How to Write a Healthcare Business Plan
A healthcare business plan is just like any other plan in that you must demonstrate there is a large market for your product or service, you and your management team are uniquely capable of serving the market, and if the plan is executed properly, the potential financial returns are excellent. But some aspects of a healthcare plan are distinct.
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Things You'll Need
- Market research about your industry, growth rate and 5-year outlook
- Assumptions for costs of developing and marketing your product/service, and for ongoing operating expenses
- Research about strengths and weaknesses of competitors
Instructions
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1
Determine the size of your market. The healthcare industry is a multibillion-dollar industry, and is projected to grow tremendously as the population ages. But you need to estimate the size of your specific market niche. If your product is a diagnostic device for detecting cancer, for example, show how many people are tested for cancer each year and the total cost of these tests.
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Articulate your competitive advantage. It's not good enough to be a "me-to" product or service provider. To quickly build market share you must demonstrate to your customers that your product/service offers benefits clearly superior to what's available now. Be as specific as possible. Don't just say, "My product is a lower cost solution." Say, "My product will lower diagnostic costs as much as 30%"
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3
Don't get lost in technical jargon. Biotech companies' business plans tend to dazzle the reader with lengthy descriptions of the technology, because that is what the principals of the company are most familiar with. Keep the explanations in layman's terms, and make sure you keep the investor's No. 1 question in mind: How are we going to make money with this?
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Build your business model. Business model simply means your sources of revenue, and why each will be profitable. Your production costs may be lower than competitors', for example, or you may have lower overhead or administrative costs. Be sure you clearly explain which revenue streams will be most important, and why.
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Assess and disclose risk factors. The healthcare industry is subject to a tremendous amount of government regulation. And liability issues must always be a consideration. Show how current and pending regulation affects your venture, and how severely the business could be affected by potential lawsuits.
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Tips & Warnings
Whatever amount of capital you think you need, add an additional amount, perhaps as much as 20-25%, to cover unforeseen events. It usually takes longer for a start-up company to become profitable than the entrepreneur thinks it will. Product development costs and marketing costs are usually higher than projected. Investors don't just put money behind products or good ideas --- they invest in people. Make sure you have clearly presented why the experience and skills of your management team will translate into success in this venture.
Entrepreneurs' biggest mistake with their business plans is sending them out before they are ready. Have several trusted associates read and critique your plan before sending it to investors. They will be able to point out areas that need clarification, more information or further editing. A little more care and attention to polishing your plan now will give you a better chance of obtaining funding, saving you time and frustration.
