UBC Phar400-pharmacy business planning-27jan2012

January 27, 2012
Gerry Spitzner
retailSOS.ca

 Rules of engagement; “play full on”
 Get my attention if you have a question or comment
 There are no “out of bounds” questions
 When I reference...
 Patients are customers - - customers are patients
 Product or service; they are the same
 Organization, firm, company; all these = Pharmacy
 “You”; almost always I am referring to your clinical
service idea or your Pharmacy business plan.

retailSOS.ca Gerry Spitzner 3

 Your clinical service Business Plan project
◦ Help you with a simple strategic framework to create your
clinical service business plan.
◦ First we’ll look at a high level approach to planning with
proven concepts.
◦ Then take these ideas to share a 3 step strategy for your
Business Plan to communicate and implement a new clinical
service strategy that produces strong financial results.


 Thoughtstarters
 Planning in its larger context
 Critical role of Market Research
 Initial Considerations to Address About Your Idea for a
New Product or Service
 Another way to look at Strategic Planning


 Why does it matter?
 Why should the business come to you rather than
someone else?
 What are you known for? What are you a solution for?
 Doesn’t make sense to dream up ideas without
speaking with customers.
 A need does not necessarily mean there is a market.
 Differentiate, differentiate, differentiate


 What is the real purpose of a business?

 Dial into everybody’s favorite radio station; WIIFM
 It’s never about what you can get; rather it’s about what
you can give.
 Your job is not to sell something; rather it is to fulfill an
intention. The customers intention to do business with
you; to fulfill some unmet need they have.
 Value is in the applied benefits of the benefit.


Understanding the overall context
for planning can greatly help you to
design and carry out the planning
process in almost any planning
application.


 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.


 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, or benefits for
consumers, e.g., jobs for workers, enhanced quality of
life for customers, etc.
 Systems can be the entire organization, or its
departments, groups, processes, etc.


 Work Backwards Through Any "System“
 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.


 Planning typically includes use of the following basic
terms.
 Goals
◦ Goals are specific accomplishments that must be accomplished in
total, or in some combination, in order to achieve some
larger, overall result preferred from the system, for example, the
mission of an organization. (Going back to the reference to
systems, goals are outputs from the system.)

 Strategies or Activities
◦ These are the methods or processes required in total, or in some
combination, to achieve the goals. (Going back to the reference to
systems, strategies are processes in the system.)


 Objectives
◦ Objectives are specific accomplishments that must be accomplished
in total, or in some combination, to achieve the goals in the plan.
◦ Objectives are usually "milestones" along the way when implementing
the strategies.
 Tasks
◦ Particularly in small organizations, people are assigned various tasks
required to implement the plan. If the scope of the plan is very
small, tasks and activities are often essentially the same.
 Resources (and Budgets)
◦ Resources include the
people, materials, technologies, money, etc., required to implement the
strategies or processes. The costs of these resources are often
depicted in the form of a budget. (Going back to the reference to
systems, resources are input to the system.)


 1. Reference Some Overall Singular Purpose ("Mission") or
Desired Result from System
◦ During planning, planners have in mind (consciously or
unconsciously) some overall purpose or result that the plan is to
achieve. For example, during strategic planning, it's critical to
reference the mission, or overall purpose, of the organization.

 2. Take Stock Outside and Inside the System
◦ This "taking stock" is always done to some extent, whether
consciously or unconsciously. For example, during strategic
planning, it's important to conduct an environmental scan. This
scan usually involves considering various driving forces, or major
influences, that might effect the organization.


 3. Analyze the Situation
◦ For example, during strategic planning, planners often conduct a
"SWOT analysis". (SWOT is an acronym for considering the
organization's strengths and weaknesses, and the opportunities
and threats faced by the organization.)
◦ During this analysis, planners also can use a variety of
assessments, or methods to "measure" the “health” of systems.

