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UBC Phar400 Business Plan Essentials-20Sept2013

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Presented to 4th year Pharmacy students at UBC Pharmaceutical Sciences in the Phar400 Pharmacy Business Management course.

As part of the curriculum students are required to work in teams to create a new sustainable professional clinical service supported by a business plan. At the end of the semester the teams present in a "pitch" to classmates and a panel of judges. Winners are determined by their peers.

In this second presentation of the semester we take an in depth look at the business plan to help students get started on their year end project. Also include tools for them to organize the various activities of Finance, Marketing and Operations essential to a solid business plan.

Learning objectives:

>Steps to creating a business plan
>Define business concept and unique value proposition
>Establishing goals
>Identifying your market
>Determine sales strategies
>Management systems
>Develop financials

Published in: Business
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UBC Phar400 Business Plan Essentials-20Sept2013

  1. 1. UBC – Phar400 | Pharmacy Management pharmacySOS.ca | Gerry Spitzner September 20, 2013
  2. 2.         The hardest part is starting. Once we get that out of the way, you’ll find the rest of the journey much easier. Steps to creating a business plan Define business concept and unique value proposition Establishing goals Identifying your market Determine sales strategies Management systems Develop financials pharmacySOS.ca | Gerry Spitzner 2
  3. 3.  To guide and inspire a strategic process for your clinical service Business Plan and presentation. ◦ Help you with tools and a strategic framework to create and document the key elements of your Business Plan. ◦ Share an approach to planning with proven concepts. ◦ Take these ideas to share a simple 3 step presentation strategy at “The Pharmacy Moguls Den” in 5 minutes (or less) to communicate a new clinical service that produces strong financial results. pharmacySOS.ca | Gerry Spitzner 3
  4. 4.  Thoughtstarters/important insights  Planning in its Larger Context  The Business Model Canvas  Initial Considerations to Address  Market Research  Financial Plan  The Business Plan  Your Presentation pharmacySOS.ca | Gerry Spitzner 4
  5. 5. Or… Why should the business come to you... rather than someone else? pharmacySOS.ca | Gerry Spitzner 5
  6. 6.  Why do you do what you do?  Why does it matter?  Why should a patient care about your clinical service? ◦ Your clinical service is not about selling something; rather it is to fulfill an intention. ◦ Fulfilling a customers intention is a motivator to buying. ◦ Value is in the applied benefit of the benefit. ◦ Never about what you can get; always about what you can give. pharmacySOS.ca | Gerry Spitzner 6
  7. 7.  What problem does my professional service solve?  What is the purpose?  What are you known for? What are you a solution for? ◦ Doesn’t make sense to dream up ideas without speaking with patients/customers. What do they need and want? ◦ A need alone does not necessarily mean there is a market ◦ Differentiate, differentiate, differentiate ◦ Develop your unique value proposition pharmacySOS.ca | Gerry Spitzner 7
  8. 8.    Profit isn't a purpose, it's a result. To have purpose means the things we do are of real value to others. Value is not determined by the people who set the price, it is determined by those who choose to pay the price. Value is the bundle of perceived benefits offered at a given price. pharmacySOS.ca | Gerry Spitzner 8
  9. 9.    Lets share what makes us different because everyone can already see what makes us the same. When we have a clear sense of our destination, we can be flexible in the route we take to reach it. Achievement happens when we pursue and attain what we want. Success comes when we are in clear pursuit of WHY we want it. pharmacySOS.ca | Gerry Spitzner 9
  10. 10. Understanding the overall context for planning can help you to design and carry out the planning process in almost any planning application. pharmacySOS.ca | Gerry Spitzner 10
  11. 11.   Simply put, planning is setting the direction for something -- some system -- and then working to ensure the system follows that direction. Systems have inputs, processes, outputs and outcomes. ◦ Inputs to the system include resources such as raw materials, money, technologies and people. ◦ Inputs go through a process where they're aligned, moved along and carefully coordinated, ultimately to achieve the goals set for the system. pharmacySOS.ca | Gerry Spitzner 11
