Hi readers! Welcome to a new series, where I’ll interview entrepreneurs who’ve created a unique business or stream of income. I’m constantly amazed at the creativity and ingenuity of the businesses people start, very often in industries I didn’t know existed. There are thousands of ways to create streams of income, to help you become financially independent faster and retire earlier. And that’s not to mention the tax breaks and write-off incentives.
Today, we’ll hear from Susan, my mom. She and my dad started a clinical research trials business a few years ago, and she sat down with me over Thanksgiving break to tell me a bit more about their unique industry and business. Susan was in the education field for many years, eventually earning her Ed.D., and only started this business in retirement. Not only has it provided a challenge and purpose for her during retirement, she has an i401K , tax incentives, and other benefits. Read on for more!
Can you tell us a little about your business? What do you do, what’s the industry like, etc.?
Our business is involved in doing clinical trials. We contract with pharmaceutical companies to do pediatric trials that fit the population of our collaborative pediatric practice.
What does that mean in layman’s terms?
When a pharmaceutical company has a planned trial (when they’re trying out a new medicine or further establishing dosage recommendations) they send out feasibility study questionnaires to see if we’d be a good fit, to see if we’d have a good population of patients that fit their criteria.
If they find we’re a good match, they come to do a visit to see if our setup is appropriate for their trial. For example, if the trial is for a medicine designed for swimmer’s ear, we determine how many cases of swimmer’s ear we typically see in a given month, and whether or not we have a population who’d be willing to participate in a clinical trial. Patients that participate in trials are compensated for their time. We estimate the number of patients who may want to participate, and based on that, the pharmaceutical company develops a contract. Once we sign a contract, we agree to follow exactly the protocol they’ve established with the FDA for the trial.
Are the trials safe?
Yes, they’re safe. Most of the trials we participate in are Phase III or IV, which typically means several safety studies have been done for the medications and we’re now looking for things like the most effective dosages or comparing that medication to another medication for the same problem. Without clinical trials like ours, new medications would not be able to be put on the market. FDA approval for a drug is based on an adequate number of studies of a drug with positive results.
We find that participants in our trials want to participate again and often call us to find out if we have any new trials going on.
How did you get into this business?
My husband, who is a pediatrician, had done trials periodically throughout his career in the pediatric office he worked in. We decided to expand the number of trials we were doing and set up a separate business to accomplish that. That was in 2009, so we’ve been in business for eight years now. It’s been the perfect retirement career for me (my husband is still a practicing pediatrician).
When did you start to experience success? How did you know?
We experienced success immediately, because we had several trials waiting that wanted us to participate. Immediately, we were able to make enough money to pay our staff and related expenses. But this is a business of feast or famine, so often we’ll have a rush of trials that keep us really busy, and then have slower periods where we don’t have as much to do.
What kind of setup does the business require?
We have an office with several cubicle areas and an examining room that’s located directly behind the pediatric practice, in a separate building. We have a work-up area to take patients’ weight and height. Any procedures, like blood draws, blood pressures, or EKGs, are done in the exam room. We have my husband, who’s a pediatrician and sees the patients, a phlebotomist, who does the clinical work with patients (taking blood pressures, drawing blood), and myself. I act as the administrator, and do data entry, pay roll, and contract negotiations for the business.
I am a retired teacher educator with a doctorate in education, that basically has nothing to do with clinical trials. However, I did have some research experience in the field of education, so I understand research. That’s come in handy in this position.
What have been some challenges? (Expected? Unexpected?)
The inability to schedule studies over an equal span of time, so that we’re working over a consistent level. Unfortunately, this is a business of peaks and valleys. We tend to have many studies going on at one time, or not enough to keep the staff busy. Another challenge is the cash flow for the business. Payment for trials is done well after the patient care actually occurs, so there’s a gap between doing the work and getting paid. Our business has a line of credit that we utilize if we have cash flow problems which has come in handy several times.
The fact that all trials are overseen by the FDA and by independent review organizations means that documentation and paperwork are extensive. Conforming to procedure is very exacting (in other words, you need to be a details person).
What’s the best part about owning your own business?
The ability to schedule time off as needed and to coordinate activities of the business to accommodate that.
It’s interesting because the trials you participate in change every six months to a year so you never get bored. Also, we have a chance to participate in helping drugs come to market that can benefit patients.
What are the financials like?
Overhead includes payroll for the staff, upkeep of the building, electricity, internet connections, phones, malpractice insurance specific to research, all the equipment necessary for running any kind of office, and patient compensation. We don’t pay rent because we own the building.
The business has been an excellent conduit for many expenses that would otherwise be assumed by us personally (i.e., there are tons of tax advantages). We write off our business travel, we have a 401K plan set up for me (to augment my retirement) and for the other staff members, and are able to fund life insurance through our business. However, because we’ve never tried to expand the number of trials beyond what our small staff can accommodate, profit margins have been slim.
Because this has been a retirement career for me, we’ve chosen to keep things small, so they’re manaegable.
How would someone get into this industry or start a similar business?
Most people who get into this industry are hired by a company that manages clinical trials for pharmaceutical company. These companies employ monitors, product managers, and other administrative staff to run the trials for the pharmaceutical companies (Icon is a big one as is PPD).
Employees of these companies typically have college degrees but would have majored in anything from political science to biology. Many nurses go into this field. I would recommend anyone starting a business in this get some experience first working for a company. Running a company like this requires you to have collaborative relationships with physicians so you would need to develop those relationships.
Thanks, Susan, for sharing what you do and how you got started! If you’d like to learn more about her business, visit their Facebook page. Or feel free to leave a comment in the comments section and she’ll make sure to respond!