Business Plans

Business Plans Order Description   Chamberlain College of Nursing NR-630 Executive Practicum Business Plans What would be some of the steps for analyzing the market for a new product or business? One of the many responsibilities of a nurse executive is to assess the financial feasibility of staffing, resource utilization, a specific financial project, or implementation of a new service. A business plan is the key to securing financing, maintaining focus, and communicating the plan to senior administrators. The plan helps you identify customers, target the market, and competition. Also, a business plan can demonstrate the impact of staff cuts, program downsizing, or the financial risk or unprofitability of a proposed program or business. It is also important to consider the size and scope of the program proposed by the business plan. The scope may be as small as requesting additional equipment for the unit or as large as building an additional wing for the medical center. Course Outcomes 3 Integrate effective communication techniques and relationship management in the role of the nurse leader. (PO 3) Weekly Objectives • Examine techniques that foster professional and financial interactions and relationship building. 8 Delineate effective resource management and fiscal responsibilities of the nurse executive. (PO 8) Weekly Objectives • Determine the impact of implementing business strategies for request of services and personnel. • Assess efficiency in resource utilization. Business Plan Introduction A business plan is a detailed plan for a proposed program, project, or service. The scope of a business plan may be small as requesting additional equipment for a nursing unit or substantial as building an additional wing for an acute-care hospital. A business plan can demonstrate the impact of staff and program downsizing, the financial risk or unprofitability of a proposed program or business. The depth and complexity of the business plan will vary by the scope of the proposed project. For projects with large capital investments, a thorough business plan is crucial. The business plan should clearly state the objectives of the proposed project and demonstrate how the plan’s objectives will lead to accomplishment of the organization’s goals. A major component of any business plan is for the nurse executive to understand the financial feasibility of the project being proposed. Developing a business plan requires an understanding of the business industry, the competition in the market, the projected revenues and expense, and the time frame for achieving a break-even position. Many times, new programs fail because of inadequate financial planning, or the program does not serve the needs of the population (Marquis & Huston, 2009). Reflection Questions that a nurse executive may ask in preparing to develop a business plan include the following. 1. What exactly is the proposed project? 2. To what extent does the organization have the capabilities to undertake the project? 3. Will the project make a profit? 4. How much financial security is needed for the proposed project? Seven steps comprise the business plan. 1. Project Proposal 2. Product Definition 3. Market Analysis 4. Rough Financial Plan 5. Detailed Operations Plan 6. Detailed Financial Plan 7. Executive Summary Project Proposal The first step in developing a business plan is for the nurse executive to introduce the new product or service. This section relates to what the business plan proposes to do and what will change as a result of implementing the new program or service. For example, the nurse executive may be proposing an expansion of the telemetry unit with 10 additional patient beds to improve the throughput of patient admissions from the emergency department as well as discharges to the medical- surgical units. Product Definition Once a program has been proposed, the nurse executive must carefully define the product. The nurse executive will want to include in this section the organization’s goals and mission statements and how the new program supports those goals. The following questions should be asked to assist in defining the product. 1. What is the specific product or service? 2. What are the ways to provide the product or service? 3. What will be the resources needed to provide the product or service? 4. What patients will be served as a result of the new product or service? 5. What will be the labor requirements to institute the new product or service? 6. Is there a need for capital investments? If so, what is the amount of capital investment? 7. How long will it take to start the program? 8. What is the impact of economic and technological trends? Market Analysis Having defined the product, the next step is the market analysis. A market analysis identifies the estimated market share, clients and client mix, and payers and payer mix. The market share is the estimated percentage of the entire market for a product or service that is managed by a provider or organization. For example, the organization may admit 20% of the market share of cardiac patients. Is it reasonable to propose that the market share will increase based on the proposal? In preparing the market analysis section of the business plan, the nurse executive needs to define market for the new product or service. The more specific the product is defined, the more easily the market boundaries can be defined. A market is a set of actual and potential customers. In our previous example, the market would be patients that are admitted from the emergency department to the telemetry unit (Debelak, 2000). SWOT (Strengths, Weaknesses, Opportunities, Threats) Analysis Internal and External Market Analysis A SWOT analysis of the marketing plan assesses the organization's strengths, weaknesses, opportunities, and threats. The strengths and weaknesses consist of the internal audit of the organization, and the opportunities and threats assess the organization’s external position. When completing a SWOT analysis, it is important for the nurse executive to assess the organization from a customer’s point of view (Debelak, 2000). A major part of any marketing program is projecting to customers the image the organization wants to be known for. How