  12. 12.   Outputs are tangible results produced by processes in the system, such as products or services for consumers (patients/customers). Another kind of result is outcomes, goals for the business or the benefits for consumers. ◦ i.e. jobs for workers or enhanced quality of life for patients and customers.  Systems can be the entire organization, or its departments, groups, or processes. Or your project. pharmacySOS.ca | Gerry Spitzner 12
  13. 13.  Work Backwards Through Any "System“; always begin with the end in mind. ◦ Whether the system is an organization, department, business, project, etc., the process of planning includes planners working backwards through the system. ◦ They start from the results (outcomes and outputs) they prefer and work backwards through the system to identify the processes needed to produce the results. ◦ Then they identify what inputs (or resources) are needed to carry out the processes. pharmacySOS.ca | Gerry Spitzner 13
  14. 14. Business model Canvas is a way to think about the business in a visual and intuitive way. pharmacySOS.ca | Gerry Spitzner 14
  15. 15. 1. 2. 3. 4. 5. 6. 7. 8. 9. Problem (customer painpoints) Solution (your magic sauce) Key Activities (what you do to give the customer value) Unique Value Proposition (what customer actually gets) Competitive Advantage (secret sauce to protect yourselves from competition) Channels (how do you reach the customers) Customer Segments (who are your customers) Cost structure (what are your costs and how much you need to charge) Revenue Streams (in what ways you make money) pharmacySOS.ca | Gerry Spitzner 15
  16. 16. pharmacySOS.ca | Gerry Spitzner 16
  17. 17. pharmacySOS.ca | Gerry Spitzner 17
  18. 18.  How to use the Business Model Canvas… ◦ Go to the DocStoc video series ◦ The link is in the doc titled UBC Phar400-Business Planresource videos 20Sept2013 ◦ Look for the #5 video titled “The Lean Canvas Business Model - Creating The Killer Business Plan” ◦ It will give you a prioritized step by step process to fill in your canvas for maximum effectiveness and flexibility. pharmacySOS.ca | Gerry Spitzner 18
  19. 19.  Go to Google search  Search for *business model canvas template*  Helpful resources you can use for creating a canvas   Recommend using the Google Docs template also available on Google Drive for online collaboration. Or go to; www.leancanvas.com and download pharmacySOS.ca | Gerry Spitzner 19
  20. 20. Overall, you’ll need to consider and answer these questions in your business plan presentation and business case. pharmacySOS.ca | Gerry Spitzner 20
  21. 21.  If you'll need funding to start your new clinical service, investors or funders are much more likely to provide money if they see that you've done some planning. ◦ How much money will you need? ◦ What will the return on investment (ROI) be? ◦ How long will it take to break even and make money? ◦ What are the barriers to entry? Us & our competition? ◦ What are your assumptions? ◦ What is the product or service being sold? pharmacySOS.ca | Gerry Spitzner 21
  22. 22.  You’ll also need to answer these questions... ◦ Is there a need for the service and is there a market? ◦ What type of new product or service will you be starting? ◦ What Are Your Initial Plans? ◦ What Planning and Financial Skills Do You Need? ◦ What Human Resources Will You Need? ◦ What Facilities and Equipment Will You Need? ◦ How Much Money Will You Need? pharmacySOS.ca | Gerry Spitzner 22
  23. 23.  What is the nature of your new product or service? ◦ Whether you're starting a new product or service, there needs to be a strong market for it.  How do you know there is a need? ◦ You'll have to do more than "sense that there is a need" or claim that "it's common sense that there is a need".  Who are your competitors? ◦ Go visit them; ask to use the service. pharmacySOS.ca | Gerry Spitzner 23
  24. 24.  What is the basic purpose of your product or service? ◦ This is your mission statement and your value proposition. ◦ Basically, the mission statement describes the overall purpose of the product or service. ◦ When wording the mission statement/value proposition, consider the product or services’; markets, values, concern for public image, and priorities of activities for survival. ◦ Focus your efforts on applied benefits and why it matters. ◦ Use the value proposition worksheet provided in pre-reads. pharmacySOS.ca | Gerry Spitzner 24
  25. 25.  What are the major goals for your product or service over the next 24 to 36 months?  What do you need to do to reach those goals?  What objectives do you need to reach along the way to each goal?  How will you know that the organization is efficiently pursuing its goals? ◦ Knowledge of these goals will help you a great deal when thinking about what resources/skills you will need right away. pharmacySOS.ca | Gerry Spitzner 25
