the business plan. Good afternoon everybody it's great to be here in person again. I'm really happy that you're not having to watch this virtually because we taped all these talks beforehand and I I watched mine last night I'm like wow that's that's really interesting how I did that but I'm going to talk a little bit about how to write a business plan for the intensive care unit. So show of hands who has written a business plan in the past? Okay so a few of you who has written a research grant or a study proposal? Okay a lot of you and and the reason I ask is because there's a lot of similarities. I once got in a discussion with our chief financial officer about business plans versus grant proposals and I said they're really very similar they're almost identical in a way and I think we'll compare and contrast and you'll you'll see what I mean here in a minute. So I have no relevant financial relationships to disclose. The objectives define the purpose of a business plan and compare and contrast the elements of a business plan with a research grant proposal. So the first question you have to ask yourself is why are you going to be asked to write a business plan and I think the most important answer to that is because hospital administrations these days are dealing with a lot of financial headwinds a lot of financial challenges and they're going to want to make sure that whatever money they invest is going to have a return on their investment and and this is a graph from Kauffman Hall when I put together this slide it was in the data was through September of 2022 I can tell you that the data is very similar all the way through December but basically what it is showing it's a national composite of hospital operating margins across the country and you can see really since January 2022 all hospitals have been on average operating with a negative operating margin so they're bringing in or they're spending more money to take care of their patients than what they're bringing in for revenue which which really makes it even more important that whatever you outline in your business proposal in your business plan shows a financial return on the investment because they're not going to one they don't have the money to invest in many situations and two they're going to want to be very conservative on how they invest money in new programs and you can see here why you know I mentioned so it's not really a function of revenue we're bringing in more revenue but we're spending more to take care of our patients and to run a hospital a lot of that has to do with labor costs supply chain costs and it's really an untenable situation that a lot of hospitals and health systems are struggling with right now but grant funding is also competitive and so again if you look at why you put together a research proposal the the funding agencies want to make sure that what you're going to do is going to generate some kind of impact generate some kind of return on their investment so so very competitive so that that's really one of the most important similarities between why you write a grant why you write a business plan is is because it's it's very competitive you want to demonstrate a return on your investment I like quotes not everybody does but I think these two are very relevant to writing a business plan Benjamin Franklin said by failing to plan you are planning to fail and Winston Churchill said he who fails to plan is planning to fail so very similar but I think very relevant and I think really outlines the importance of a business plan for your program so so really again business plans and grant proposals they allow you to define your goals and objectives really provide a roadmap for how you achieve those goals and objectives and establish a key timeline for your deliverables and it really in essence is taking your idea for a project for a program and creating that idea and turning it into something that is is tangible on paper that you can create and develop and make it a reality and that's that's really how the business plan kind of is set up and really how a grant proposal is set up as well so these are the elements so the elements here are for the elements of a business plan these are the elements of a lot of grant proposals or at least how a lot of funding agencies like to see the major sections if you look on the internet you're gonna find a lot of information on setting up a business proposal or a business plan they may have some subtle differences in terms of the key headings but this is how I was taught to put these together and and I think you know that the the subject headings are probably less important than the topic areas but these are going to be kind of the key topic areas that you're going to want to include in your business plan so I was always taught when you put together a grant proposal the most important page is the first page that specific aims page and so the analogy for a business plan is the executive summary and that that probably is absolutely the most important part of your business plan and frequently and unfortunately is probably the only thing that gets read in some cases so you really really have to spend a lot of time and energy and effort on the executive summary so it's the most important part of the business plan you want to use this opportunity to tell a compelling story you want to make the reader want to keep reading and that's the key because you know they may not have a lot of time to be spending looking through all these different business plans you want to make sure that yours provides a compelling story and and really grabs their attention early on so that they'll keep keep reading and they'll be interested in funding your proposal you want to summarize the key messages of the plan generally and it's a little bit different for a business plan versus a specific aims page you have about one to three pages to develop your executive summary so