There are as many ways of starting a chemical business as there are people starting them. Entrepreneurs range in profile from smooth talking slicksters to sober, ROI-calculating engineers. Entrepreneurs can also be rather unruly folk. It is not automatically true that business founders are inherently talented at designing and running orgainzations. In fact, they are frequently poor at it. But, successful founders are usually highly focused and are able to attract resources.
A common motivation for starting a business is that the founder is possessed with existential certainty that he/she can operate a business venture better than, say, a former boss or rival. A business founder may be a free spirit, refractory to sensible advice, or may be a solemn Harvard MBA operating by the book. It is not uncommon for a founder to have had several previous failed ventures prior to a successful one.
And make no mistake, the sense of power that a founder feels in the execution of a business plan can be as addictive as heroin or crack. Once a person has had the experience of successfully gathering resources and then allocating them to leverage progress to a goal, they are forever changed. Whether or not they continue the role of managing funds or personnel, their eyes have been opened to the real meaning of power.
Power is the ability to allocate resources.
No matter what kind of chemical business one wishes to start, it is crucial to understand that it will require the accumulation of some kind of resource that you can apply to a problem. That resource can range from your technical reputation, 30 days net of commercial credit, VC monies, or a chemical processing plant. It is all a form of leverage toward the greater goal converting streams of goods and services into streams of cash.
Try to get cash flowing from sales as early as possible. Choosing a Market-Pull activity is the best way to do this.
A chemist starting up a business is able to choose several kinds of general business activities. If you want to be a consultant, you must determine the boundaries of your knowledge and then find demand for that expertise. If you are truly an expert in a field, then more likely than not you know who might buy your services.
If you choose a Technology-Push approach, try to target customers who are willing to be early adopters.
A chemist may be well situated to start an operation offering analytical services. In that case, the enterprising analyst needs to know about underserved demand out in the marketplace. You need to offer a service that prompts people to send a purchase order to you.
If your startup is a one-act pony, it is critical that the pony actually be able to jump through the flaming hoop as advertised. Try to avoid one-act pony business plans. Find Market-Pull products to pay the bills while your Technology-Push products are under development.
A chemist is in a great position to get into formulations. While this might not be strictly a “chemistry’ activity, the walking-around-knowledge of chemicals that a chemist might have probably well exceeds the basic chemistry knowledge of many “experts” in the formulations business. However, a chemists general knowledge may not be applicable for direct application to formulations. A formulator must accumulate specialized knowledge and analytical methods for the materials they handle, including things like rheology, cloud and pour points, fungal contamination, and miscibilities. The level of infrastructure for doing formulations can be dramatically less stringent than chemicals manufacturing as well, requiring less startup capital. That said, formulations may be in demand at the large scale. Puttering around at only the less-than-drum scale may have no future. Again, to be a formulator you need to know what is in demand.
Remember-Sometimes it is dumb to be too smart about things. Be customer oriented. Be honest about strengths and weaknesses. Learn the difference between smart and cagey. Dick was a cagey businessman. Don’t be a Dick.
Fine chemicals manufacture has many success stories. Alfred Bader started his Aldrich empire making what we now call Diazald. Bader was extremely customer service oriented and I believe this was the key to his success. He visited laboratories and asked workers what they needed. If the request was reasonable, he would put the material in the catalog collection. If the chemist-entrepreneur desires to start a catalog fine chemical company to sell reagent chemicals and widgets, then I would advise making a study of that business arena.
An understanding of the regulatory compliance world is critical as well, especially relating to the Toxic Substances Control Act, TSCA. A company may have to start out as being a provider of ‘R&D Only’ products. To freely sell commercial quantities of specialty and fine chemicals, a substance must be on the EPA’s public or confidential lists. If not, then permission must be granted by EPA. This will require a special filing which discloses its manufacturing and/or use process, Personal Protection Equipment (PPE), fugitive dust and corresponding controls on exposures to workers and the environment, vapor releases and method of control, a disclosure of how much of the New Chemical Substance (NCS) gets into the environment, any and all available toxicity data, a Safety Data Sheet, physicochemical data, waste NCS disposal, batch size and yearly production. For less than or equal to 10,000 kg per year a Low Volume Exemption (LVE) can be filed. This is an abbreviated version of a Pre-Manufacturing Notification (PMN) filing which will be examined in greater detail and will take much longer for EPA to complete. EPA has the right to require the submitter to collect certain kinds of toxicological data at the submitters expense. These tests are standardized and are performed by certified labs.
Most advisors to entrepreneurs will say that the prospective businessperson is well advised to put down a written plan. This is important on many levels. The act of writing a business plan is useful to the entrepreneur in several ways. It causes the writer to focus his/her ideas and energy as well as to clarify the goal and how to track towards it. A well written business plan is critical if you need to attract funds to get the operation started. Investors and bankers need a document to study and to bring before others for analysis and buy-in. Just gotta have it.
