Marketing and Marketing and Positioning the Idea, Positioning the Idea, the Product and Youthe Product and You

True Stories from a Serial EntrepreneurTrue Stories from a Serial Entrepreneur

North Coast Medical Products, Inc.North Coast Medical Products, Inc.

My first big sale (selling “me”)My first big sale (selling “me”): Converting from being an employee : Converting from being an employee to being an entrepreneur.to being an entrepreneur.

The companyThe company: NCMP eventually sold and: NCMP eventually sold and serviced the products of serviced the products of sixsix different major medical manufacturers to hospitals in different major medical manufacturers to hospitals in five five different different states: Ohio, Michigan, Indiana, Pennsylvania and West Virginia.states: Ohio, Michigan, Indiana, Pennsylvania and West Virginia.

The productsThe products: Operating room equipment, including surgical tables : Operating room equipment, including surgical tables and accessories and supporting supplies, and also radiological and accessories and supporting supplies, and also radiological equipment (fluoroscopic C-Arms).equipment (fluoroscopic C-Arms).

North Coast Medical ProductsNorth Coast Medical Products

►What was good about the business model:What was good about the business model:

- Start up costs were almost non-existent- Start up costs were almost non-existent

- Revenues came quickly (if you could sell)- Revenues came quickly (if you could sell)

►What was bad about the business model:What was bad about the business model:

- The hospital market is a VERY tough market to - The hospital market is a VERY tough market to

break into; but once you’re in, you’re “in.”break into; but once you’re in, you’re “in.”

- Lack of control over your destiny- Lack of control over your destiny

BE RELENTLESS! USE THE BE RELENTLESS! USE THE ADVANTAGES YOU HAVE TO GET ADVANTAGES YOU HAVE TO GET

THE JOB DONE.THE JOB DONE.

Why was NCMP was a success?Why was NCMP was a success?: :

We allowed our salespeople to make a lot of money We allowed our salespeople to make a lot of money (and, therefore, they made US a lot of money!)(and, therefore, they made US a lot of money!)

We were one of the few companies who sold BOTH We were one of the few companies who sold BOTH operating room and radiological equipment (dual operating room and radiological equipment (dual specialization). We sold ourselves as not only specialization). We sold ourselves as not only having the best products, but as being “one less having the best products, but as being “one less vendor” for the hospital to deal with. vendor” for the hospital to deal with.

Last, I used my accounting background and played up Last, I used my accounting background and played up the expertise associated with my being a CPA to the expertise associated with my being a CPA to “prove” to hospitals – on paper – how they could “prove” to hospitals – on paper – how they could save money by buying the products I was selling.save money by buying the products I was selling.

ALWAYS BE LOOKING FOR THE NEXT ALWAYS BE LOOKING FOR THE NEXT OPPORTUNITY.OPPORTUNITY.

► We ended up selling NCMP to a medical manufacturer We ended up selling NCMP to a medical manufacturer who then shut it down. Why do you think we sold it?who then shut it down. Why do you think we sold it?

► The most important result of NCMPThe most important result of NCMP: The product ideas : The product ideas for my NEXT company were a direct result of my for my NEXT company were a direct result of my experiences at NCMP.experiences at NCMP.

Because we sold to two different hospital departments Because we sold to two different hospital departments when few others dared to do so WE SAW PRODUCT when few others dared to do so WE SAW PRODUCT

DESIGN PROBLEMS OTHERS DIDN’T.DESIGN PROBLEMS OTHERS DIDN’T.

Some of the Product Design Problems We Saw Some of the Product Design Problems We Saw at North Coast Medical Productsat North Coast Medical Products

The “C” didn’t fit around the surgical table.The “C” didn’t fit around the surgical table.

Existing products produced poor radiological images (white lines Existing products produced poor radiological images (white lines and white noise in the images) due to bad materials and bad and white noise in the images) due to bad materials and bad design.design.

The tables were difficult to adjust so the C-Arm had to be moved The tables were difficult to adjust so the C-Arm had to be moved instead of adjusting the table:instead of adjusting the table:

- Extra person in O.R. ($$)- Extra person in O.R. ($$)

- Slower surgeries- Slower surgeries

- Less surgeries ($$$)- Less surgeries ($$$)

- Negative effects on patients- Negative effects on patients

350 lb. weight limit of tables was too low.350 lb. weight limit of tables was too low.

SO NOW THAT YOU SEE THE PROBLEM/OPPORTUNITYSO NOW THAT YOU SEE THE PROBLEM/OPPORTUNITYWHAT DO YOU DO WITH IT?WHAT DO YOU DO WITH IT?

► At NCMP, we tried to get the medical manufacturers to At NCMP, we tried to get the medical manufacturers to improve their products.improve their products.

