UBC Phar400-business planning-21sept2012

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UBC Phar400 | Pharmacy Management retailSOS.ca | Gerry Spitzner September 21, 2012

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Guest lecture to UBC Entry to Practice 4th year Pharmacy students about strategic business planning and their semester term project to present a business plan for a new clinical service.

Transcript of UBC Phar400-business planning-21sept2012

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UBC – Phar400 | Pharmacy Management retailSOS.ca | Gerry Spitzner

September 21, 2012

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Email me

[email protected]

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Get my attention if you have a question or comment

Or text me if that works... @ 604.985.4425

There are no “out of bounds” questions

When I reference...

◦ Patients are customers - - customers are patients

◦ System refers to delivering the promise of your product or service

◦ Product or service; they are the same

◦ Organization, firm, company; all these = Pharmacy

◦ “You”; I am referring to your clinical service idea and business plan.

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Planning In Its Larger Context

Market Research

The Business Plan

Your Presentation

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To guide and inspire your clinical service Business

Plan project and presentation.

◦ Help you with a strategic framework to create and document

your clinical service Business Plan.

◦ First we’ll look at a high level approach to planning with

proven concepts.

◦ Then take these ideas to share a simple 3 step presentation

strategy of your Business Plan at “The Pharmacy Moguls Den”

to communicate and implement a new clinical service that

produces strong financial results.

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Why does it matter?

Why should the business come to you rather than

someone else?

What are you known for? What are you a solution for?

Doesn’t make sense to dream up ideas without

speaking with customers.

A need alone does not necessarily mean there is a


Differentiate, differentiate, differentiate

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Understanding the overall context

for planning can greatly help you to

design and carry out the planning

process in almost any planning


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Simply put, planning is setting the direction for

something -- some system -- and then working to

ensure the system follows that direction.

Systems have inputs, processes, outputs and


◦ Inputs to the system include resources such as raw materials,

money, technologies and people.

◦ Inputs go through a process where they're aligned, moved

along and carefully coordinated, ultimately to achieve the

goals set for the system.

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Outputs are tangible results produced by processes in

the system, such as products or services for

consumers (patients/customers).

Another kind of result is outcomes, for the business or

the benefits for consumers

◦ i.e. jobs for workers or enhanced quality of life for patients

and customers.

Systems can be the entire organization, or its

departments, groups, or processes.

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Work Backwards Through Any "System“

◦ Whether the system is an organization, department, business,

project, etc., the process of planning includes planners

working backwards through the system.

◦ They start from the results (outcomes and outputs) they prefer

and work backwards through the system to identify the

processes needed to produce the results.

◦ Then they identify what inputs (or resources) are needed to

carry out the processes.

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Planning includes use of the following basic terms...


◦ Goals are specific accomplishments that must be accomplished

in total, or in some combination, in order to achieve some larger,

overall result preferred from the system, for example, the

mission of an organization. (goals are outputs from the system.)

Strategies or Activities

◦ These are the methods or processes required in total, or in some

combination, to achieve the goals. (strategies are processes in

the system.)

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◦ Objectives are specific accomplishments that must be accomplished in total, or in some combination, to achieve the goals in the plan. Objectives are usually "milestones" along the way when implementing the strategies.


◦ Particularly in small organizations, people are assigned various tasks required to implement the plan. If the scope of the plan is very small, tasks and activities are often essentially the same.

Resources (and Budgets)

◦ Resources include the people, materials, technologies, money, etc., required to implement the strategies or processes. The costs of these resources are often depicted in the form of a budget. (resources are inputs to the system)

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Reference Some Overall Singular Purpose Such As The

Mission or Desired Result from System

◦ During planning, planners have in mind some overall purpose

or result that the plan is to achieve. It's critical to reference

the mission, or overall purpose, of the organization.

Take Stock Outside and Inside the System

◦ This "taking stock" is always done to some extent. For

example, it's important to conduct an environmental scan.

This scan usually involves considering various driving forces,

or major influences, that might effect the organization.

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Analyze the Situation

◦ For example, conduct a "SWOT analysis". (SWOT is an acronym

for considering the organization's strengths, weaknesses,

opportunities and threats faced by the organization.)

Establish Goals

◦ Based on the analysis and alignment to the overall mission of

the system, establish a set of goals that build on strengths to

take advantage of opportunities, while building up

weaknesses and warding off threats.

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Establish Strategies to Reach Goals

◦ The particular strategies (or methods to reach the goals)

chosen depend on matters of affordability, practicality and


Establish Objectives Along the Way to Achieving Goals

◦ Objectives are selected to be timely and indicative of

progress toward goals.

◦ They are “signposts” to ensure implementation results are

cycled back so that adjustments can be made to stay on track.

