement for a medical research lab shows how much revenue and profits your business is expected to generate in the future.
The projected balance sheet of your medical research lab
Your medical research lab's projected balance sheet provides a snapshot of your business’s financial position at year-end.
The cash flow forecast
A projected cash flow statement for a medical research lab is used to show how much cash the business is expected to consume or generate in the years to come.
Which solution should you use to make a financial projection for your medical research lab?
Using an online financial forecasting tool, such as the one we offer at The Business Plan Shop, is the simplest and safest solution for forecasting your medical research lab.
There are several advantages to using specialised software:
- You can easily create your financial forecast by letting the software take care of the financial calculations for you without errors
- You have access to complete financial forecast templates
- You get a complete financial forecast ready to be sent to your bank or investors
- The software helps you identify and correct any inconsistencies in your figures
- You can create scenarios to stress-test your forecast's main assumptions to stress-test the robustness of your business model
- After you start trading, you can easily track your actual financial performance against your financial forecast, and recalibrate your forecast to maintain visibility on your future cash flows
- You have a friendly support team on standby to assist you when you are stuck
If you are interested in this type of solution, you can try our forecasting software for free by signing up here.
Choose a name and register your medical research lab
The next phase in launching your medical research lab involves selecting a name for your company.
This stage is trickier than it seems. Finding the name itself is quite fun; the difficulty lies in finding one that is available and being the first to reserve it.
You cannot take a name that is similar to a name already used by a competitor or protected by a registered trademark without inevitably risking legal action.
So you need to find a name that is available, and be able to register it before someone else can.
In addition, you will probably want to use the same name for:
- Your company’s legal name - Example LTD
- Your business trading name - Example
- The trademark - Example ®
- Your company’s domain name - Example.com
The problem is that the procedures for registering these different names are carried out in different places, each with their own deadlines:
- Registering a domain name takes only a few minutes
- Registering a new trademark takes at least 12 weeks (if your application is accepted)
- The time taken to register a new business depends on the country, but it's generally fast
You will therefore be faced with the choice of: either registering everything at once and hoping that your name will be accepted everywhere, or proceeding step by step in order to minimise costs, but taking the risk that someone else will register one of the names you wanted in the meantime.
Our advice is to discuss strategy with your legal counsel (see further down in this guide) and prioritise your domain names and registered trademarks. You'll always have the option of using a trade name that's different from your company's legal name, and that's not a big deal.
To check that the name you want is not already in use, you should consult:
- Your country's business register
- The relevant trademark registers depending on which countries you want to register your trade mark in
- A domain name reservation company such as GoDaddy
- An Internet search engine
In this area too, your legal counsel will be able to help with the research and formalities.
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Deciding upon the corporate identity of your medical research lab
The next step in opening a medical research lab is to look at your company's visual identity.
Your company's “visual identity” plays a crucial role in shaping your brand image. It helps you to be recognizable and to stand out from your competitors.
Although you can define your visual identity yourself, it is generally advisable to call on the services of a designer or marketing agency to achieve a professional result.
At a minimum, you will need to define the following elements:
- Logo
- Brand guidelines
- Business cards
- Website theme
Logo
Your medical research lab's logo allows others to quickly identify your company. It will be used on all your communication media (website, social networks, business cards, etc.) and official documents (invoices, contracts, etc.).
In addition to its design, it's important that your logo is available in a variety of colors, so that it can be seen on all media (white, dark background, etc.).
Brand guidelines
Having brand guidelines enables you to maintain consistency in formatting across all your communications media and official documents.
Brand guidelines define the font (family and size), design and colours used by your brand.
In terms of fonts, for example, you may use Roboto in size 20 for your titles and Lato in size 14 for your texts.
The colours used to represent your brand should generally be limited to five:
- The main colour,
- A secondary colour (the accent),
- A dark background colour (blue or black),
- A grey background colour (to vary from white),
- Possibly another secondary colour.
Business cards
Designing business cards for your medical research lab is a must, as they will allow you to communicate your contact details to your customers, suppliers, partners, potential recruits, etc.
In principle, they will include your logo and the brand guidelines that we mentioned above.
Website theme
In the same way, the theme of your medical research lab website will be based on your logo and the brand guidelines we mentioned above.
This involves defining the look and feel of your site's main graphic elements:
- Buttons,
- Menus,
- Forms,
- Banners,
- Etc.
Understanding the legal and regulatory steps involved in opening a medical research lab
The next step in opening a medical research lab is to take the necessary legal and regulatory steps.
We recommend that you be accompanied by a law firm for all of the steps outlined below.
Registering a trademark and protecting the intellectual property of your medical research lab
The first step is to protect your company's intellectual property.