  26. 26.  You need more than a good idea to verify and fund your proposed product or service. ◦ Just because it seems like a great idea doesn't mean that it can become a product or service. ◦ A viable product/service needs to be profitable and sustainable, including being “producible” and marketable. ◦ Also, the product/service should be related to the purpose, or mission, of the business. ◦ Businesses can go bankrupt by trying to be too many things to too many customers, rather than doing a few things very well. pharmacySOS.ca | Gerry Spitzner 26
  27. 27.  Ideas can come from many different sources... ◦ Complaints and feedback from customers. ◦ Requests for proposals (RFP’s) from large businesses, government agencies (BC Bid), or LTC facilities. ◦ Modifications to current products; i.e. diabetic meters ◦ Suggestions from employees, doctors, inter-professional healthcare, wholesalers and suppliers. ◦ Healthcare publications, magazines, media; i.e. Dr. Art Hister ◦ Competition pharmacySOS.ca | Gerry Spitzner 27
  28. 28.    At this point, you will benefit from understanding the basics of marketing, particularly how to conduct market research and a competitive analysis. If your idea still seems like a good one, then it's important to know how you will position and identify your new product/service to the market. You'll certainly want to know how much you might charge for it , its price to the customer/consumer). pharmacySOS.ca | Gerry Spitzner 28
  29. 29. It is extremely difficult to develop and provide a high-quality product or service without conducting at least some basic market research. Capture behavior, not just data. pharmacySOS.ca | Gerry Spitzner 29
  30. 30.   The results of quantitative research will generally be a numerical form of data collection and analysis Key data points to consider are… ◦ ◦ ◦ ◦   Overall market size Growth Target market or market segment Ideal customer segment Sources Summarize using graphics; pie charts, bar graphs etc. pharmacySOS.ca | Gerry Spitzner 30
  31. 31.     Market research usually involves doing a periodic study of some sort. Quantitative market research generally probes a few topics; by itself doesn’t yield a deep understanding of the customer. The periodic nature merely offers a snapshot of customers at a moment in time. Adopt a customer learning approach to find out who your customers are, what they want, how and why. pharmacySOS.ca | Gerry Spitzner 31
  32. 32.  As opposed to periodic studies, customer learning is a continuous process of probing customers. ◦ It’s a process that fundamentally incorporates the fact that every customer is truly unique and that their needs, wants and expectations are never static. ◦ They change with the life forces affecting the individual or the business and the environment in which they exist.   Who is your ideal audience, where do they do business, and why? Work your clinical service backwards from them. pharmacySOS.ca | Gerry Spitzner 32
  33. 33.  Who are your competitors? ◦ What customer needs and preferences are you competing to meet? ◦ What are the similarities and differences between their products/services and yours? ◦ What are the strengths and weaknesses of each of their products and services? ◦ How do their prices compare to yours? ◦ How are they doing overall? pharmacySOS.ca | Gerry Spitzner 33
  34. 34.  How do you plan to compete? ◦ Offer better quality services? (value) ◦ Lower prices? ◦ More support? ◦ Easier access to services? ◦ How are you uniquely suited to compete with them?  Gather competitive intelligence from as many sources as possible; include your data, ideal customers and competition. Then do a S.W.O.T. analysis. pharmacySOS.ca | Gerry Spitzner 34
  35. 35. pharmacySOS.ca | Gerry Spitzner 35
  36. 36.  Go to Google search  Search for *swot analysis template*  All the resources you need for your creating a SWOT   Recommend using the Google Docs template; use Google Drive for online team collaboration. Go to Google Docs; search for *google docs swot analysis template*; for a selection of templates pharmacySOS.ca | Gerry Spitzner 36
  37. 37. Focus on the vision and the numbers will thrive. Focus on the numbers and the vision will struggle (and so will the numbers). pharmacySOS.ca | Gerry Spitzner 37
  38. 38.     The financial section is not the same as accounting Forecast best guess based on past results or on market research Forecasting is a forward-looking view, starting today and going forward into the future Also, allow for some small percentage of financial flexibility in your financial planning. Contingencies. pharmacySOS.ca | Gerry Spitzner 38
  39. 39.  A financial business plan for a start-up is based on realistic projections ◦ Finish conducting market research first ◦ Describe your products, services and marketing strategy ◦ Set your organization's operating principles ◦ Identify all items that pertain to your service as an expense ◦ Determine fixed costs and variable costs ◦ Zero based budgeting ◦ Always use the principle of best guess from research pharmacySOS.ca | Gerry Spitzner 39
