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Anesthesia Business Plan Development:

Solving Problems Before You Get Started
Garry Brydges, DNP, CRNA, ACNP-BC
2014 TxANA Spring Meeting

Objectives

The learner will be able to list the 10 most critical steps in the anesthesia business plan
development.
The learner will be able to analyze the anesthesia market for a perspective anesthesia
practice or venture
The learner will be able to identify the importance of offering unique anesthesia services
in a competitive market.
The learner will be able to compare and contrast an anesthesia practice to like practices.
The learner will be able to develop a 5-year strategic plan for anesthesia services
The learner will be able to investigate the anesthesia market for practice niches.

Introduction
Part 1

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Why Develop a
Business Plan?

A written document
carefully explaining every
aspect of a new business
venture.

Why Develop a Business Plan?

Serves as a dual purpose document

Internally: roadmap
Externally: introduces A business opportunity and execution plans

Most Eective Business Plan is a process including;

1.

identifying a business idea,

2.

screening the idea (or ideas) to determine their preliminary feasibility,

3.

conducting a full feasibility analysis to see if proceeding with a business plan

is warranted,

4.

writing the plan

5.

Requires several days to weeks

6.

Changes an abstract idea into concrete realities

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External Reasons

a selling document for a company

Investors rely almost exclusively on business plans for Start-Up Funding

Company Employees

the process of working together

also uncover potential trouble spots in a team

rank-and-le employees operate in sync and move forward in a consistent and

purposeful manner

geographically dispersed employees

help develop a strong, cohesive team

members of a team can't work together to produce a business plan

Investors & Stakeholders

business plan should be written with extreme empathy for the readers, who are
typically busy people who like to read plans that are clear, concise, and plainly explain
the business.

Overly optimistic statements or projections undermine a business plan's credibility

most compelling facts a company can provide in its business plan are the results of its
own feasibility analysis, particularly if the analysis includes feedback from industry
experts and prospective customers

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Structure & Style of the Business Plan

conventional structure

most recommendations fall in the 25-35 page range

be carefully thought out

plastic spiral binder, including a transparent cover

avoid getting carried away with the design elements

One important criterion that all business plans should adhere to is to convey a clear,
coherent story of what the business plans to accomplish and how it plans to get there.

Elevator Speech

develop a concise description of their business

carefully constructed statement

45 seconds to 2 minutes long that outlines the merits of a business venture

1.

Describe the opportunity or problem that needs to be solved. (20 seconds)

2.

Describe how your product or service meets opportunity or solves the problem. (20 seconds)

3.

Describe your qualications. (10 seconds)

4.

Describe your market. (10 seconds)

Red Flags

Founders with none of their own money at risk

Poorly cited plan

Dening the market size too broadly

Overly aggressive nancials

Avoiding or hiding weaknesses

Any element of sloppiness

Lengthy business plans

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Personal Goals & Aspirations

venture capitalists shoot for a 30 - 40 % annual return on investment.

a total return over the life of the investment of 5 to 20 Xs original investment.

Some equity will be given up (How much?)

Evolution of Plan can create dislikes . . . Better now than later

Be aware of the Corridor Principle

Always remain alert to new ideas

Product Description
Brief description of the Product

What are you selling? . . . What is your service?

describe your service or product.

emphasizing the benets to potential and current customers.

Focus on the areas where you have a distinct advantage.

Identify the problem in your target market for which your service or product provides a
solution.

Give the reader hard evidence that people are, or will be, willing to pay for your
solution.

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6 Most Common Sources of New Business Ideas

Changing Environmental Trends

who has money to spend and what

they spend it on
i.e.Glidescope versus Shikani Stylet

Satisfy social need

i.e. FaceBook

Anesthesia Logs, Outcomes?