As mentioned earlier in this guide, you have the option to register a trademark. Your lawyer can assist you with a thorough search to ensure your chosen trademark is unique and doesn't conflict with existing ones and help select the classes (economic activities) and jurisdictions in which to register your trademark.
Your lawyer will also be able to advise you on other steps you could take to protect your company's other intellectual property assets.
Drafting the contractual documents for your medical research lab
Your medical research lab will rely on a set of contracts and legal documents for day-to-day operations.
Once again, we strongly recommend that you have these documents drawn up by a lawyer.
Your exact needs will depend on the country in which you are launching your medical research lab and the size of the company you are planning.
However, you may wish to consider the following documents at a minimum:
- Employment contracts
- General terms and conditions of sale
- General terms and conditions of use for your website
- Privacy Policy for your website
- Cookie Policy for your website
- Invoices
- Etc.
Applying for licences and permits and registering for various taxes
The licenses and permits needed for your business will depend on the country where you are establishing it. Your lawyer can guide you on the regulations relevant to your activity.
Similarly, your chartered accountant will be able to help you register for taxes and take the necessary steps to comply with the tax authorities.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast and write a business plan to help convince investors that your business idea can be profitable.
How do I write a business plan for a medical research lab?
Once you've completed all the above steps, you can start writing the business plan for your medical research lab.
What is a medical research lab's business plan?
The business plan is a document containing:
- The financial forecast (discussed earlier in this guide), highlighting the project's financing requirements and profitability potential,
- A written presentation, which presents your project in detail and provides the necessary context for the reader to assess the relevance and coherence of your forecast.
The business plan is particularly important: it will help you validate your business idea and ensure its coherence and financial viability.
But it's also the document you'll send to your bank and potential investors to present your plan to open a medical research lab and make them want to support you.
So it's best to draw up a professional, reliable and error-free business plan.
How to write a business plan for my medical research lab?
If you're not used to writing business plans, or if you want to save time, a good solution is to use an online business plan software for startups like the one we offer at The Business Plan Shop.
Using The Business Plan Shop to create a business plan for a medical research lab has several advantages:
- You can easily create your financial forecast by letting the software take care of the financial calculations for you without errors
- You are guided through the writing process by detailed instructions and examples for each part of the plan
- You can access a library of dozens of complete startup business plan samples and templates for inspiration
- You get a professional business plan, formatted and ready to be sent to your bank or investors
- You can create scenarios to stress test your forecast's main assumptions
- You can easily track your actual financial performance against your financial forecast by importing accounting data
- You can easily update your forecast as time goes by to maintain visibility on future cash flows
- You have a friendly support team on standby to assist you when you are stuck
Interested? If so, you can try The Business Plan Shop for free by signing up here.
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How to raise finance for my medical research lab?
Once your business plan has been drafted, you’ll need to think about how you might secure the financing necessary to open your medical research lab.
The amount of initial financing required will obviously depend on the size of your medical research lab and the country in which you wish to set up.
Businesses have access to two main categories of financing: equity and debt. Let's take a closer look at how they work and what sources are available.
Equity funding
At a high level, the equity of your medical research lab will consist of the money that founders and potential investors will invest to launch the company.
Equity is indispensable as it provides the company with a source of long-term (often permanent) financing and demonstrates the founders' conviction in the company's chances of success, since their investments would be lost in the event of bankruptcy.
Equity investors can generate a return on their investment through dividends (which can only be paid out if the company is profitable) or capital gains on the resale of their shares (if the company is attractive enough to attract a buyer).
As you can see, the equity investors' position is extremely risky, since their capital is at risk and can be lost in the event of bankruptcy, and the company must be profitable or resellable before they can hope to generate a return on their investment.
On the other hand, the return on investment that equity investors can expect to generate by investing in a medical research lab can be very substantial if the company is successful.
This is why equity investors look for start-up ideas with very high growth or profitability potential, in order to offset their risk with a high potential return on investment.
In technical terms, equity includes:
- Share capital and premiums: which represent the amount invested by the shareholders. This capital is considered permanent as it is non-refundable. In return for their investment, shareholders receive shares that entitle them to information, decision-making power (voting in general assembly), and the potential to receive a portion of any dividends distributed by the company.
- Director loans: these are examples of non-permanent capital advanced to the company by the shareholders. This is a more flexible way of injecting some liquidity into your company than doing so as you can repay director loans at any time.
- Reserves: these represent the share of profits set aside to strengthen the company's equity. Allocating a percentage of your profits to the reserves can be mandatory in certain cases (legal or statutory requirement depending on the legal form of your company). Once allocated in reserves, these profits can no longer be distributed as dividends.
- Investment grants: these represent any non-refundable amounts received by the company to help it invest in long-term assets.
- Other equity: which includes the equity items which don't fit in the other categories. Mostly convertible or derivative instruments. For a small business, it is likely that you won't have any other equity items.