  40. 40.  Recommend using the template provided  Estimate your one time start-up costs  Estimate your regular expenses  Forecast your sales  Cash flow projection will auto-populate  A financial forecast isn't necessarily compiled in sequence. It's typical to start in one place and jump back and forth. pharmacySOS.ca | Gerry Spitzner 40
  41. 41. A business plan is your documented blue print and road map to implement your idea. pharmacySOS.ca | Gerry Spitzner 41
  42. 42.  1. Business summary ◦ Describes the organization, business venture or product (service), summarizing its purpose, management, operations, marketing and finances.  2. Market opportunity ◦ Concisely describes what unmet need it will fill, presents evidence that this need is genuine, and that patients or customers will pay for the costs to meet this need. ◦ Describes credible market research on target customers (including perceived benefits and willingness to pay), competitors and pricing. pharmacySOS.ca | Gerry Spitzner 42
  43. 43.  3. People ◦ Arguably the most important part of the plan, it describes who will be responsible for developing, marketing and operating this venture, and why their backgrounds and skills make them the right people to make this successful. ◦ This section is also where you should include your advisors (board of advisors) and other healthcare professionals such as doctors, NP’s, nurses, LTC administrators etc. ◦ Also consider others you may need to make the plan a success; suppliers, corporate sponsor, associations, advisors pharmacySOS.ca | Gerry Spitzner 43
  44. 44.  4. Implementation ◦ This is the how-to of the plan, where the action steps are clearly described, usually in four areas: start-up, marketing, operations and financial. ◦ Marketing builds on market research presented, include your competitive niche. How will you be better than your competitors in ways that matter to your ideal customers ? ◦ Financial plan includes, costs to launch, operate, market and finance, along with conservative estimates of revenue, typically for 2 to 3 years; a break-even analysis is often included. pharmacySOS.ca | Gerry Spitzner 44
  45. 45.  5. Contingencies ◦ Outline the most likely things that could go wrong with implementing this plan, and how management is prepared to respond to those problems if they emerge. ◦ What will your recovery plan be when (not if) something goes wrong. ◦ It’s not so much about trying to identify and avoid all the things that can take you off track or go wrong; it’s usually more about how you will recover. ◦ Always plan for the fact that no plan ever goes according to plan. pharmacySOS.ca | Gerry Spitzner 45
  46. 46. You have 5 minutes to communicate your product/service strategy that must result in action; so, keep it simple and get to the core issues quickly. pharmacySOS.ca | Gerry Spitzner 46
  47. 47.  Prepare and answer just three questions and you have your presentation strategy...  HOW BIG do we want to be? ◦ The Financial plan. Sales/expenses/cash flow  WHO do we want to SERVE? ◦ The Marketing plan. Ideal audience and Customer awareness  HOW will we COMPETE and WIN? ◦ The Operations plan. Competitive advantage &Customer experience pharmacySOS.ca | Gerry Spitzner 47
  48. 48.   Means the Financial plan for your Business Plan and product or service idea. What are the financial goals to satisfy the owners of the business? ◦ Financial goals determine the character of your strategy. ◦ Morph from a strategy-drives-financials paradigm to a financials-drive-strategy one. ◦ Don’t try to squeeze better numbers out of a given strategy. pharmacySOS.ca | Gerry Spitzner 48
  49. 49.   Means the Marketing Plan of your Business Plan. Who are the ideal customers to whom you intend allocating scarce resources because you believe they represent the best economic opportunity? ◦ There is no such thing as a bad customer; it’s just that some are better than others. ◦ If a customer segment (audience) can’t deliver your financial goals why would you bother with it? ◦ Consider the Lifetime Value (LTV) of a customer as a way of making a choice of who to serve. pharmacySOS.ca | Gerry Spitzner 49
  50. 50.   Means your daily Operations Plan and how you will “deliver the promise” of all parts of the Business Plan. How do you intend to compete with other companies available to your ideal customers and win? ◦ The most critical aspect; as it puts words to why someone should do business with you instead of with your competition. ◦ Too many objectives paralyzes progress; define the critical few and outline them. ◦ Find the three things that will achieve 80% of the strategy. pharmacySOS.ca | Gerry Spitzner 50
