David Brigham was a post-doctoral student at Oklahoma State University in 1996 when he came up with a remarkable idea about silkworms.
He knew spider silk is five times stronger than the material used in bulletproof vests. It’s even stronger than steel. What if silkworms could be genetically altered to produce spider silk on a massive scale? The resulting silk could be woven into fiber of extraordinary strength for the U.S. military.
Brigham, an expert in molecular genetics research, went on to other projects but never forgot his idea. Today, he and his wife Teresa-are co-founders of EntoGenetics, Inc., a futuristic technology company that will deliver a pilot product made of spider silk to the military this year. EntoGenetics also plans to launch commercial products in early 2017.
Along the way, the Brighams discovered that silkworm technology isn’t the only complicated aspect of their business. “I’m not an accountant,” David says with a laugh. The Brighams had difficulty analyzing and using their company’s financial data to the best advantage.
After partnering with Lucrum Consulting, they learned how to streamline their financial systems and maintain an up-to-date business plan. The two features combined help to create a more efficient company that demonstrates its value in front of potential investors. Here are five of their best practices:
* Track costs by how the funds are used, especially if the company receives grants. Grant funding often requires a variety of financial reports to substantiate that the grant money was utilized as prescribed in the proposal. Investors, boards of advisors, and boards of directors also want to see this type of data.
EntoGenetics track expenditures to ensure compliance with grant approvals. They also allocate each purchase to a grant based upon the use of the item. More up front organization means less stress as reporting deadlines near. “It’s much easier to do our monthly and year-end reporting now,” Teresa says.
* Separate expenses into the right categories. As a company grows, it’s essential to code expenses into meaningful categories so that the leadership understands where the money is going. Time spent in establishing a chart of accounts that is meaningful to your company and circumstances is going to provide benefits in the long run. In EntoGenetics’ case, the categories include administration, production, and research/development.
A disciplined approach to finances throughout the year also makes it much easier to complete such required documents as workers comp audits, W-2’s and 1099’s.
* Develop data that will educate your professional advisors. Business expansion leads to more conversations with your company’s insurance providers, lawyers, HR consultants, and other advisors. Providing good information to them helps keep these people on track, their services reasonably priced, and their turnaround quicker for completing projects.
* Keep the business plan up to date. The Brigham’s had a business plan, but it lagged behind their current business model. It didn’t adequately explain how company executives arrived at their financial projections. Taking the time to update the plan gave them a document that will impress future investors.
* Tell the company’s story in your business plan, marketing, and daily interactions. Storytelling is critical for exciting others about your mission, whether in a business plan, in hiring the right people, or in marketing your product. Choose your words thoughtfully and assess your target audience.
The Brigham’s first business plan didn’t work in part because it was too technical. After Jeff Heybruck of Lucrum reviewed it, he asked the couple, “What defines ‘success’ for you; what is your ultimate goal?” “I told Jeff, ‘I want my first letter from a wife, saying thank you for the product that saved her husband’s life,’” David recalls. “Jeff told us we need to have that in our document. That’s why people would invest in our company.”
When a business has leaders who are passionate about their products and have the right financial systems in place, there are no limits to where it can go. We salute EntoGenetics for developing an exciting technology to protect our military men and women.