 4. Establish Goals
◦ Based on the analysis and alignment to the overall mission of the
system, planners establish a set of goals that build on strengths to
take advantage of opportunities, while building up weaknesses and
warding off threats.


 5. Establish Strategies to Reach Goals
◦ The particular strategies (or methods to reach the goals) chosen
depend on matters of affordability, practicality and efficiency.

 6. Establish Objectives Along the Way to Achieving Goals
◦ Objectives are selected to be timely and indicative of progress
toward goals.

 7. Associate Responsibilities and Time Lines With Each
Objective
◦ Responsibilities are assigned, including for implementation of the
plan, and for achieving various goals and objectives.
Ideally, deadlines are set for meeting each responsibility.


 8. Write and Communicate a Plan Document
◦ The above information is organized and written in a document
which is distributed around the system or company.

 9. Acknowledge Completion and Celebrate Success
◦ This critical step is often ignored -- which can eventually undermine
the success of many of your future planning efforts. The purpose of
a plan is to address a current problem or pursue a development
goal. It seems simplistic to assert that you should acknowledge if
the problem was solved or the goal met. However, this step in the
planning process is often ignored in lieu of moving on the next
problem to solve or goal to pursue. Skipping this step can cultivate
apathy and skepticism -- even cynicism -- in your organization. Don't
skip this step.


 Sources of Ideas...

 Complaints from current customers
 Requests for Proposals (RFP’s) from large
businesses, government agencies, etc. (i.e. LTC
facilities, BC Bid)
 Modifications to current products (i.e. Innovation)
 Suggestions from
employees, customers, suppliers, doctors, healthcare
professionals, etc.

 You Need More than a Good Idea
◦ Just because it seems like a great idea doesn't mean that it
can become a product.
◦ A viable product needs to be profitable (or, in the case of a
nonprofit, at least sustainable), including being producible
and marketable.
◦ Also, the product should be related to the purpose, or
mission, of your business.
◦ Businesses can go bankrupt by trying to be too many things to
too many customers, rather than doing a few things very well.


 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 to the market.
 You'll certainly want to know how much you might
charge for it (that is, its price to the customer).


It is extremely difficult to develop
and provide a high-quality product
or service without conducting at
least some basic market research.


 Market research has a variety of purposes and a
variety of data collection methods might be used for
each purpose.
 The particular data collection method that you use
during your market research depends very much on
the particular information that you are seeking to
understand.


 Various methods of market research are used to find
out information about markets, target markets and
their needs, competitors, market trends, customer
satisfaction with products and services, etc.
 Businesses can learn a great deal about
customers, their needs, how to meet those needs and
how the business is doing to meet those needs.
 Businesses or YOU need not to be experts at methods
of research either.


 1. Identify opportunities to serve various groups of
customers.
◦ Verify and understand the unmet needs of a certain group (or
market) of customers. What do they say that they want? What
do they say that they need?

 2. Examine the size of the market – how many people
have the unmet need.
◦ Identify various subgroups, or market segments, in that
overall market along with each of their unique features and
preferences.


 3. Determine the best methods to meet the unmet needs of
the target markets.
◦ How can you develop a product with the features and benefits to
meet that unmet need? How can you ensure that you have the
capacity to continue to meet the demand?
 4. Investigate the competition.
◦ Examine their products, services, marketing
techniques, pricing, location, etc. One of the best ways to
understand your competitors is to use their services.

 5. Clarify your unique value proposition.
◦ Your proposition describes why customers should use your
organization and not the competition’s.


 6. Conclude if the product is effectively meeting the
needs of the customers.
◦ One of the best ways to make this conclusion is to conduct an
evaluation. An evaluation often includes the use of various
data collection methods, usually several of them.

 7. Conclude if your advertising and promotions
strategies are effective or not.
◦ One of the best ways to make this conclusion is to evaluate the
results of the advertising. Are current and/or potential
customers aware.