the organization is perceived by its customers is what will determine marketing and business-plan success. Internal audit is one area where the organization tends to see itself in a much more positive light than its consumers do and not see its weaknesses. An organization’s weaknesses are not necessarily deficiencies; they are facts of the market. The internal audit is the snapshot of the organization’s current state and where it has been in the past. Following is a list of potential strengths and weaknesses of an organization that the nurse executive may assess when completing the market analysis. Features Innovation Market focus Product service and design Alliance partners Sales force Customer service Experience Management Meets consumer needs Geographic location Financial strength Perceived status Source of customer information Perceived to be the save choice Price/value Promotional program Quality Reimbursement Product differentiation Market trends are just one of the healthcare organization’s concerns. The organization also has to adjust to moves by competitors and changes in customer needs. In other words, in order to succeed, healthcare organizations have to understand the customer’s total world and how that world interacts with the organization’s services. The external market audit of a business plan assesses an organization’s opportunities and threats. The external audit consists of evaluating the future opportunities of the organization and whether the profits of a service or product line will be financially sound. New trends, new developing healthcare markets, and new technology can create opportunities for the organization. The threats include what the other hospitals within the market area are doing to expand their services and/ or products and if there is competition for services. In today’s healthcare market, if you miss a trend you’ll be either out of business or have a significantly smaller patient clientele. The organization’s goal is to start capitalizing on potential threats by adding new services to meet new trends and then to continuously modify existing services so they serve the needs of the new trends. Nurse leaders need to know what their threats are. But instead of reacting to those threats, they need to learn how to turn them into opportunities. Questions the nurse executive may ask in developing the external market analysis can consist of the following. 1. What market share does the organization get? 2. Is there enough demand for the product? Is the market likely to grow? 3. What will the competition do when they see the new product? 4. What are some of the strengths and weaknesses of the competition? Reflection Consider completing a SWOT analysis at your practicum site related to your management project or perhaps another project that your nurse mentor is currently addressing. What would be included as the organization’s strengths, weaknesses, opportunities, and threats? Rough Financial Plan A rough financial plan includes rough estimates of revenues and expenses. The revenues can be based on the demand projections from the market analysis. Revenues can be projected based on assumptions of payer mix (e.g., 70% being Medicare; 15% HMO). Furthermore, the revenues for each patient type can be projected based on assumptions and payment analysis. The expenses are based on approximations of the types and amounts of resources needed and may include: start-up costs of the program such as purchase of equipment, office supplies, salaries, and other miscellaneous items. After completion of the rough financial plan, the nurse executive should be able to arrive at one of three findings: First—do not continue with the plan; second—proceed; and, third—requires more thought; although, there should be a certain degree of skepticism if the plan requires more thought. Further analysis would be required to determine the feasibility of the project. Detailed Operations Plan The next step of the business plan is for the nurse executive to develop a detailed operations plan. The main question to be answered in this section of the plan is: What impact will the project have on the entire organization from an operations perspective? The first element to consider is the physical location and structure required by the project; next, the human resources and equipment and supplies. For example, who will staff the new program, will there be a manager or clinical coordinator that oversees the program, will a medical director be involved, and what other departments may be involved? Detailed Financial Plan A detailed financial plan is done after considering the various impacts of the proposed plan on the operations of the organization. This part of the plan incorporates all the information from the operations plan, considering the financial impact of the resources to be used, and will ultimately determine whether it is possible to go ahead with the proposed program. Transcript (Links to an external site.) Sensitivity analysis is considered with the fact that often a number of assumptions and predictions are made in calculating the financial aspects of the business plan. Sensitivity analysis is a process whereby the financial results are recalculated under a series of varying assumptions—the “what if” analysis. This analysis recognizes uncertainty and provides a means by which you can gain confidence in the project. Executive Summary The executive summary is the most crucial aspect of the business plan and should be very brief, no more than one page (similar to an abstract for a journal article). The executive summary is always reviewed by the senior executive team and financial executives and immediately casts a yes or no decision in reading the remainder of the business plan and accepting the new service or product. The summary should state what the project is, the competitive position of the organization, and what the most likely projected results are—financials and future. References Debelak, D. (2000). Marketing plan: Winning strategies for every small business. Avon, Massachusetts: Streetwise Publishing Marquis, B. L. & Huston, C. J. (2009). Leadership roles and management functions in nursing: Theory and application. Philadelphia: Lippincott, Williams & Wilkins