Any chemical manufacturing business has a sales group.  Sales people will sell existing products, that is, products for which the manufacturing facility already has a process.  It is relatively straightforward to sell existing products.

If your company is so disposed, the sales group might also market its ability to take on new projects.  To sell this kind of capability you need a special kind of sales person.  Many companies call such sales people “Business Development” managers. Such people almost always have a strong technical background and a desire to interact with customers. 

A business development manager is a special kind of animal.  In addition to their technical ability they must have a wide range of general business skills.  Such a person must have a thorough grasp of all phases of manufacturing- R&D, pilot plant, semi-works, and production.  This intimate understanding of manufacturing is not limited to just the technical aspects of making a proposed material to specifications.  There is raw material sourcing to be done as well as the generation of an economic model of the proposed process.  And, before you can even offer a product you have to do your due diligence in the intellectual property arena. 

The business development person must somehow mesh the customers price and delivery requirements with the company production timeline. For the development of a new product,  a company needs a process that operates at scale.  To get a scaled-up process, it has to have a process validated at the pilot plant scale.  To get a pilot scale process, the company needs its process bench chemists to pony up a process that is cost efficient and safe. 

The practice of business development will involve math.  Costing and pricing are two economic activities that will put you in contact with accounting and with upper management.  This is where the job can become highly stressful.  Your company will probably have costing numbers that are reasonably accurate.  I say probably because there is some philosophy involved. 

Your accountants will use GAAP- Generally Accepted Accounting Principles.  I’m not an accountant and I have no aspirations to be one.  All I can say is that the allocation of costs to a given product, at least in a multipurpose facility, will involve some assumptions about how to partition resource costs to any given process.  The previous sentence can be the source of incredible confusion for companies.  The method by which costs are allocated can lead to numbers that are unrealistic on either the high or low side.  Overly low numbers can lead to pricing that is too low to sustain the operation.  Overly high numbers can lead you to offer quotations that are not competitive. Both circumstances are not desirable.

A business development person must be intimately familiar with all phases of manufacture.  Fundamentally, business development people are show horses.  They represent their company on site and at meetings and conferences off-site.  A business development person must have excellent communication skills, be an effective public speaker, and be in command of details in diverse fields.  And, it really helps if you have some savoir-faire.   Personal skills like the ability to listen, to carefully drill into customers and competitors for specific details without being rude or creepy.  It helps to be able to dress well, understand decorum, and display good manners.  It is better to be sincere and risk being taken advantage of on occasion than be cagey and deceptive. This kind of thing does really matter. 

Many chemists out there who have yet to hatch from the academic and post-doc world may not have heard of this job description. Other manufacturing arenas may use engineers in this capacity. In the chemical manufacturing field, chemists can step into this type of activity and be in the center of the activity and at the edge of technology all at once. Having done it, I can only encourage fellow chemists to consider it as a career path. 

It is tough being a small company or start-up.  You have perpetual cash flow concerns and maintaining a big enough plug of working capital is always difficult. Add to this the fact that larger companies tend not to take you seriously on either the buy or sell side. 

Selling to a company that is much larger is often challenging.  They are often skeptical of your ability to deliver; they want to throw their weight around by dumping outrageous terms and conditions on the table; and they may want you to “invest in the relationship” with freebies like holding inventory, unpaid R&D, free R&D samples, or a dozen other things. 

One of the common purchasing tricks is to ask for wide range of volume pricing. That is, ask for the pricing of 1, 10, 100, and 1000 kg of a product.  What they will do is to look at the largest volume price as a sort of floor or asymptote price and then begin to ask for lower quantities at that price.  They know that you can offer the material at the low unit price one way or another, so why not ask for smaller quantities there as well?  This can be a very effective leverage when negotiating price with a vendor, that is, the knowledge of their fall-back pricing. 

As the manufacturer you are well aware that the economy of scale only works if you actually manufacture at scale.  Many manufacturers of specialty chemicals may not actually keep certain products in inventory. If their sales history is spotty or if it is relatively obscure, there is no way to predict demand.  So, dumping capital into finished goods that sell poorly is a bad decision most of the time.  When you do not carry a product in inventory, that is, you only make it on demand, your hands are tied in price negotiations.  You just can’t rationally offer 10 kg at 1000 kg pricing.

Another difficulty is invoicing.  It is almost always the case that the vendor will have to pay for raw material in advance, hopefully with commercial credit terms like 30 days net.  And no matter what, payroll has to be met.  So the manufacturer has to commit resources up front for a given sale. Only when the product goes on the truck can the vendor issue an invoice.  This is all reasonable and expected.

It is possible to go to your banker with a purchase order in hand and apply for a short term loan to fund the manufacturing costs.  It is important to get to know your banker well. If they have confidence in you they can help you out during tough times.

Typically, payment is due 30 days after the product ships.  Some companies will insist on starting the clock when the shipment arrives. For shipments in the states, this isn’t such a problem. But for shipments involving boats it can present cash flow problems given the month-long transit time.  Incidentally, companies that use the SAP accounting system will have requirements that will be as fixed and unchangeable as the very ground you stand on. 

It will usually transpire that the manufacturer will have to pay for raw materials and payroll well in advance of payment.  This is normal.  One of the ways you get into trouble is when raw mats show up too early or too late. Raw mats that show up too early will require payment sooner and raw mats that show up too late will delay manufacture.  Timing is important. 

Another kind of financial trouble you can encounter is from late payment or even nonpayment from a customer. Late payment gives rise to all kinds of trouble for any company, but especially for small, capital-deficient companies.  Receivables accountants maintain an aging chart for invoices.  After 30 days, the receivables person will begin to get nervous and get on the phone to roust the customer for payment. After 60 days, people are getting jumpy about payment and after 90 days there may be calls to the customers president or controller. 

When a company has a cash flow problem, they will direct whatever cash they have into their most critical expenses in order to keep the place running.  Your invoice may not be at the top of the list.  When you encounter this problem with a customer, it is important to keep your cool and try to get whatever they can afford to send. Chances are good that they are already twittered about it so threats and heavy handedness may be a waste of time.  But often it is the squeaky wheel that gets the grease (or lucre) in these circumstances. So it is always worth talking to the customer about payment.

This whole business of pricing, invoicing, and getting paid is deadly serious and the inability to do it well will shut a company down quickly.  We technical people often discount the accounting end of our business, perhaps believing that it is the domain of lesser skilled persons.  Successful companies, however, know that a good accounting group and clear policies are crucial for stable operation.

Start-up companies, however, may not pour resources into accounting systems as generously as they should.  Often, it is the founders who do the accounting themselves in the early days.  Eventually, the founders realize that they need book keepers and accountants to manage all of the cash flow issues.