If you'll need funding to start your new for-
profit or non-profit clinical
service, investors or funders are much
more likely to provide money to you if they
see that you've done some planning.


 Is There Really a Need for the Product or Service in
Your Organization?
 What Type of New Product or Service Will You Be
Starting?
 What Planning and Financial Skills Do You Need?
 What Are Your Initial Plans?


 What Human Resources Will Your New Product or
Service Need?
 What Facilities and Equipment Will You Need?
 How Much Money Will You Need?
 Write a Strategic Plan or Business Plan Document?


 What is the nature of your new product or service?
◦ Whether you're starting a new product, service or
organization, there needs to be a strong market for it
 How do you know there is a need for your new product
or service?
◦ You'll have to have enough evidence to convince an investor
or funder -- and yourself.
 Who are your competitors? What makes your new
product/service any different or more needed by
customers?
◦ Conduct a competitive analysis. What is a competitive
analysis?


 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?


 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?


 What is the basic purpose of your organization? (This
is your mission statement.)
◦ Basically, the mission statement describes the overall
purpose of the organization.
◦ When wording the mission statement, consider the
organization's products, services, markets, values, and
concern for public image, and maybe priorities of activities
for survival.
 For example McDonald’s mission statement...
◦ McDonald's vision is to be the world's best quick service
restaurant experience. Being the best means providing
outstanding quality, service, cleanliness, and value, so that we
make every customer in every restaurant smile.


 How will you manage your finances?
 How will you monitor and record your income and
expenses?
 Do you know how to prepare and manage a budget?
Cash flow statement? Balance sheet?
◦ What system will you use for bookkeeping and accounting?
◦ What system will you use to document patient counselling?
◦ How will you adjudicate with Pharmacare?
◦ How will you bill the patient?


 What are the major goals for your organization over
the next three years?
 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?


 1. What skills (and people) are needed by your
organization?
◦ Employee Task and Job Analysis and Job Descriptions will be helpful.

 2. How will you attract and retain the best people?
◦ Research Recruiting, Retaining Employees and any Basic Guide to
Management and Supervision will help you.

 3. How will you know how to organize your staff?
◦ Workforce planning, Specifying Jobs and Roles and Selecting Your
Organizational Design (who will work for whom, etc.) will help you.
For those in nonprofits, research Key Roles and Structures in
Nonprofits and The Aspects of Nonprofit Structure will help you.


 4. How will you compensate employees? What benefits will
you offer?
◦ Researching Benefits and Compensation will help you.

 5. How will you know what basic personnel policies you'll
need?
◦ The topic Policies (Personnel) will help you.

 6. How will you know how to manage your organization?
◦ The topic Broad List of Knowledge Areas and Skills in Management
(you don't have to master all these skills to start an organization)
will help you. Also consider Boards of Directors, Chief Executive
Role, Basic Overview of Supervision and Management Skills Unique
to Nonprofits (for nonprofits).


 7. How will you ensure personnel are effectively
working toward the organization's goals?
◦ The topic Employee Performance Management will help you.

 8. Do you have a banker? Financial adviser? Tax
advisor? Lawyer?
◦ Research the topics Getting and Using Banker, Getting and
Using a Consultant, Getting and Using a Lawyer and Getting
and Using an Accountant will help you.


 What equipment needs will you have?
◦ These needs depend very much on the resources needed to
develop, distribute and support your product/service.
Researching Facilities Management might be helpful to you.
◦ Facilities Management includes, cleaning, floor
washing, ventilation (HVAC), lighting, receiving

 What computer equipment will you need?
◦ Researching Computers, Internet & Web will help you.
◦ Laptops, iPad’s, printers, Wi-Fi etc.


 What is the Cost of Needed Resources?
◦ Consider the costs to obtain the necessary skills, facilities
and equipment identified from addressing the questions from
all the previous.

 What are your start up costs?
◦ How much money will you need to get started before
generating any revenue?
◦ Consider wages, licenses & fees, advertising, marketing &
promotion, leasehold improvements etc.


