When am I ready to scale?
The timing regarding scaling in life science companies is crucial for your business. If you move too quickly or slowly, you risk losing revenue and knowledge.
Fundamentally, Mads Rømer Svendsen believes you need a handle on your Product Market Fit before you’re ready to scale your company.
You have Product Market Fit when you have established a well-functioning production of the right product, which you can sell to the right customer segment at the right price.
Mads Rømer Svendsen
Program Manager, DTU Science Park
Product Market Fit is different from Problem Solution Fit. You can still sell products as tests or pilot projects when you achieve Problem Solution Fit.
It’s a classic mistake to confuse the two and start scaling too early.
“It’s a confusion that can lead to costly decisions that are difficult to correct later. You achieve Product Market Fit when you have positioned the product through repeated sales,” explains Mads Rømer Svendsen.
To gain a Product Market Fit, you need three things to get right. We’ll go through them in the steps below.
1. Have control over your supply chain
You’re not ready to scale until you’re confident you can produce the number of products you expect to sell over the next three years. This is important because demand can suddenly surge, and your supply chain must not become a bottleneck,” says Mads Rømer Svendsen.
He elaborates that it’s an art to ensure a production setup within life science and MedTech that is future-proof without becoming too large. It should keep pace with the company’s development and demand. You don’t necessarily need to have the warehouse or production machinery yourself; it can be located with your subcontractor. However, you must meet the requirements for quality control before scaling your business and entering the market. When establishing your production, you must ensure that it complies with GMP standards (Good Manufacturing Practice) to supply to, among others, the European and American markets.
“You need to pay special attention to establishing your quality assurance and quality control function to meet the standards required to sell your goods,” he explains.
2. You need a sales strategy - and the resources to execute it
“You need to know which customers you’re targeting. You can achieve this through a clear sales strategy,” explains Mads Rømer Svendsen.
“When your product is to be commercialized, it’s not just enough to have a strategy. Resources are also needed to execute the sales strategy. It’s important to have defined who your customers are and which markets you should focus on. Whether it’s the hospital sector, general practitioners, clinics, or other segments,” he says.
He elaborates that you can start in Denmark by focusing on local markets and competitive situations. But it’s essential to plan for which markets you will establish yourself in – and how.
“Here, it’s also important to consider cultural and structural differences. There may be a need for two very different approaches when selling to a hospital in Denmark and Germany,” says Mads Rømer Svendsen.
3. Your organization needs to be able to grow as sales increase
“When a company scales rapidly – often when raising capital – the organization also grows. Such expansion can create significant organizational pressure, which you must be prepared for.
“It’s therefore important to establish a recruitment strategy, set up supportive processes for onboarding new employees, define and anchor the company’s culture, and put together the right management team,” says Mads Rømer Svendsen.
“If you don’t have this in place, the company will struggle to execute when sales suddenly grow,” he explains.”
The challenges arise if you scale too early
When discussing scaling errors within life science, Mads Rømer Svendsen observes that classic scaling mistakes occur if you scale too early or don’t have control over your risk.
He elaborates:
If you scale too early, you establish expensive production and hire many staff, only to discover that you can only support the increased costs if the sales growth materializes.
Mads Rømer Svendsen
Program Manager, DTU Science Park
Furthermore, it’s essential to integrate the company’s risks into decision-making processes so that you have maneuverability. For example, if you experience technical challenges with your product, have overestimated the market size, or are struggling to maintain a competitive advantage.
“These risks are often tied to one’s financing plan. Is there financial leeway if you don’t meet your objectives?” concludes Mads Rømer Svendsen.
Get help scaling your startup
Every year, we assist innovative startups at various stages in scaling their businesses and facilitate access to the business community and potential investors. Read about our programs here:
- Danish Tech Challenge is Denmark’s leading growth program for hardware startups.
- GreenUP Accelerator is an intensive growth program for startups developing CO2-reducing solutions.