Starting a drug company is going to be quite difficult for a few isolated chemists to do. It is a complex and insanely expensive and risky business that requires a wide diversity of players to be on board and committed. Somewhere you have to get an MD or MD/PhD, finance people, former pharma executives, regulatory affairs peoples, etc., on the board to add gravitas to your plan. A whole circus of expensive prima donnas. Sounds like a nightmare to me.
Lamentations on Chemistry 
I appreciate your perspectives on chemical entreprenourship. As a formulator, I frequently think about these issues. Aside from the usual regulatory waste issues, I think sales experience is something that more chemists including myself definitely need to work on. Finding an underserved niche and developing a product for it, and then selling that product is much harder than I wish it was. I think this area is where the shortgage is rather than a shortage of chemists/scientists/formulators/engineers to work on a problem. Finally, there are already a number of talented chemists working as formulators. While formulations could use more academic research, the lack of academic research has somewhat protected our job market. Otherwise, thanks for your thought provoking posts.
I don’t mean to slam formulators. It is a major part of industry. But it is an area that most chemists probably don’t think of as a career field because of simple lack of familiarity. While a chemist may be competent to train in formulations, they probably cannot throw a commercially viable formulation together ad hoc based on knowledge gained from the ACS curriculum of study.
Formulation can be quite tricky. Then there is the R word- rheology. Most chemists have to learn about rheology on the job. Rheology can be a large part of the formulators life.
Yes, it is difficult to find market opportunities. It is especially difficult if you have designs on commoditized products. Specialities with a high unit price and a large labor component to the cost offers high value products whose pricing is less reliant on raw material costs. If your costs are not heavily reliant on raw materials so much as labor then you have some wiggle room to get costs down by increasing mfg efficiency.
If you find yourself between inflexible or rising raw material costs and falling commodity product prices, you are in deep trouble. If you have the luxury of choice, choose a product that few companys offer and one that requires the dark manufacturing arts that few understand.
It’s a shame that most chemists don’t learn about rheology in school. I once searched in the US for an lab in a department of chemistry that focused on rheology and I couldn’t find one. I only found rheologists in Chemical Engineering and other more specialized schools.
Jeez Gauss. As a famous RR once said-“There you go again”.
Listen, you’re not an independent entrepreneur, so why rag on everyone else?
I suggest you post who you are (take a risk) and what you’ve accomplished. You’ve a great blog but you often talk about what you’re doing at your wage slave doldrums 9-5 job. I’d like to know what percentage of your personal wealth is derived from your entrepreneurship? Yeah I can sell a few beans and make $10.
But can I make a living at it? Could you quit your day job and still make a living. Get health insurance?
Anyone can claim to be a risk taker (i.e I play the lotto). I even won $5 once!
Sigh.
I have not disclosed my identity because I don’t want the blog to be about me. I want it to be about certain ideas. One of the ideas is that it is possible to start a business in the chemical field.
I have been part of 3 startups, one fulltime. All have failed. I have also worked closely in other capacities with many more all over the country. I have seen what works and what doesn’t. I’ve left a good bit of skin on the pavement over the years.
I have been dumped onto the street with 2 weeks of severance pay for my 2 year old and wife. I have been a PhD construction laborer working with criminals, drunks, and unhappy imbeciles as a result of my choice to go to work with entrepreneurs. I’ll say that there are some pretty smart folks working in construction as well. I was lucky enough to work with a few of them.
The advice I’ve given isn’t for everyone. My hope is that a few readers will fold a few of the ideas into their plans and make a go of it. We don’t need everyone to start a business. But we do need a few chemists to do it every year.
Entrepreneurism isn’t for pussies. It takes real guts and all of the mental faculties you can muster.
As to my own activity in this area now? I may disclose more as time goes on.
Rheology is a real bear. There is a reason that it is not taught to undergraduates and probably never will be – tensoral mathematics on manifolds is the same mathematics used in general relativity. Sure you can teach simple concepts – the Deborah number, the power-law fluid… which some places do, but it is a failure. If I had a dime for every time I’d ever heard “thixotropic” misused, I’d have my mortgage paid off. The term is thrown around with complete abandon simply because it sounds intimidating. I don’t even bother anymore with an accurate technical explanation of time-temperature superposition anymore. I simply handwave my way through it and people eat it up because it has that “feel-good, looks-good” goo-goo that they want, and then they can go tossing around a new buzzword and act smart.
But certainly one can offer viscosity measurement as part of an undergraduate lab experience. There are several kinds of measurement that are commonly performed every day with fairly inexpensive devices. If the student wants to learn more, they can enroll in grad school.
If anything, we could familiarize the masses with the definition of thixotropism so certain northerners aren’t in a constant state of irritation. \;-)
I don’t care for your politics but if you write a book called “Entrepreneurism isn’t for pussies” I’ll buy a few copies.
I’ll autograph a few copies just for you.
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