 Should I write write a Basic Strategic Plan, full on
Business Plan or both?
◦ Usually a Business Plan is a three year outlook and used to
attract investor funding. Consider the Pharmacist/owner as
an investor.
 What is Strategic Planning?
◦ Simply put, strategic planning determines where an
organization is going over the next 12 months or more and how
it's going to get there.
◦ Typically, the process is organization-wide, or focused on a
major function such as a division, department or other major
function.


 A business plan is often prepared when:
◦ Starting a new organization, business venture, or product
(service) or
◦ Expanding, acquiring or improving any of the above.

 There are numerous benefits of doing a business
plan, including:
◦ To identify any problems in your plans before you implement
those plans.
◦ To get the commitment and participation of those who will
implement the plans, which leads to better results.


 To establish a roadmap to compare results as the
venture proceeds from paper to reality.
 To achieve greater profitability in your
organization, products and services -- all with less
work.
 To obtain financing from investors and funders.
 To minimize your risk of failure.


 To update your plans and operations in a changing
world.
 To clarify and synchronize your goals and strategies.
 For these reasons, the planning process often is as
useful as the business plan document itself.


 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 (or does)
fill, presents evidence that this need is genuine, and that the
beneficiaries (or a third party) 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.


 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.
◦ Ideally, each person in the management team (and key
program and technical folks) are indicated by NAME.
◦ 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 etc.


 4. Implementation
◦ This is the how-to section 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, e.g., in a
Market Opportunity section of the plan, including your
competitive niche (how you will be better than your
competitors in ways that matter to your target customers).
◦ Financial plan includes, e.g., costs to launch, operate, market
and finance the business, along with conservative estimates
of revenue, typically for three years; a break-even analysis is
often included in this section.


 5. Contingencies
◦ This section outlines 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.


 1. Strategic Analysis
◦ This activity can include conducting some sort of scan, or
review, of the organization's environment (for example, of the
political, social, economic and technical environment).
◦ Planners carefully consider various driving forces in the
environment, for example, increasing competition, changing
demographics, etc.
◦ Planners also look at the various
strengths, weaknesses, opportunities and threats (an
acronym for this activity is SWOT ) regarding the organization.


 2. Setting Strategic Direction
◦ Planners carefully come to conclusions about what the organization
must do as a result of the major issues and opportunities facing the
organization.
◦ These conclusions include what overall accomplishments (or
strategic goals) the organization should achieve, and the overall
methods (or strategies ) to achieve the accomplishments.
◦ Goals should be designed and worded as much as possible to be
specific, measurable, acceptable to those working to achieve the
goals, realistic, timely, extending the capabilities of those working
to achieve the goals, and rewarding to them, as well. (An acronym
for these criteria is "SMARTER".)


 3. Action Planning (tactical plan)
◦ Action planning is carefully laying out how the strategic goals
will be accomplished.
◦ Action planning often includes specifying objectives, or
specific results, with each strategic goal.
◦ Therefore, reaching a strategic goal typically involves
accomplishing a set of objectives along the way -- in that
sense, an objective is still a goal, but on a smaller scale.


 3. Action Planning (tactical plan)
◦ Often, each objective is associated with a tactic, which is one
of the methods needed to reach an objective.
◦ Therefore, implementing a strategy typically involves
implementing a set of tactics along the way -- in that sense, a
tactic is still a strategy, but on a smaller scale.
◦ Action planning also includes specifying responsibilities and
timelines with each objective, or who needs to do what and by
when.
◦ It should also include methods to monitor and evaluate the
plan, which includes knowing how the organization will know
who has done what and by when.


Your strategy must result in
action, so keep it simple, get to the
core issues quickly and act.


 Build a new Pharmacy clinical practice with a
strategic approach and a simple tactical business
plan that communicates value and benefits.

 and answers the question...