you have a little bit more room and space to outline clearly define the problem the solution and the opportunity it's as I mentioned it's frequently but not always the only part of the business plan that gets read and and just like a specific aims page you really want to do this at the end you write the executive summary after you've written the rest of the entire business plan and again it's important really to spend a lot of time on this and it's really a key element the analogy that I like to use if you've heard of an elevator pitch so the elevator pitch is something if you get on an elevator with somebody you should be able to talk about the problem the impact of the problem in your solution for the problem by the time that the elevator gets to the floor that you're going so you have about two minutes for an elevator pitch to really encapsulate all the things in your business plan the similar analogy for the executive summary so that the executive summary of your business plan is your elevator pitch and it's your opportunity to really grab the attention of the reader the next section is the description of the business I like to think that about the relevance section or the facilities and the other resources section of a grant proposal this is really where you're going to provide important background information on the business opportunity on your proposed solution and why the organization should make this investment at that point it's going to provide a lot of details on the product or service or your program again pictures are really helpful picture is worth a thousand words and and this kind of gives you an idea of different business proposals that I've either read or that I've written and again pictures are very colorful they're going to be attention grabbing and and I would take advantage of using pictures in the description of the business section of your your business plan the next couple sections the market competition marketing and sales and operations I like to think of it's it's very similar to the grant proposal for your equipment your research strategy significance innovation and approach section so a lot goes into this part as well the the market really you want to define the market who is it how big it is you know is there a lot of competition there so if you're if you're putting together a business plan to you know develop let's say an MRI suite you want to know what the market is if there's a lot of MRIs scanners in the area you don't necessarily want to you know the hospital's probably gonna not invest in a new MRI so you want to get a really a framework for what the market looks like how powerful the competition is and so again the market really is defined as the potential customers who have purchasing powers and unmet needs so define your market who who is your audience and and you know what your competition look like I think it's helpful for this to use different tools that are available I don't have a lot of time so I'm not going to go into these different tools in detail but Michael Porter's five forces model if you look that up online you can get a lot of information on that it's in there's some really good Harvard Business Review articles on that but it's a way to describe the market and in the different forces that are involved and and if you outline in that particular section of your business plan use the Porter five forces model a lot of the the business leaders in the hospital administration are going to realize what that is and they're going to know what that is so I think it's a very useful tool another one that I've seen is a SWOT analysis so you look at strengths weaknesses opportunities and threats again something that is very commonly utilized and I think is really helpful to put in your business plan when you when you conduct a marketing analysis and I think is really helpful other sections marketing and sales may or may not necessarily be relevant to your specific business proposal or your business plan but it's it's something that I think is important for certain types of business plans and again they talk about the four Ps place promotion product and price maybe again not as relevant for a not-for-profit but again something that I think is is important to take a look at and to learn about what these different things are when you put together your business plan the operations section really is is you have to put on paper what's required to make this project a success what are the new equipment that we need what are the personnel you know what are our plans for improvement if we see any barriers with this particular project proposal what are those barriers how are we going to overcome those barriers all those things are going to be important to put in the operations section of your business plan management and key personnel is exactly what it sounds like so you want to outline what are the qualifications of the different individuals in your business proposal so as an example I showed you the on the earlier slide we put together a business plan for a educational program that used medical illustration and animation and so you know we outlined okay who's going to lead that what is their experience it's it's exactly like a research plan when you have a CV they want to know that the individuals that are going to be working on this project are qualified to do so and so it's important to kind of list their different qualifications or or if you're going to hire new personnel what kind of personnel are you looking for those are the kinds of elements that would go on this particular section finances this this is going to be very similar to your budget section of your research proposal and and this is where I think a lot of times it's very helpful to enlist help and and what I found is people who work in the finance department at hospitals are thrilled when physicians and nurses and clinicians come to them with ideas and ask for