Hey Leon - quick question. If a biomed company needs to get its...

Hey Leon - quick question. If a biomed company needs to get its products approved through various clinical testing in Australia / U.S. etc before it is able to sell these products to clients, then can you answer me how they are able to produce revenue from said product without approval from the various governments? Surely you can understand you need approval before you are able to operate in the medical realm and sell your products - that therefore means you have significant start up costs.

Put in another way (so hopefully you may understand if you're Australian and do not understand how biomed companies operate) - if I wanted to sell a new range of coffee beans to my local supermarket, I would need to contract with a supplier in, for instance, Brazil and then have the beans shipped over. I would then need to contract with a roasting company in order to roast these coffee beans. Next, I need to contract with a packaging company in order to sell said beans to a supermarket. I would also need to get regulatory approval and have a barcode approved so said product can scan at the counter. I then decide to pay some costs for marketing, and then have to enter into distribution agreements with logistic companies to deliver the product to the supermarket as unfortunately I cannot do this due to time constraints. In total, all these contracts costs me circa $10,000 and that is before I have been able to sell a single bean, as unfortunately for me all these suppliers/subcontractors did not accept 1 year payment terms. FYI I have a side-business that sells products to supermarkets so I know all these costs, and that 1 year payment terms are alas not possible.

At that point, if you looked at my books you would call my company an absolute failure and tell me I should shut down as I have $10,000 in costs and no revenue. And I would not be able to argue based on my books. However, what you wouldn't know is that I have set my company up now and am ready to start selling my coffee to my local supermarket, and that in 2-4 months I will make back my start-up costs, and in 6+ months will be operating at a profit. Then, low-behold, in 12+ months I get a contract with said supermarket to supply all their stores across Australia, and I am now a big company with employees and dividends.

That's how businesses work yeh? Or did you just go to accounting school and stop at month 3?