|April 13, 2016||
11 Essentials for Your Integrative Medicine Business Plan
Guest post courtesy Glenn Sabin of FON Consulting
Every new integrative health and medicine enterprise and organization should have a well-researched and well-written business plan.
In this post I walk you through the key elements of a business plan, and the essentials on which to focus, based on your approach to financing.
Investors are looking for a level of risk that will best ensure a decent return on investment. They want an equity (ownership) stake, or debt (interest) on their contribution at a higher rate than they would normally get from parking their money in another spot.
A business plan geared toward investors must be comprehensive and, at a minimum, include each of the 11 core elements detailed below.
Pros: Investors can include family, friends, or colleagues with whom you have solid relationships; interest terms and a repayment schedule can often be flexible. If investors take an equity position, you are free from the stress of repayment, hence able to focus on building revenues and brand equity.
Cons: If you provide shares (giving up equity) in exchange for an investment, you may dilute your position to a point where you may one day lose control of running your business. In cases where you have less than fifty-percent of shares, you can be outvoted; essentially no longer in charge.
These days, especially for small business loans, your ability to secure a specific sum at a decent interest rate is based on your good ‘personal’ credit.
Let me be frank: chances are, you will need to personally guarantee any bank loan you require.
A business plan document for a commercial loan is typically short. Banks usually want to see a summary of the company, products, services, market, management team, and financials.
Put simply, banks do not ‘fund’ business plan documents, but a well prepared business plan document which clearly indicates past performance, aged receivables, and your ability to guarantee the repayment of loans is key to securing funding. Banks will not put depositors’ money at risk based upon rosy pro forma projections illustrated in the business plan.
The loan application process may be more involved than your business plan document itself. If you’re seeking funds to expand an existing business, you will be required to provide lots of data, including the last three years of tax returns, aged receivables, and cash flow projections.
And, in addition to putting up business assets as collateral, you will still, most likely, need to personally guarantee the loan; you’ll be expected to provide personal financial information.
Any partners will need to provide the same data.
Pros: Banks do not own equity in your enterprise, and generally do not call the shots on how you run your business. (There can be exceptions to this rule, so check the covenants in your loan documentation. Common exceptions are requirements for setting aside a minimum amount of working capital or needing bank approval for entering new lease agreements.)
Cons: Loan payments can eat up cash flow during the first lean period when a startup or expanding business most needs to preserve capital.
Reasonably self-explanatory. You create a corporate entity and put up the capital—from savings, liquidated assets like stocks and bonds, or a 401K.
No outside investors. No bank loans. All the risk is yours.
Over time, when your integrative business has strong operational cash flow, you can repay yourself for the original and/or ongoing capital infusion.
Pros: You control the financing of your business, own 100% of the shares, and owe no one.
Cons: Your conservative approach does not leverage bank money or outside investors, and may limit your ability to scale or grow your business at an aggressive pace. This is especially true if you are looking for the business to grow from operational cash flow over time, and not make additional personal contributions at different points to help accelerate growth.
The 11 Essentials
Your business plan should include, as appropriate for funding type, these 11 core features.
My personal recommendation is to include each of these elements into your business plan document regardless of how you choose to finance your integrative medicine practice, business, or organization.
- Mission and vision statements.
- Description of company and product(s) and/or service(s).
- Description of how your products and/or services are different within the competitive set.
- A market analysis that describes the business market you intend to enter, competitors, where you fit, and type/size of market share you think you can capture.
- Description of management team, experience, and success of key leaders. Solo/small practices/businesses can include mentors, coaches, and key consultants.
- Marketing, sales and communications plan. Note: a vital component.*
- Analysis of your company’s strengths, weaknesses, opportunities, and threats (SWOT).
- Business model and clinic model (if integrative or functional medicine clinic, center, or institution).
- Cash flow statement including detailed startup costs and recurring overhead.
- Revenue projections for 18-24 (or more) months.
- Summary and conclusion.
*Your Marketing, Sales, and Communications Plan is Crucial
While each component is critical to include in a business plan document, a sound business model can only succeed if it is supported by an exceptional marketing, sales, and communications strategy.
The truth is, every business should aspire to the holy grail of consistent referrals via an uninterrupted stream of ‘word-of-mouth’ recommendations, after which the business over-delivers at every customer interaction to achieve amazing retention. This form of business delivery will allow you torealize the lifetime value of your patient or customer.
In summary, a flawless and consistently executed marketing and communications strategy produces an endless cycle of success.
Done right, over time, you may be able to place less emphasis on promotion and engagement. But, for new launches, or expanded business development initiatives, marketing and communications—and how it ties to sales—is the foundational engine of growth for any integrative health enterprise.
- Understand the various ways to finance a new or expanding business, and the inherent pros and cons of each.
- Create a business plan document for your new or expanding enterprise, but let the funding source inform what exactly is included and how deep and detailed you should go.
- Make sure to include an outstanding marketing and communications strategy with your business plan document to illustrate how you will engage and sell your products and or services.
FON is a leading business development and consulting firm delivering customized solutions to integrative health organizations—focused on growing patient volume, program and product sales—driven by innovative marketing, messaging and branded storytelling, all rooted in fiscally viable business models that work.
Contact us today to schedule a complimentary 30-minute consultation to discuss your career strategy or business development needs.