Due to complex regulations, the health care industry is difficult to navigate for entrepreneurial ventures. Ellen Rudnick's advice? Carefully choose and evaluate potential advisors. “Who you choose as your advisors and partners is really key,” said Rudnick, executive director of the Polsky Center for Entrepreneurship and clinical professor of entrepreneurship.
Rudnick and Susan Baldwin, a headhunting consultant for Spencer Stuart, spoke at an August 8 discussion hosted by the student-led Chicago Booth BioPharma group at Gleacher Center on August 8.
Rudnick shared her experience as chairman and co-founder of Pacific Biometrics, which provides specialized central laboratory and contract research services to support pharmaceutical and diagnostic manufacturers conducting human clinical trial research “When times get tough – and times got tough for us – even the best relationships will get strained,” she said. “My relationship with my partner survived, and I think that’s why our company survived.”
Rudnick provided other tips for entrepreneurs interested in health care.
• Raise more money than you think you will need, especially in a health care venture. “Be willing to give up a larger piece of the pie, if it will make the pie larger,” she said.
• Perseverance and flexibility can keep a company alive. “Our ability to quickly cut expenses and build another revenue base allowed our shareholders and creditors to come out whole,” Rudnick said.
• When it’s time to leave the company, do it. “I knew as we redeveloped the business that I was no longer essential to the growth of the company,” she said.
In successfully launching an entrepreneurial venture within a large health care firm, Rudnick learned that high-growth companies provide significant management opportunities and that corporate entrepreneurship has advantages and disadvantages. “On the plus side, there’s a lot less risk,” she said. “You don’t have to worry about cash flow or raising capital, and you can leverage your existing client relationships and internal resources. On the negative side, you don’t get to share in the upside if you’re successful. Also, you have to do everything through a corporate bureaucracy.”
In heading a turnaround and restart, Rudnick discovered that domain expertise and network are crucial to entrepreneurship, she said. Furthermore, she said she learned that:
• Compared to large companies, access to resources at small companies is very limited. “It’s critical to stay focused on execution and not let yourself get diverted by things that are not critical to the success of your business,” Rudnick said.
• If you retain only a small percentage of ownership you have limited influence on the eventual decision to sell, determine effective ways to negotiate for equity.
• If the company is sold, negotiate a good severance package for the management team. “We knew the management team was really important to the value of the business,” she said.
MBAs should consider several factors in choosing prospective employers in health care, said Susan Baldwin, a headhunting consultant for Spencer Stuart. Among the issues are:
• Size does not matter. “Within large organizations, you can find really exciting work,” Baldwin said. “There are tradeoffs with both large and small companies.
• Build depth and diversity in work experience. “It’s been really rewarding for me to learn about different types of health care,” she said.
• Do not move from job to job too quickly. “Taking a new opportunity every two or three years raises some flags on your resume,” Baldwin said.
• Be honest with yourself and patient during your job search. “Really think about what makes you excited to wake up in the morning,” she said. “Assess your strengths and what you think your shortcomings are before you land anywhere. Do your due diligence.”
• Ultimately, enjoy your career. “One of my regrets is never taking time off between jobs, not taking more than a week or two vacation,” Baldwin said. “Life is too short not to have fun.”
Chicago Booth BioPharma invited Rudnick and Baldwin to speak to provide complimentary expertise on entrepreneurship in healthcare, said Devyani Bedekar a student in the Evening MBA Program who co-chairs the student-led group. “Professor Rudnick is the person we wanted to hear from on health care entrepreneurial ventures, how they might change the industry, and what types of challenges you might face,” Bedekar said. “As a headhunter with 20 years of experience in health care, Susan created a strong combination with Professor Rudnick.”
— Phil Rockrohr