  51. 51.  Step by step approach to create HOW to WIN... ◦ Select the customer needs and expectations you intend to satisfy from the segment you have chosen to serve. ◦ Examine the internal opportunities; look broadly at the competencies your organization currently has to deliver. ◦ Evaluate exactly where the competition is focusing their efforts; Which segments? Their value proposition? Market success? Vulnerabilities? (use the SWOT results) ◦ Decide on what basis you intend to compete/win and create a HOW to WIN position statement to say how you will do it. pharmacySOS.ca | Gerry Spitzner 51
  52. 52.  Here’s an example...  “Our basic competitive approach will be to develop intimate one-to-one relationships with our diabetic patients (customers) and be the only Pharmacy in our community that delivers disease management, healthy living and nutrition counselling offers to match each one’s unique needs and preferences.” pharmacySOS.ca | Gerry Spitzner 52
  53. 53.    HOW BIG? WHO SERVE? HOW WIN? Once the answer to each of these questions is clear the Strategic Game Plan Statement needs to be created. It’s developed from the answers to the 3 questions above and looks something like this... “We intend to (HOW BIG) by [desired time frame] by focusing our scarce resources on (WHO to SERVE). We will compete by (HOW to WIN).” pharmacySOS.ca | Gerry Spitzner 53
  54. 54.  We intend to grow Pharmacy revenue from the rapidly increasing diabetic market segment from 500K to 750K by the end of 2013. We will focus our resources on working with our local 1st Nations Bands with a view to expand into other Lower Mainland bands in the 1st Quarter of 2014. pharmacySOS.ca | Gerry Spitzner 54
  55. 55.  We will COMPETE and WIN by... ◦ Leveraging the intimate understanding we have of the patient and their current situation with disease management and medication adherence. ◦ Providing personalized holistic health & wellness based solutions combined with nutritional solutions to improve daily living and promote healthy outcomes. ◦ Matching our 4 CDE Pharmacists specifically with each patient, and delivering the services to our patients and customers onsite in their community. pharmacySOS.ca | Gerry Spitzner 55
  56. 56.   Overall, we help First Nations diabetic patients improve their quality of life and manage their disease by combining nutrition counselling with medication review and adherence. Specifically, we want to develop strategies to identify at risk women in their child bearing years and educate them about healthy lifestyles resulting in improved health outcomes for patients and infants. pharmacySOS.ca | Gerry Spitzner 56
  57. 57.  Want an electronic copy of this presentation? ◦ Email me; gerry@pharmacySOS.ca   To your business and professional success, thank you for your attention. Questions? pharmacySOS.ca | Gerry Spitzner 57
  58. 58. Follow Twitter:  Connect LinkedIn:  Web:  Blog:  Email:  Online Biz Card:  @passion4retail Gerry Spitzner pharmacySOS.ca gerryspitzner.com gerry@pharmacySOS.ca gerryspitzner.tel pharmacySOS.ca | Gerry Spitzner 58
  59. 59.  Gerry Spitzner is an optimist with a natural "kid-like“ curiosity for improving life and business results. He believes in a bright future and our ability to build it together and is passionate about making the public aware of the great things Pharmacists do. Drawing on 35+ years experience in multi-site retail Pharmacy operations, drug store ownership and the Pharmaceutical wholesale supply-chain; Gerry brings the leadership, knowledge and market awareness of business development to retail Pharmacy owners helping them achieve growth objectives. He teaches and inspires Pharmacists to achieve results by aligning their vision with marketing strategy and operational execution. Fascinated with a lifelong curiosity for why customers buy and a passion for retail Pharmacy; Gerry guides leaders and organizations to create, engage and keep great customers by delivering the promise of an extraordinary customer experience. He has devoted his life to sharing his thinking with other Pharmacy leaders to manage market analysis and build business plans that increase profitability and create competitive advantage with systems to implement. His company is pharmacySOS.ca, a Vancouver-based business management consultancy with a suite of business services focused on supporting Pharmacy owners starting, buying or strategically realigning their practice. With a clear understanding of the business of Pharmacy he uses a solution oriented focus with ideas and alternatives that clients can use to address the changing practice issues they face right now. Gerry understands who they are, what they need, and where to find it; helping them market and strategically realign their professional and clinical services to integrate the business activities of optimal drug therapy outcomes through patient centered care. pharmacySOS.ca | Gerry Spitzner 59

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