Business PlanningBusiness Planning

Derek Simpson MBA CSci FIBMSDerek Simpson MBA CSci FIBMS

What is a Business Plan?What is a Business Plan?

• A business plan sets out the method for running a specific activity over a specific future period.

• Specific Activity– Small introduction of a new test– Large a new system of working

• Future Period– Six months– 18 months developing a new section

Why Bother?Why Bother?

• Maximise efficiency

• Upgrade and replacing equipment

• Lower your costs

• Product development

• Staff skill mix

• Training

• Look for the problems ahead

Business Plan is Part of a JourneyBusiness Plan is Part of a Journey

• The plan is the start

• Charts the route for your destination

• Identifies the major hazards

• Strategies for coping with them

• Reference points to check your progress

• Where you are going

• How to get there.

Ten Steps to the Successful PlanTen Steps to the Successful Plan

1. Define your business activities2. Define the current state of the business3. Define the external market conditions, your competition

and your marketing position4. Define your core objectives5. Develop a strategy for achieving the core objectives6. Identify risk and opportunities7. Develop a strategy for limiting risks and exploiting

opportunities8. Refine the strategies into working plans9. Project costs, revenues, cash flow10. Finalise plans

1.What is your Business Activity1.What is your Business Activity

• Healthcare

• Information

• R&D

• Packaging & Posting

• Training

• Education

Vision & MissionVision & Mission

• Vision should short and punchy– Leading pathology department in East of

England– Quickest turn round time for patient treatment

• Mission concentrate on the customer needs and benefits bring 50% of our send away tests ‘in house’ to provide a faster diagnosis tool for our clinicians

Example of mission statement Example of mission statement MEDIAMEDIA

• "We create happiness by providing the finest in entertainment for people of all ages, everywhere."

2. Current State of Business2. Current State of Business

• What are you doing? – Expanding or Reducing Market share

• Who you are?– Organisational Chart helpful

• How are you working?– Manually or Automated Acute Primary Care

• Where are you doing? – Off site POCT

• When are you working?– 24HR, 9 TO 5

• Which discipline are you?– Single department, combine departments

3. Market Conditions, Competition 3. Market Conditions, Competition and your Market Positionand your Market Position

• Market Conditions– Identify your actual and potential buyers– Create a need for your product– Target Markets Acute, GPs & Private

• Competition– Commercial firms other NHS Hospitals

Market Position Are you the leader? What use do you have?

4. Define your Core Objectives4. Define your Core Objectives

• Maximising value

• Maximising profitability (related bonuses)

• Maximising the income

• Maximising market share

• Maximising total assets

• Minimising risk

5. Strategy for Core Objectives5. Strategy for Core Objectives

• Quality – Quality Control, sampling, testing, compliance with CPA

standards• Process

– Production methods and technology, equipment and machinery, automation

• Capacity– Minimum, optimum and maximum capacity levels

• Inventory – Optimal levels of stock, purchasing just in time techniques

• Workforce – Availability of skills, skilled workers, support staff, performance

measurements

6. Risks and Opportunities6. Risks and Opportunities

• What are your major risks– Identify them, Quantify them, Deal with them

& monitor them

• Risks to consider– Industry; what are your competitors dreaming

up– Market; how is it changing how will this effect

your sales– Product; quality problems, cost overruns,

declining demands

Risk Matrix Risk Matrix

5 10 15 20 25

4 8 12 16 20

3 6 9 12 15

2 4 6 8 10

1 2 3 4 5

CONSEQUENCES

LIK

ELI

HO

OD

6.1 Risks & Opportunities6.1 Risks & Opportunities

• Look for the opportunity is the glass half full or half empty

• Turn your problems into advantages– Your equipment is old and breaking down– What are the risks?– What are the opportunities?

7. Strategy for limiting Risks and 7. Strategy for limiting Risks and Exploiting OpportunitiesExploiting Opportunities

• Risks – Do nothing; this has risk– Wrong market niche market, unique products

or low cost high volume

• Opportunities– High Costs identify Economies of Scale– Excess capacity– Identify potential rewards

7.1 Strategy for limiting Risks and 7.1 Strategy for limiting Risks and Exploiting OpportunitiesExploiting Opportunities

• How do the rate your Sections

Weak Strong

Wea

kS

tron

g

Competitive position

Gro

wth

in I

ndus

try PROBLEM

CHILD

Divest or Build

CASH COW

Milk it all you can

DOG

Get out of the business

STAR

Protect and Support

8. Refine the strategies into 8. Refine the strategies into working plansworking plans

• Documenting the Strategy1. Identify the domain sought – market niche,

unique products

2. Explain your competitive advantages in pursuing that domain.

3. Introduce the strategy you have devised.

4. Specify your objectives.

5. Outline the potential rewards (bring out in financial sides.

8.1 Competitive Advantage8.1 Competitive Advantage

1. Low cost High volume capacity

2. Superior product and or customer support

3. Economies of scale

4. Barriers to entry

9. Project costs, revenues, cash 9. Project costs, revenues, cash flowflow

• Identify the funding, – Capital paid for up front usually universities

for research VAT exempt– Reagent Rental traditional all equipment and

services in price of reagent VAT included– Leasing Company buys for you pay them for

use of equipment VAT included– Managed Service Contract way to savings

and new equipment VAT can be reclaimed

10. Finalise plans10. Finalise plans

• Who are you?

• What do you want to do?

• How will you do it?

• Where do you break even?

• How are you funding?

• What’s in it for me?

• Risks and Rewards

Business Plans ContentsBusiness Plans Contents

• Preliminary Details• Executive Summary• Current Situation• External Environment• Strategy and Plans• Financial Analysis• Risk Analysis• Conclusion• Annexes

Preliminary detailsPreliminary details

• Contact information

• Document control

• Professional advisers

• Definitions

Executive SummaryExecutive Summary

• Most important section of plan• Is the plan in miniature • Captures all the pertinent points• Sets the tone• Sells your vision and objectives

– Management team– Products and services why they are special– Market, niche and unique factors– Other assets, strengths, competencies and advantages– Strategy for success– Key financial data– Funding required and how it will be spent or the approvals

required

Current SituationCurrent Situation

• Basic corporate information

• Vision, mission, values

• History

• Business organisation

• Products and services

• Core competencies

Strategy and PlansStrategy and Plans

• Objectives

• Business Strategy

• Operational Plan

Financial AnalysisFinancial Analysis

• Breakeven Analysis

• Sales Projections

• Capital Spending

• Operating Costs

Risk AnalysisRisk Analysis

• Overview

• SWOT-strengths, weaknesses, opportunities, and threats

• Limiting factors

• Alternative Scenarios

• Specific risks and their solutions

SWOTSWOT

• Strengths

• Weaknesses

• Opportunities

• Threats

Strengths and WeaknessesStrengths and Weaknesses

STRENGTH WEAKNESS • Processes

– High Productivity Slow Results output

• Management – Good at acquisition Poor Staff relation

• Equipment – State of the art End of life

• Building – New purpose built Old dark and dirty

Opportunities and ThreatsOpportunities and Threats

OPPORTUNITIES THREATS

• Market– Growing rapidly Reaching Maturity

• Industry– Fragmented Commercial Firms

• Accreditation– Use for marketing Costs Time

ConclusionsConclusions

• Annexes– Sales forecasts – Current expenditure– Future expenditure– Employee costs– Workload Figures