► Opportunity RecognitionOpportunity Recognition: We could make a better product : We could make a better product ourselves and ourselves and bebe medical manufacturers – the folks in the medical manufacturers – the folks in the industry who had control over their own destiny. industry who had control over their own destiny.

► My First Business Plan (why I did it)My First Business Plan (why I did it):: - I didn’t know how to manufacture – anything!- I didn’t know how to manufacture – anything! - I didn’t know how much money I needed – or where the - I didn’t know how much money I needed – or where the that money would come from.that money would come from. - Note: I did my first business plan to talk myself- Note: I did my first business plan to talk myself out of out of starting my second business – ATM. starting my second business – ATM.

..

American Table Manufacturing, Inc.American Table Manufacturing, Inc.

►Q: How did we start itQ: How did we start it? ? ► A: We mortgaged our houses, found ourselves a good engineer A: We mortgaged our houses, found ourselves a good engineer

and some industrial space and got going (a garage shop start-up and some industrial space and got going (a garage shop start-up and a lesson in humility).and a lesson in humility).

►Q: How did we develop the products?Q: How did we develop the products?► A: From simple to increasingly complex tables (we developed A: From simple to increasingly complex tables (we developed

two solid platforms that worked and then added to them). We two solid platforms that worked and then added to them). We subcontracted out or used off-the-shelf parts at first, but subcontracted out or used off-the-shelf parts at first, but eventually built our own computers and fabricated certain other eventually built our own computers and fabricated certain other parts internally.parts internally.

►Q: Where did we get our product ideas?Q: Where did we get our product ideas? A: From our customers and from our own observations. A: From our customers and from our own observations.

WHEN YOU WANT TO CONVINCE WHEN YOU WANT TO CONVINCE SOMEONE TO DO SOMETHING, YOU SOMEONE TO DO SOMETHING, YOU

NEED TO THINK ABOUT WHAT WOULD NEED TO THINK ABOUT WHAT WOULD MOTIVATE MOTIVATE YOUYOU TO DO IT. TO DO IT.

Who wants to buy the first surgical table ever manufactured by a brand new medical manufacturer?

(How did I get hospitals to buy my product?)

IF YOU’RE GOING TO GIVE IF YOU’RE GOING TO GIVE SOMETHING BIG AWAY – BE SURE SOMETHING BIG AWAY – BE SURE TO GET SOMETHING BIG BACK!TO GET SOMETHING BIG BACK!

The Cleveland ClinicThe Cleveland Clinic

The Mayo ClinicThe Mayo Clinic

Massachusetts General Hospital Massachusetts General Hospital (where the students from Harvard Medical (where the students from Harvard Medical

School learn their trade)School learn their trade)

Johns HopkinsJohns Hopkins

(Why did we target these particular hospitals?)(Why did we target these particular hospitals?)

WHEN YOU HAVE THE OPPORTUNITY TO WHEN YOU HAVE THE OPPORTUNITY TO DO “MORE THAN YOU HAVE TO DO” IN DO “MORE THAN YOU HAVE TO DO” IN

ORDER TO HELP YOUR FELLOW ORDER TO HELP YOUR FELLOW ENTREPRENEUR, DO IT. YOU NEVER ENTREPRENEUR, DO IT. YOU NEVER

KNOW WHEN YOU’RE GOING TO NEED A KNOW WHEN YOU’RE GOING TO NEED A FAVOR IN RETURN. FAVOR IN RETURN.

►The Call (“I need help!”)The Call (“I need help!”)►The Decision (a begrudged, “ok”)The Decision (a begrudged, “ok”)►Why it turned out to be one of the Why it turned out to be one of the

smartest things I’ve ever done……smartest things I’ve ever done……

SOMETIMES YOU HAVE TO DO SOMETIMES YOU HAVE TO DO THINGS YOU THINGS YOU REALLYREALLY DON’T WANT DON’T WANT

TO DO.TO DO.

McCormick Place in Chicago: The RSNA trade McCormick Place in Chicago: The RSNA trade show. Booth space was $10,000 per “space.” show. Booth space was $10,000 per “space.” We We needed at least 4 “spaces” to attend and debut needed at least 4 “spaces” to attend and debut our spectacular new ATM 6000 surgical table!our spectacular new ATM 6000 surgical table!

I decided in order to attend, I’d need to be in I decided in order to attend, I’d need to be in SOMEONE ELSE’s booth space (an example of SOMEONE ELSE’s booth space (an example of classic bootstrapping). Ideally a C-Arm company classic bootstrapping). Ideally a C-Arm company that didn’t have a surgical table line. (Who’d I that didn’t have a surgical table line. (Who’d I have to call?) have to call?)

TRUTH REALLY CAN BE TRUTH REALLY CAN BE STRANGER THAN FICTIONSTRANGER THAN FICTION

ESPIONAGE at a trade show (I had been ESPIONAGE at a trade show (I had been warned)……what’s a “little guy” to do?warned)……what’s a “little guy” to do?