help on putting together the financial part of the business plan because unless you're you have some experience in this I think you can really get off track and so it's important to get a financial analyst to help you out it's important to get somebody who knows what a finance team what a CFO is going to look for in a business plan when you put that together and I've always found that financial departments have been very open and very helpful in helping me to put together the financial part of the business plan here you want to list your assumptions that drive any of your financial models you want to list your revenues and expenses it's important to conduct a break-even analysis I'll go over that in a second and then you're going to want to conduct list pro forma financial statements for the next three to five years so that that the financial statements you know your your statement of cash flow your income statement your balance sheet those are the things that they're going to want to see the hospital administration and and have you project that out for the next three to five years depending on the nature of your your proposal and they're going to want to see you know maybe you don't necessarily generate a positive margin in the first year of your project but they're they're going to want to see that it's going to over time start to generate an impact a financial impact to return on their investment so that's going to be really important in that I think is where you're going to need some help if you've not worked with financial statements before so the break-even analysis so and we can talk a little bit about this later this afternoon but generally you're going to want to either conduct a break-even analysis you're going to want to calculate an internal rate of return or you're going to want to show what your your break-even point is your time to breaking even so this is where you calculate okay we're going to invest this much money in this project when are we going to start to see that project generating a positive income for the hospital and so there's different ways to do that the internal rate of return is one way it's a little bit more complicated of a calculation but I like to use the break-even point because it's pretty simple to use you're just basically taking fixed costs and dividing it by your total sales revenue minus the cost to make the project so that's your contribution margin at the in the denominator and your fixed costs in the numerator so what's a fixed cost so a fixed cost is something that no matter what it's going to cost money so think about it in an intensive care unit regardless of whether you have any patients in the ICU or not you're going to have to pay for staff you're going to have to pay for equipment you're going to have to pay for space power electric all of that those are all fixed costs so regardless of your volume of sales your volume of patients your fixed cost is what you're going to have to generate upfront regardless of whether you're doing any business or not as opposed to a variable cost would be the cost per patient in our scenario so it would be the cost of each individual patient in the intensive care unit and so if you take your fixed costs you divide it by your revenue minus your variable cost that will give you your break-even point that tells you the amount of money that that your project has to deliver in order to overcome those fixed costs and and they're and usually in any particular business proposal your fixed costs are going to be a lot of upfront investment and and your your hospital team is going to want to see how long is it going to take for us to pay back those fixed costs and and so that that's a really nice way to be able to calculate that and tell them this is our break-even point these are some examples of the financial statements that you would have to show out for three to five years you have your income statement here your balance sheet which a lot of you have probably seen because this is what gets reported in most hospital end of the year financial reports it really gives you assets and the liabilities and then your statement of cash flows you're going to want to generate these and project them out for three to five years for your project and they're and and again that's where I think it's important to get a lot of help to put those together milestones and risks are exactly that so milestones what are the the kind of the the touch points for each part of your project it's good to show a Gantt chart here so this is again that animation library that we built for the business proposal it kind of gives you a timeline of okay where we where do we want to be at which point in the next three to five years and it's a it's good to show that out and project that out and then make sure in your business proposal that you're you're saying okay these are our timelines but these are the potential barriers and and if we run into some barriers and it delays us this is what we're going to do to overcome that and that's that's going to be important in that risk section of the business plan all right you know business plans are a lot of hard work you know I think they're important but just like a research grant you know new faculty oftentimes go to day-long sometimes week-long seminars on how to write a grant the same is true for a business plan so you know I took a class on how to write a business plan there's lots of different opportunities online for you that I would encourage you to take advantage of it's it's not too complicated to do but I think in order for you to be successful take advantage of some of those things online and if you're interested you know sign up for a course on how to write a business proposal so I would encourage you to do that and with that I will see you in the aftermath

business plan

intensive care unit

return on investment

executive summary

market analysis

financial analysts