Technological

Political Action/Regulatory Change

Social Trends

Apple iPod (Social, Economic,

Technological)

Economic Trends

Trend versus Fad

Trends are Interconnected

Gaps in the Marketplace

Texas SB406 NP Ratios & CVS

How device satises a basic need

i.e. Airtrac

Transformation peoples frustration into

a product of need
i.e. tness for women, Curves

3 Techniques for Generating Ideas

Brainstorming

Focus Groups

Target a specic topic and identify ideas

Groups of people familiar with a topic

Domino eect of freewheeling

Great follow-up to brainstorming

Very informal

Ask the group question about the idea

Using 6 sources of business ideas

College Drop-In

Develop ideas to address each category

Seek interconnectedness

Group into patterns/themes to solid ideas

Specic Insights

Market assessment/issues

3 Techniques for Generating Ideas

Library/Internet Search

Discuss the idea with a librarian

Industry-specic magazines

Powerful search engines

E.g. Mintel (publish market research on industries)

Market analysis

Consumer Trends

Competitive Intelligence

Internet Search via Google, Yahoo, newspapers

http://www.mintel.com

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First Screen
Business Idea Strength

Assessing the merit of an idea quickly

Requires research & analysis

Not intended to lengthy

5 Part Process

Business Idea Strength

Industry-Related Idea

Market/Consumer Related Idea

Window of Opportunity

Open: product or service developed

Close: market maturation

E.g. Desktop Computer, Mobile Phone

Must Add Value to People

Look at Industry Trends

Business & Company Resource Center

Mintel

IBISWorld

Founder Issues

ProQuest

Financial Issues

MagPortal

First Screen
Industry-Related Issues

Market-Customer Related Issues

Industry Factors account for 30% of a

companys protability

Identify the Target Market

Number of Competitors

Competitive Advantage

Stage of Product Life Cycle

Growth Rate

Seek out competitors Operating Margins

BizStats, IBISWorld, Mintel, S & P

NetAdvantagr

Emerging or underserves niche

Create Barriers to Entry

Economies of Scale

Product Dierentiation

Unique Access to Distribution

Intellectual Property e.g. Patent

City-Data.com, American Factnder

Spending patterns, deographics

First Screen
Founder Related Issues

Financial Issues

A self-assessment

Develop a sense of the magnitude of nancial

support

Weak versus Strong Founders

Speak to industry experts, reports, etc

Strong Founder Attributes

Still Uncertain . . . .

Determine Revenue drivers The more the

better

Experience

Skill related to Product or Service

Broad Social/Professional Network

Personal Goal/Aspirations

IBISWorld provide Cost Structure associated

with owning rms

Number of hospitals

Number of Surgeons

Population

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MarketFeasibility Analysis
Part 2

Industry Description and Outlook

Product/Service Feasibility

Concept Test

Assess overall appeal of service/product

1.

A description of the product or service

Product Desirability

2.

The intended target market

Concept Test

3.

The benets of the product or service

Product Demand

4.

A description of how the product or service will be

positioned relative to competitors

5.

A description of how the product or service will be

sold

6.

A brief description of the company's management

team (for purposes of completeness)

Industry Description and Outlook

Product/Service Demand

Perform a Short Survey to the intended

audience

Tends to be optimistic (not all will buy)

How much would you be willing to pay for the

product or service?

Where would you expect to nd this product

or service for sale?

This provides insight into pricing.

This may provide insight into sales and

distribution.

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Identifying Your Target Market

Distinguishing characteristics.

Size of the primary target market.

Market research.

Your pricing and gross margin targets.

Media you will use to reach your target audience.

Purchasing cycle of your potential customers.

Trends and potential changes that may aect your primary target market.