 “Why should I (the customer) do business with you?”
 Or... what are we offering to our customers that sets us
apart from the competition?


 After conducting a high level environmental scan
you’ve determined a need and market for a new
clinical service.
 For example... You’ve heard from the Band Chief that no one
in the area is serving diabetic patients in the neighbouring
1st Nations community to help band members lead a
“normal” active life. He is concerned for the children.
 Your Pharmacy has 2 CDE Pharmacists on staff and recently
the owner was approached by a nutritionist for a possible
collaboration.
 You notice there are more and more Band members visiting
the Pharmacy.
 You know you need to move quickly to seize the opportunity


 Answer just three questions and you have your
strategy...

 HOW BIG do we want to be?

 WHO do we want to SERVE?

 HOW will we COMPETE and WIN?


 HOW BIG do we want to be?
◦ Means the Financial plan for your Business Plan (idea).

 What are the financial goals in order 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.


 WHO do we want to SERVE?
◦ Means create the Marketing Plan for your Business Plan.
 Who are the customers to whom you intend allocating
scarce resources because you believe they represent the
best economic opportunity for the firm?
 There is no such thing as a bad customer; it’s just that
some are better than others.
 If a customer segment 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.


 HOW will we COMPETE and WIN?
◦ Means your daily Operations Plan and how you will “deliver the
promise” of your idea in all the other parts of the Business Plan.
 How do you intend to compete with other companies
available to your targeted customers and win?
 How win is the most critical aspect of your strategy
building 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 do them.
 Find the three things that will achieve 80% of the strategy
and do them.


 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.
 Evaluate exactly where the competition is focusing their
efforts: Which segments? Their selling proposition?
Market success? Vulnerabilities? (SWOT)
 Decide on what basis you intend to compete, win and
create a unique value proposition. I.e. what unique value
benefits do you promise your chosen customers?


 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 offers to
match each one’s unique needs and preferences.”


 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).”


 Here’s an example...
 We intend to grow Pharmacy revenue from the rapidly
increasing diabetic market segment from 500K to 750K by the
end of 2012. 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 2013.
 We will compete and WIN by
◦ Leveraging the intimate understanding we have of the customer
(patient) and their current situation with disease management
◦ Providing personalized holistic health & wellness based solutions
combined with nutritional solutions
◦ Matching our CDE Pharmacists specifically with each customer, and
◦ Delivering knock your socks off customer service


 Create a strategic game plan for your clinical service
idea by addressing three critical questions; HOW BIG
do you want to be? WHO do you want to SERVE? HOW
are you going to compete and WIN?
 Develop detailed objectives and action plans that
address how to implement the strategy.
 Prioritize the list of objectives to determine the critical
few that will have the highest impact on strategy
execution.
 Hold people accountable for their strategy
deliverables.


 Review the progress you are making on your strategy
at least once a quarter. Even daily during the first
month then monthly for the first quarter.
 Focus. Focus. Focus. Determine the fewest number of
things that will produce 80% of the strategy results
and do them. Multi-tasking can be deadly.
 Cut the crap. Eliminate all activity that does not work
toward implementing your new strategy. And reassign
the people associated with non-strategic work.


 Be anal about execution. 90% of winning is what you
do in the trenches, not how pretty your plan is.
 Plan on the run. The success of your strategy will be
determined by how well your organization listens to its
successes and failures (customers) on a day to day
basis. Use this experience to tweak your strategy on
the go.
 Celebrate your success every time you hit a milestone
(no matter how small it is) to keep everyone engaged
and moving forward.
 Don’t let the “status quo” bozo’s get you down...


 Find me...

 Follow Twitter: @passion4retail
 Connect LinkedIn: Gerry Spitzner
 Web/Blog: retailsos.ca
 Email: gerry@retailsos.ca
 Digital Biz card: gerryspitzner.tel
 Digital Biz card: retailsos.tel


UBC Phar400-pharmacy business planning-27jan2012

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