GUARDING against further espionage and GUARDING against further espionage and sabotage at a trade show………sabotage at a trade show………

Well….THAT didn’t work…Now what do I Well….THAT didn’t work…Now what do I do?do?

““Hello, now Hello, now II need a favor………..” need a favor………..”

ATM’s successes within 2-1/2 yearsATM’s successes within 2-1/2 years::

We had developed a diverse line of surgical We had developed a diverse line of surgical tables and surgical table accessories.tables and surgical table accessories.

We had solved design problems other We had solved design problems other manufacturers couldn’t - or wouldn’t – solve.manufacturers couldn’t - or wouldn’t – solve.

We had product placed in major teaching We had product placed in major teaching institutions like Massachusetts General, etc.institutions like Massachusetts General, etc.

We had applied for our patents.We had applied for our patents.

Our products were UL-listed.Our products were UL-listed.

-- So, what’s next?-- So, what’s next?

WHAT WAS NEXTWHAT WAS NEXT

““What do you mean it’s time to sell the company?” What do you mean it’s time to sell the company?”

And by the way, HOW do you sell a company like And by the way, HOW do you sell a company like ATM? (NCMP vs. ATM)ATM? (NCMP vs. ATM)

Repercussions of being an FDA compliant company:Repercussions of being an FDA compliant company:

- Compliance vs. approval.- Compliance vs. approval.

- Being subject to surprise audits and site visits.- Being subject to surprise audits and site visits.

WHEN IT COMES TO MARKETING ANYTHING, WHEN IT COMES TO MARKETING ANYTHING, AN OUNCE OF PREVENTION IS WORTH A AN OUNCE OF PREVENTION IS WORTH A

POUND OF CUREPOUND OF CURE

Potentially the largest difficulty in marketing and selling ATM? Potentially the largest difficulty in marketing and selling ATM? My My early research showed it was convincing our potential buyers we early research showed it was convincing our potential buyers we were FDA compliant.were FDA compliant.

Luckily we had planned ahead (we had decided our exit strategy was Luckily we had planned ahead (we had decided our exit strategy was to sell the company when we prepared the business plan) and, by to sell the company when we prepared the business plan) and, by the time we were ready to sell, we had already addressed the issue. the time we were ready to sell, we had already addressed the issue.

How do you know you’ve satisfied the FDA?How do you know you’ve satisfied the FDA?

- Code of Federal Regulations- Code of Federal Regulations

- Look at what other companies are doing- Look at what other companies are doing

- FDA website………?- FDA website………?

The AnswerThe Answer

FDA Auditor Training!FDA Auditor Training!

HOW TO SELL YOUR SMALL COMPANY HOW TO SELL YOUR SMALL COMPANY

TO A BIG COMPANYTO A BIG COMPANY

- Investment bankers (fee negotiation)- Investment bankers (fee negotiation)

- Attorneys (experience counts!)- Attorneys (experience counts!)

- Develop the Management Presentation- Develop the Management Presentation

- - Sales ApproachSales Approach: :

The concept of the Strategic Buy (selling your The concept of the Strategic Buy (selling your

PRODUCT vs. your revenue/profit record).PRODUCT vs. your revenue/profit record).

- The due diligence process……………….- The due diligence process……………….

DUE DILIGENCEDUE DILIGENCE

- Massive amount of paperwork!- Massive amount of paperwork!

- - ProblemProblem: How do you give your potential buyer: How do you give your potential buyer (a competitor) enough information to want to(a competitor) enough information to want to BUY your company, but not enough BUY your company, but not enough

informationinformation to destroy you if they don’t? (In my opinion, to destroy you if they don’t? (In my opinion, the answer is NOT a confidentiality the answer is NOT a confidentiality

agreement.)agreement.)

SOMETIMES THE BEST OPTION, THE SOMETIMES THE BEST OPTION, THE ONLY OPTION, IS TO SIT DOWN, SHUT ONLY OPTION, IS TO SIT DOWN, SHUT

UP AND …..WAIT.UP AND …..WAIT.

► So it’s September 10, 2001 and we’re in the very final So it’s September 10, 2001 and we’re in the very final stages of negotiating the sale of ATM to a much larger stages of negotiating the sale of ATM to a much larger corporation….corporation….

► ……..Nothing can go wrong now, right?..Nothing can go wrong now, right?

► What I learned AFTER the saleWhat I learned AFTER the sale

► Trust your gut and do everything in your power to protect Trust your gut and do everything in your power to protect your company’s reputation: The Story of “Big Jim.”your company’s reputation: The Story of “Big Jim.”

► Imperial Luxury Home Builders: How do you market Imperial Luxury Home Builders: How do you market yourself as a new luxury home builder?yourself as a new luxury home builder?