Find markets large enough to sustain the business but small enough to avoid large competitors

Competitive Analysis

Strength assessment including:

An ability to satisfy customer
needs and current upward
economic conditions
A large share of the market and
the consumer awareness that
comes with it
A good track record and
reputation
Solid nancial resources and the
subsequent staying power which
that provides
Key personnel

Weaknesses assessment including:

A high investment cost
The time it takes to set up your
business and current downward
economic conditions

Changing technology
The lack of quality personnel
Customer resistance (i.e., long-
standing relationships, brand
loyalty)
Existing patents and trademarks
that you can not infringe upon

Key personnel

rsums that details your ability to manage a business

what specialized small business training you have recently completed

Identify Management Expertise, Organizational Competence, & Resources

Management Prowess

Passion is critical

Employees Understand the Concept

Resource Suciency

Identify top 8-12 nonnancial resources that may be problematic

Clusters: pros versus cons i.e. Silicon Valley or Medical Centers

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Environmental Barriers

Regulatory Restrictions

Licensing

Special Permitting

Financial Feasibility

total startup cash needed

BizStats.com

nancial performance of similar

businesses

BizMiner.com

overall nancial attractiveness of the

proposed venture

IBISWorld.com

Trick: nd the nancial performance of small,

more comparable rms

Part 1

Part 2

total cash needed to prepare the

business to make its rst sale
estimating a proposed startup's
potential nancial performance

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5-Year Projections

revenue levels

based on market data

assumptions

Company Description
Part 3

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Company Description

a high-level look at how all of the dierent elements of your business t together

information about the nature of your business

as list the primary factors that you believe will make your business a success

The rst 2 steps:

Executive Summary

Company Description

Executive Summary

The most important part of a business

plan

Clear

Concise

Easy to follow

You are being Judged

Sharp Appearance

Reads Well

Professional

Solid Research
Competence, Passion, Attention-to-Detail

Executive Summary

The most important part of a business

plan

Clear

Concise

Easy to follow

You are being Judged

Sharp Appearance

Reads Well

Professional

Solid Research

Competence, Passion, Attention-to-Detail

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Cover Page

Company Name

Street address

E-mail address

Phone number (land based and cell),

Date

Contact information for the lead

entrepreneur,

Company's Web site address

Company Logo (Branding)

http://www.inmagine.com Royalty Free Photos

Table of Contents

Make it VERY easy to anything in the

plan

A mechanism to draw attention to

focused areas of the plan

Executive Summary

Overview of the Entire Plan

NOT an Introduction or Preface

Max 2 pages double spaced

2 versions;

Stand alone

Business Plan Component

Crisp, concise, businesslike, exciting

Each section is Factual with Research

Company description, opportunity,

status of oering

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Company Description

Extremely Important

Demonstrates the translation of an

idea into a business

Brief Introduction plus Demographics

A story of an opportunity

Delivering Value!!!

Credibility through Fact & Research

Company Description

Components of the Description

Company History

Mission Statement

Product or Service

Where idea came from

Driving force
Brief & Rules of Thumb
Beyond executive summary
Uniqueness

Current Status

Legal Status & Ownership

Team Composition, customer reaction, and

nancial status
Type: S, or C-Corp., LLC

Mission Statement

Not be a mini-overview of the business

Google

Describe what makes your company dierent

Be honest-don't claim to be something you arent

Convey passion and stick in the mind of the reader

Dene your "reason for being

Be risky and challenging but achievable

Use a tone that best reects your company's culture

Be something that everyone involved with the rm can

relate to

Involve everyone in your team in its creation

Organize the world's information and make it

universally accessible and useful.

eBay

eBay's mission is to provide a global trading platform

where practically anyone can trade practically anything.

Intel

Delight our customers, employees, and shareholders by

relentlessly delivering he platform and technology
advancements that become essential to the way we
work and live.

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Selecting A Business Name

Consumer Driven Companies

Caution Cultures

Reect the Category of Service

Must be Unique
Search Trademarks www.uspto.gov
Register Domain Name

1-800-Flowers

Industry Driven Company

Reect the advantages of product or

service

Legal Issues

Big & Tall

Product or Service Driven Company

Reect attribute of clientele

General Motors, Home Depot

www.godaddy.com
Chevy Nova in Mexico
No Vo = Doesnt Go

State the company is registered,

tradmarked, and internet domain name
is secured

Personality or Image Driven Company

Indelible stamp

Ben & Jerrys Homemade

Industry Analysis
Part 4

Industry Analysis

Industry versus Target Market

Premature to focus on Target without knowing the Industry

Example: Pesticides for Orange Growers (target market)

Industry is pesticides

Larger or small

Expanding or shrinking

Large or small companies

Making or losing money

Determines the attractiveness of pursuing a target

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Industry Analysis: Part 1

Dene the Industry

Use SIC and NAICS codes from North American Industry Classication System

http://www.naics.com/search/

Anesthesiologist Code is 621111

Anesthesia Code is 339112

Use these codes to perform industry analysis in Mintel, IBISWorld, NetAdvantage, etc.

