Contrary to popular belief, several business owners are lured to the healthcare industry because of the rules. No industry outside of military is more closely monitored, and for good reason: Extra prudence is required when dealing with humans. In the realm of digital health businesses, rules, procedures, and regulatory complexity may be entry hurdles, but they also create opportunity.
Entrepreneurs frequently come up with inventive justifications for the increased monitoring, such as claiming that their launch was only a proof-of-concept or that they can’t afford to spend hundreds of thousands of dollars each month on advertising to draw in new customers.
There was a compelling need to emphasize speed and make the most of the runway offered by smaller seed rounds when venture capital was hard to come by. However, the climate has changed; there is now an even greater need to devote a sizeable budget to compliance due to rising investor interest and an abundance of cash. While speed and effectiveness may be crucial for businesses, regulatory compliance does not have to be a time- or money-consuming burden.
If compliance isn’t taken into account from the beginning, entrepreneurs will eventually find themselves having to rush to rectify problems behind the scenes while spending a significant amount of money on legal expenses, and that’s the best case scenario. An agreement may, in the worst situation, fail.
It makes sense that these worries may first be disregarded. To think of creating something that doesn’t currently exist, entrepreneurs need to have a particular level of inventiveness and unhappiness with the present quo. However, a person in need of medical attention is the ultimate end customer when creating a digital health firm. As opposed to developing the subsequent puzzle game or food delivery software, the risks are larger.
Many of the tens of thousands of company initiatives that entrepreneurs start each year never succeed. Others lose steam after impressive rocket beginnings. Despite having devoted fans, a six-year-old condiment firm has only made less than $500,000 in sales. The firm’s gross margins are insufficient to pay its expenses or give the founder and other family members who work for the company a sufficient compensation. Additional development would need a significant influx of funds, but buyers and investors are wary of small, marginally profitable companies, and the family has run out of options.
Another fresh, successful business that is expanding quickly brings novelty goods from the Far East and sells them to major chain stores in the United States. The creator has been nominated for entrepreneur-of-the-year honors and has a paper net worth of several million dollars. But due to the company’s phenomenal expansion, he was compelled to reinvest the majority of his income to pay for the rising inventory and receivables. Additionally, the business’s success has drawn rivals and persuaded clients to do business directly with Asian suppliers. The company will fail if the founder doesn’t take action quickly.