Best Practice Guidelines: Healthcare Practice Management & POPIA Compliance Framework
Best Practice Guidelines: Healthcare Practice Management
POPIA Compliance Framework
Copyright © 2021 GoodX Software. All rights reserved.
GoodX online Learning Centre
2. How to Start your Practice
2.2. Building a Business & Financial Plan
Your business plan is a powerful tool. As we mentioned before, your business plan will form your practice’s foundation and guide you through each stage of starting your new practice.
BENEFITS OF A BUSINESS PLAN
Here are three key benefits of having a business plan:
- Bigger Picture: A business plan helps you to connect the dots and see your practice as a whole.
- Strategic Alignment: Keeping your focus and priorities aligned will help you allocate your time, effort, and resources effectively.
- Metrics and Tracking: Knowing your numbers will help you keep track by developing accountability and maintaining quality.
BASIC TIPS FOR A BUSINESS PLAN
- Keep It Short and Concise: This may sound strange but the goal behind this tip is for you to be able to go back and use your business plan throughout your journey of starting and managing a new practice. If your business plan is too big or detailed, it can be a hassle to revise and refine. This can be different for everyone.
- Know Your Audience: Your audience is the investors of your business. You need to use language that your audience will understand – accommodate them with simple and understandable terms. You can always use the business plan appendix for full specifications, acronyms, etc.
- Don’t Feel Overwhelmed: Most medical practitioners are not business experts when they start out. Your business plan doesn’t have to be overcomplicated with a lot of detail. Start simple with quality content – maybe even a one-page business plan will suit you which can be expanded later on. If you choose to use a one-page business plan, the executive summary will be your main focus.
THE 6 ELEMENTS OF A BUSINESS PLAN
Below is a chart of the six elements that will give you an edge to a successful business plan. Please take note that this is a guideline and there might be things that are not specifically applicable to you and your practice.
1. EXECUTIVE SUMMARY
The executive summary introduces your medical practice. This is a critical section of your business plan as it will create the reader’s first impression of you and your medical practice. Even though the executive summary is structurally the first section of your business plan, it’s advisable to write it at the end.
It’s quite common for the readers/investors to only ask for the executive summary and later on follow-up for the detailed plan. It is ultimately a summary that highlights the sections mentioned in your business plan. You can use the diagram below as a guideline on what to add into an Executive Summary section:
- The Practice Overview is the first few sentences of the executive summary. It includes your vision and/or mission statement. Who are you? What do you do?
- The Value Proposition is where you describe the product and/or service that you offer that will provide a solution/value to a problem/need in the market. This includes your competitive advantage – what makes you unique and better than your competitors?
- The Target Market is where you can create your ideal patient profile. What is your patient demographic? What are their income levels? Does your product and/or service meet their needs?
- The Practice Structure highlights the practice and management summary. This is the overall practice’s information. From the size of your practice to the number of employees. What will their roles and responsibilities be? How do you want your practice to look like in the short-, medium- and long-term?
- Milestones and Traction is your progress. What have you achieved so far and what milestones do you still need to hit. Your metrics of success.
- The Financial Summary highlights your financial plan. If you require funding, then the financial summary is a must where you can specify what your budget is. The budget can be sectioned into short-, medium- and/or long-term requirements. From opening your practice, purchasing/hiring the necessary resources, to future plans. You can use charts for your profitability projections, expenses, and sales.
In this section, you identify and provide information about the opportunity – your solution to a problem/need in the market. You can use the diagram below as a guideline on what to add to the Opportunity section:
- The Solution to the Problem is where you will start. Begin by defining the problem and from that, you will be able to explain how your practice will provide a solution. This is your business concept and it’s part of your value proposition. Will your products and/or services meet the market’s needs?
- Target Market can include market research, analysis, and trends. Be more specific than just saying “everyone” is your target market. Create your ideal patient profile by categorising them – be specific. What is your patient demographic? Location of your market? Is the market growing or shrinking? Is the market evolving to different needs and trends?
- Competition is where you describe why your practice has a competitive advantage against its competitors. This is also part of the value proposition in the executive summary. Who are your competitors? What do they do? What will you do differently?
- Potential Future Plans is the potential of growth for your practice. You can choose to not include this in your business plan but you can add a paragraph or two if you’re focused on the long-term and impressing your readers.
In this section, you will explain how you will seize the opportunity and how you will execute your plan. You can use the diagram below as a guideline on what to add to the Execution section:
- Your Marketing and Sales Plan includes your positioning statement, pricing, promotions, advertising, marketing, and social media. Creating a name for yourself as a professional medical practitioner. Your positioning statement describes how the market will see you and this will have an effect on the pricing and promotions of your products and/or services. Identify effective ways of advertising and marketing your practice. Social media can play a key role as more businesses opt for social media platforms to build their brand.
- In Operations you will explain how your practice will operate – how the “gears” will be turning. This includes your resources, tools, logistics, and technology. What are the logistics behind your products and/or services?
- Distributions are applicable if you are offering a product (such as medication) at your practice. This is how you will distribute your product to your market. Will you be using direct or retail distribution?
- This is where you describe the Alliances or partnerships that you plan on forming. Being in a partnership may help you with targeting the market, and planning your marketing and sales.
- Your Milestones and Metrics are highlighted in your executive summary. See this as your map to opening your medical practice. It’s a way of keeping track of how much you have achieved and which milestones you still need to complete.
4. PRACTICE & MANAGEMENT SUMMARY
Use this section to provide the readers with an overview of your practice and the management thereof. You can use the diagram below as a guideline on what to add to the Practice & Management Summary section:
- Your Practice Overview will be quite short in your business plan. Here you will include your mission statement, intellectual property, your legal structure, ownership details, the location of your practice, and the history (if you are taking over from an existing practice).
- The Team is the staff that you have or will hire to help you with different roles and responsibilities in your practice.
5. FINANCIAL PLAN
One of the most important sections of any business plan, the financial planning section. You can use the diagram below as a guideline on what to add to the Financial Plan section:
- Your Sales Forecast can be used to forecast future sales of your products and/or services. You can put forecasts into categories per product or target market. Here you can add the Cost of Goods Sold (COGS) as well.
- Personnel Plan is where you plan on how much you will be paying your team/staff. This is more than just their salaries, it includes taxes, insurance, and any other payroll services.
- The Profit and Loss Statement is your first statement. It is also known as the income statement which shows whether you are operating at a profit or a loss. This includes sales, income, COGS, expenses, taxes, interests, etc.
- Not to be confused with the Profit and Loss Statement, the Cash Flow Statement will show the amount of money you have in the bank at any given point. This second statement can come in handy to indicate where you are low on cash and how much money you need to grow your practice.
- The third statement is your Balance Sheet. See the balance sheet as an indicator of your practice’s financial health. This includes your practice’s assets, liabilities, and equity.
- The Use of Funds is particularly important if you require funds from investors. Simply put, this is where you will explain how you will make use of your investor’s funds if they agree to your business plan. This can be a brief description of the major areas where their funding will go into.
- Now, the Exit Strategy is good to have if you are considering selling or giving away the ownership of your practice.
The appendix can be a handy element at the end of your business plan. This is especially so if you are using a language that might not be understandable to readers outside your profession. This can include terms, acronyms, specific products and/or services mentioned in your business plan. It serves as a reference for quick and additional information.
Now you know how to build your own business plan in order to open your own medical practice. In our next blog, we will continue with our journey of opening a medical practice. You can click on this link to be navigated to a more in-depth article on writing a business plan. You can also click on this link to be navigated to a website that gives you samples of medical practice business plans.