Powerful tool on competitive Intelligence . . .

Industry Size

Growth Rate

Sale Projections

Presenting the Data

Industry Size

Industry Characteristics

Dollars over 3-5 year time frame

Structure

Goal: large enough not to get attention

Industry Participants

Key Ratios

Key Success Factors

Industry Growth Rate

In percentages compare to other similar

industries

Industry Sales Data

Intelligence Reports & Other Sources

Cautious: these must be trusted

Industry Trends

Most important section

Environmental

Business

Recall: economic, social, technological,

political
Prot Margins
Innovations: accelerating or waning

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Market Analysis
Part 5

Market Analysis

Describes a companys

Target market

Customers

Competitors

Reason for Market Analysis

Denes the nature of the business

Assures a company clearly understands market forces: customers, competition

Market Segmentation

Involves a careful deconstruction of the market

Geography (i.e. city, county, state)

Demographics (i.e. gender, age, income)

Psychographic (i.e. personality, lifestyle, values)

Behavioral variables (i.e. brand loyalty, benets sought)

Product type (i.e. varies by product)

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Target Market

Biggest Mistake

Target Market Size

Dene a market too broadly or multiple segments

Very dicult

Rule of Thumb: do not make frivolous predictions

Based on . . .

Reasonableness of assumption

Anchoring numbers in the facts and analysis

Good faith eort

Competitor Analysis

Search for direct, indirect, and future competitors

Direct Competitors

Oer products/services in direct competition

Most important because they compete for your customers e.g. anesthesiologist

Indirect Competitors

Future Competitors

Oer Substitutes to your product/service e. g. AA

Potentially move into direct or indirect competitors e. g. oral surgeons, family practice, PA

Competitive Intelligence

Gathering information about your competitor . . . . Very Powerful!

Conferences

Periodicals

Industry reports!!!

Purchase competitor products

Speak to customers seek out motives

Competitors Website

Competitors Aliates

Complete a Competitive Analysis grid

Hire Secret Agents Digiorno Pizza vs. Freschetta

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Marketing Plan
Part 6

Marketing Plan

It is NOT dening the market, customers, competitors, or potential sales

IT IS . . . .

The method of nding customers

Making Sales

Positioning

Points of Dierentiation

Strategy

Customer must be completely in mind during this process

Focus on how your service or product will be sold!!!

Overall Marketing Strategy

A companys approach to marketing a product or service in general terms

Aligns mission with market knowledge: must compliment each other

A reection of how the company feels about the target market

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Positioning Strategy

How a company is positioned in relation to competitors

Examples

BMW (Sports Oriented)

Chevrolet (Functional)

Always consider you client and what your oer to attract that client

i.e. surgeon

Points of Dierentiation

Articulate early in the business plan

Limit to 2-3 points

Ensure these points are distinct and memorable.

Pricing Strategy
Cost-Based Pricing

Value-Based Pricing

Adding mark-up percent to the cost price

Estimate of what consumer is willing to pay

Typically determined by the company

Determined by

Easy and arbitrary for the company

Occasionally challenging for start-up

Frequently higher gross margins compared

to cost-based pricing

Comparison shopping limits price decisions

Percieved product value

Choices available in the marketplace

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Promotion Mix

Advertising

Customer awareness is critical

Service features

Benets

Public Relations

Not paid, its networking

Press release

Media Coverage

Newsletter

Blogging

Sales Strategy & Related Issues

Unique methodologies in distribution & Sales strategies

E.G. Apple Computers and the Apple Store

Anesthesia Practices with multiple locations

Dierent hospitals

Within hospitals

OR, Non-OR, ICU, ER, Clinics

Organization & Management

Part 7

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Management Team & Company Structure

Management Team

Dene the relationships between employees and responsibilities

Level of commitment to BOD and Advisory Boards with respect to advice

Clearly document and dene the management team evolution into the future.

