Developing a Business Plan

Definition:

A business plan is a formal document that explains plans to develop a financially

successful practice.

• It is a blueprint of the practice
• Lack of planning is the principal reason for business failure!!!
• Required by most lenders when financing is sought
• May run 25 to 40 pages, if consultants are involved
• Seek advice of an experienced corporate attorney and an accountant

Why develop a business plan?

            While nurse practitioners (NP) may have the confidence in their professional ability to be independent practitioners, success depends on knowing the practice climate, the competition, laws governing NP practice, and the public’s perception to NP’s. A good business plan, therefore, takes the big picture into account.

            The key steps in developing a business plan include conducting an assessment, identifying business objectives, developing strategy, conducting an impact analysis, and developing an implementation plan.

Business plans analyze:

• Whether there is a need for the NP to fill
• Whether there will be enough business to support a practice financially
• The barriers the practice must overcome to be successful
• The business skills the NP need to operate the practice

Elements of a Business Plan:

• The description of the business
• The marketing plan
• The financial plan
• The management plan
• Additional elements:

Ø  Cover sheet

Ø  Table of contents

Ø  Executive summary

Ø  Supporting documents

Ø  Financial projections

A good business plan:

• Provides detailed information about all aspects of the business
• Makes projections about the practice over the next few years
• Points out potential adversities, competitors, and other vulnerabilities
• Should display in detail how the money will be used for practice
• Provide solid data such as estimates, industry norms, and rate sheets to support projections
• Will provide tools to implement changes and foster profitability
• Should be updated regularly

Several factors that should be reached prior to opening your practice:

• The need for the service
• Community interest in the service
• The size of the potential patient pool
• The willingness of the community to use NP services
• The willingness of the third party payers to reimburse NP services

Sources of Assistance:

• Small Business Administration
• Service Corps of Retired Executives
• Graduate business students who do plans as components of coursework
• Business oriented community groups
• Professional journals
• Libraries and business plan software programs

Sample Outline of a Business Plan:

• Cover sheet
• Table of contents
• Executive summary
• Detailed description of the business
• Market analysis
• Financial plan
• Management or organizational plan
• Financial documents
• Supporting documents

Good luck with your new practice venture!

References

Bachrodt, A.K. & Smyth, J.P. (2004). Strategic business planning linking strategy with financial reality. Healthcare Financial Management, 58, 60-66.

Galloway, M.J. (2004). Best practice guideline: writing a business case for service development    in pathology. Journal of Clinical Pathology, 57, 337–343. doi: 10.1136/jcp.2003.012518

Reel, S. (2003). Developing a business plan: Getting down to specifics. Advance for Nursing        Practitioners, 11(6), 53-54.