The main sources of equity are as follows:
- Money put into the business from the founders' personal savings.
- Money invested by private individuals, which can include business angels, friends, and family members.
- Funds raised through crowdfunding, which can take the form of either equity or donations (often in exchange for a reward).
- Government support to start-ups, for example, loans on favourable terms to help founders build up their start-up capital.
Debt funding
The other way to finance your medical research lab is to borrow. From a financial point of view, the risk/return profile of debt is the opposite of that of equity: lenders' return on investment is guaranteed, but limited.
When it borrows, your company makes a contractual commitment to pay the lenders by interest, and to repay the capital borrowed according to a pre-agreed schedule.
As you can see, the lenders' return on investment is independent of whether or not the company is profitable. In fact, the only risk taken by lenders is the risk of the company going bankrupt.
To avoid this risk, lenders are very cautious, only agreeing to finance when they are convinced that the borrowing company will be able to repay them without problems.
From the point of view of the company and its stakeholders (workforce, customers, suppliers, etc.), debt increases the risk of the venture, since the company is committed to repaying the capital whether or not it is profitable. So there's a certain distrust towards heavily indebted companies.
Companies borrow in two ways:
- Against their assets: this is the most common way of borrowing. The bank finances a percentage of the price of an asset (a vehicle or a building, for example) and takes the asset as collateral. If the company cannot repay, the bank seizes the asset and sells it to limit its losses.
- Against their future cash flows: the bank reviews the company's financial forecast to estimate how much the company can comfortably borrow and repay, and what terms (amount, interest rate, term, etc.) the bank is prepared to offer given the credit risk posed by the company.
When creating a medical research lab, the first option is often the only one available, as lenders are often reluctant to lend on the basis of future cash flows to a structure that has no track record.
The type of assets that can be financed using the first method is also limited. Lenders will want to be sure that they can dispose of foreclosed assets if needed, so they need to be assets that have an established second-hand market.
That being said, terms and conditions also depend on the lender: some banks are prepared to finance riskier projects, and not all have the same view of your company's credit risk. It also depends on the collateral you can offer to reduce risk, and on your relationship with the bank.
In terms of possible sources of borrowing, the main sources here are banks and credit institutions.
In some countries, it's also possible to borrow from private investors (directly or via crowdlending platforms) or other companies, but not everywhere.
Takeaways on how to finance a medical research lab
Multiple options are available to help you raise the initial financing you need to launch your medical research lab.
There are two types of financing available to companies. To open a medical research lab, an equity investment will be required and may be supplemented by bank financing.
What to do after launching my medical research lab?
Launching your medical research lab is the beginning of an exciting entrepreneurial adventure, and the culmination of your efforts to turn your idea into a reality. But this is also when the real work begins.
As you know, nearly half of all new businesses fail, so you'll need to do everything you can to make your business sustainable right from the start.
Estimating the future financial performance of a medical research lab inevitably involves a degree of uncertainty. That's why we recommend simulating several scenarios: a central case with the most likely scenario, an optimistic case, and a pessimistic case designed to test the limits of your business model.
Normally, your company's actual financial performance, observed after you start trading, should fall somewhere between your pessimistic and optimistic cases.
The important thing will be to quickly measure and compare this actual performance with the figures in your forecast to see where you stand, then update the forecast to re-estimate the future cash flows and cash position of your medical research lab.
This forward-looking financial management exercise is the only way to know where you stand and where you're going. And, when your figures fall short of expectations, to quickly implement actions to turn things around before the company runs out of cash.
There's nothing more dangerous than waiting until you have your accounts, which takes up to nine months after the end of your financial year (if you are in the UK, abroad your mileage will vary), to then realize that you're not on the right track and that your medical research lab won't have enough cash to operate over the next twelve months.
This is where using a forecasting solution that integrates actuals vs. forecast tracking, like The Business Plan Shop's financial dashboards do, can simplify the financial management of your business and help reduce the risk associated with your start-up project.
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Key takeaways
- To open a medical research lab you need to go through each of the 15 steps we have outlined in this guide.
- The financial forecast is the tool that will enable you to check that your project can be profitable and to estimate the investment and initial financing requirements.
- The business plan is the document that your financial partners will ask you to produce when seeking finance.
- Once you have started trading, it will be essential to keep your financial forecasts up to date in order to maintain visibility of the future cash flow of your medical research lab.
- Leveraging a financial planning and analysis platform that seamlessly integrates forecasts, business plans, and real-time performance monitoring — like The Business Plan Shop — simplifies the process and mitigates risks associated with launching a business.
We hope this practical guide has given you a better understanding of how to open a medical research lab. Please do not hesitate to contact our team if you have any questions or if you would like to share your experience of setting up your own business.
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Founder & CEO at The Business Plan Shop Ltd