Can be done with an Organizational Chart

Organizational Chart

CEO

BOD

Employee Employee Employee Employee

Management Team & Company Structure

Management Team Proles
1.

Position Title

2.

Duties & Responsibilities of each team member

3.

Previous related experience

4.

Previous achievements of each member

5.

Educational Background

Seek out management gaps which can be lled with;
BOD, Advisory Board, hired management company (Caution)

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Management Ownership & Compensation

Full disclosure is critical

Ownership structure and legal classication

Compensations and benet structure

Common Mistakes undermining credibility

Unqualied friends & family members in management positions

Assuming success other industry will translate

One-Person Team Philosophy (Wearing all the Hats)

Recruit Top managers without sharing nancial benets

Failure to look or disclose Management Gaps

Vague Plans for bridging competency gaps

Board of Directors

Typically reserved for Large Organizations

Responsibilities
1.

Appoint the rms Ocers

2.

Declare Dividends

3.

Oversee Company Aairs

4.

Guide the managers

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Eective BOD Members

Listen

Probe

Debate

Engaged in the Organizations pressing Issues

Recruiting well known BOD is called Signaling

Mark Cuban HDNet & Mavericks

Other Professionals

Attorneys

Accountants

Bank/Investors

Operations Plan
Part 8

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Operations Plan

Outlines the Service/Product you will oer

Focus should be on components that will make the business successful & separation
from competitors

Outline the critical issues confronting the business

Components:

1.

Operating Model & Procedures

2.

Business Location

3.

Facilities

4.

Strategy Plan

Operations Model & Procedure

Outlines the operational details for start-up and running the business

Operations Flow Diagram

Outlines the life cycle of your service/product

Identies the Bottlenecks in service delivery and contingency plans

How is quality control handled

How is disputes on service handled

Example: Independent Contract today. . . What if a new service provider oered

competition? Are you prepared to compete?

Non-Compete Clauses???

Business Location

Critical Factors:

Proximity to qualied labor force

Neighborhood (High Income versus Low Income Community)

State & Local Taxes

Community Incentives (Rural Especially)

Search the demographics of the community population (www.census.gov)

Search the Competition (other groups posing potential threats)

Search for ongoing opportunity

Search for other business that compliment your Objectives

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Operations Strategy

Strategic & Long-Term Plans

Links Business and Operations Strategy

Service Industry;

Who provides your service You or employees

How will employees be paid? Salary vs 1099

Product/Service Plan

Development Status & Tasks

Challenges & Risks

Cost

Intellectual Property

Development Status & Tasks

Describes the current state of the product or service

Outlines the milestones for business growth into the future

If it is a product: Prototype is the rst tangible product

Four categories through groupings of companies

Level 4: Going Concern.

Level 3: Ready to Go.

Level 2: Almost There.

Level 1: A Great Idea, But ....

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Challenges & Risks

Outline the greatest threat or challenges to delivering your product/service

Develops awareness of the risks & methods to address

Cost

Outlines the Start-up Costs or Budget to get your business up & running

Lease Equipment

Employees

Sales & Marketing

Oce Equipment &Software

Intellectual Property

Trade Secrets

Legal Advice is IMPERATIVE

Denition: product of the human imagination, creativity, and inventiveness

Trade Secret is any formula, pattern, physical device, idea, process, or other
information

Trade Secrets are only governed by state law

Protection through Trademarks, copyrights, patents-provisional

If theft of Trade Secret is proven under Federal Espionage Act of 1996 may be punishable

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Summary

Summary

Product Description

Market Feasibility Analysis

Company Description

Industry Analysis

Product Analysis

Marketing Plan

Organizational Structure

Operations Plan

Questions

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