Dr. Arlen Myers, president of the Society of Physician Entrepreneurs, can give you ten good reasons why doctors make great entrepreneurs. However, in my many years of working with physicians, I have learned when it comes to a business idea, doctors, like most new entrepreneurs, often need help getting the nuances wrestled to the ground.
For example, I remember the conversation with an ED medical director about the importance of using “ER” in ads and promotions for a new facility, rather than “ED.” True, I conceded, ED is what it was called inside the hospital and by the medical staff. But our target audience was the general public. At the time, “ER” was the most popular show on television. “You have to sell what people are buying, not what you are selling,” I explained.
Writing a business plan is a good way to bring focus to an entrepreneurial vision. It’s the intersection of what customers are buying with what your proposed business will to do to be first, be different or be cheapest. There are five things to remember when writing a business plan.
1. Know your elevator speech. What is your unique selling proposition? Can you explain in the time it takes to make the average elevator ride why your business will offer something new and exciting? Because most of the time this is how you will need to explain your business model to investors and customers. Your elevator speech is the starting point for your written plan.
2. Write your plan sooner than later. Don’t get too far along in your business development without making time to give detail to your idea. A properly written business plan offers insight into whether you should even proceed to the next actionable step. Among the components of a business plan are an executive summary (the elevator speech), trends data, demographics, competitor analysis, and a marketing and sales plan. Combined with detailed financials (see below), you will have pretty good idea if this idea of your is worth the risk. After all, the first purpose of a business plan is to convince yourself.
3. Keep it tight. The first medical business plan I ever wrote was almost 100 pages long. When I gave it t the guy to whom I reported, he looked like he wanted to beat me to death with it. Write to the point, no fluff: 25 pages max. A well-stated plan should not be over wrought. Present enough data, but not too much that your banker will go mucking around to borrow trouble. Remember, the second reason to write a business plan is to get financing.
4. Be brutally honest or get embarrassed. You need to be your worst critic. Your investors and financiers will be picking apart your idea because they don’t want to lose money on the deal or even worse, look like they don’t know what they are doing. Anticipate their resistance and address it up front. A handy device is the tried and true SWOT profile: strengths and weaknesses (internal), and opportunities and threats (external). It’s a good idea to haves someone else ask these questions so you don’t fall to the temptation to say what you want to hear. Investors like it when you already considered the worse case scenario for them.
5. Be very detailed in your financials. The comfort level of anyone who is going to invest in your business immediately goes up when they see you speak the same money language as they do. A proper financial projection that accounts for expenses and income with a cash balance and flow sheet over at least 36 months sends the message you are a good risk. The reason of a business plan is to keep you from overestimating your cash flow and underestimating the amount of cash/credit you will need to get your business through the first critical two years of operations.
John W. Mitchell is a former hospital CEO and owner, SnowPack Public Relations.