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Assign Responsibilities and Time Lines With Each


◦ Responsibilities are assigned, including for implementation

of the plan, and for achieving various goals and objectives.

◦ Ideally, deadlines are set for meeting each responsibility.

Write and Communicate a Plan Document

◦ The above information is organized and written in a document

which is distributed around the system or company.

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Ideas can come from many different sources...

◦ Complaints and feedback from customers.

◦ Requests for proposals (RFP’s) from large businesses,

government agencies (BC Bid), or LTC facilities.

◦ Modifications to current products ( i.e. diabetic meters).

◦ Suggestions from employees, doctors, inter-professional

healthcare, wholesalers and suppliers.

◦ Healthcare publications, magazines, media (Dr. Art)

◦ Competition

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You need more than a good idea to verify and fund your

proposed product or service.

◦ Just because it seems like a great idea doesn't mean that it

can become a product or service.

◦ A viable product/service needs to be profitable and

sustainable, including being “producible” and marketable.

◦ Also, the product/service should be related to the purpose, or

mission, of your business.

◦ Businesses can go bankrupt by trying to be too many things to

too many customers, rather than doing a few things very well.

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At this point, you will benefit from understanding the

basics of marketing, particularly how to conduct

market research and a competitive analysis.

If your idea still seems like a good one, then it's

important to know how you will position and identify

your new product/service to the market.

You'll certainly want to know how much you might

charge for it (that is, its price to the customer).

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It is extremely difficult to develop and provide a high-quality product or service without conducting at least some basic market research.

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Market research has a variety of purposes and a

variety of data collection methods might be used for

each purpose.

The data collection method that you use during your

market research depends very much on the

information that you are seeking to understand.

Businesses can learn a great deal about customers,

their needs, how to meet those needs and how the

business is doing to meet those needs.

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Market research usually involves doing a periodic

study of some sort.

Market research generally probes a few topics;

however by itself doesn’t yield a deep understanding

of the customer.

The periodic nature merely offers a snapshot of

customers at a moment in time.

Adopt a customer learning approach to find out who

your customers are and what they want.

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As opposed to periodic studies, customer learning is a

continuous process of probing customers.

◦ It’s a process that fundamentally incorporates the fact that

every customer is truly unique and that their needs, wants and

expectations are never static.

◦ They change with the life forces affecting the individual or the

business and the environment in which they exist.

Who is your ideal audience, where do they do

business, and why?

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Identify opportunities to serve various groups of

patients/customers (your ideal customers).

◦ Verify and understand the unmet needs of a certain group (or

market) of customers. What do they say that they want? What

do they say that they need?

Examine the size of the market – how many people

have the unmet need. (your ideal audience)

◦ Identify various subgroups, or market segments, in that

overall market along with each of their unique features and


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Determine the best methods to meet the unmet needs

of your ideal audience (the target markets).

◦ How can you develop a product with the features and benefits

to meet that unmet need? How can you ensure that you have

the capacity to continue to meet the demand?

Investigate the competition.

◦ Examine their products, services, marketing techniques,

pricing, location, etc. One of the best ways to understand your

competitors is to use their services.

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Clarify your unique value proposition.

◦ Your proposition describes why customers should use your organization and not the competition’s.

Conclude if the product is effectively meeting the needs of your ideal customers.

◦ One of the best ways to make this conclusion is to conduct an

evaluation. An evaluation often includes the use of various data

collection methods, usually several of them.

◦ I.e. observing clients, interviewing them, administrating

questionnaires with them, developing some case studies, and,

ideally, conducting a product field test, or pilot.

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Who are your competitors?

◦ What customer needs and preferences are you competing to


◦ What are the similarities and differences between their

products/services and yours?

◦ What are the strengths and weaknesses of each of their

products and services?

◦ How do their prices compare to yours?

◦ How are they doing overall?

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How do you plan to compete?

◦ Offer better quality services? (value)

◦ Lower prices?

◦ More support?

◦ Easier access to services?

◦ How are you uniquely suited to compete with them?

It is all about gathering competitive intelligence from

as many sources as possible.

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Initial considerations to address about your idea for a new product or service and preparation to document the business plan.

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If you'll need funding to start your new product or

clinical service, investors or funders are much more

likely to provide money to you if they see that you've

done some planning.

What will the return on investment (ROI) be?

How long will it take to break even and make money?

What are the barriers to entry for us and our


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You’ll need to answer these questions...

◦ Is there really a need for the product or service and is there a


◦ What type of new product or service will you be starting?

◦ What Are Your Initial Plans?

◦ What Planning and Financial Skills Do You Need?

◦ What Human Resources Will You Need?

◦ What Facilities and Equipment Will You Need?

◦ How Much Money Will You Need?

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What is the nature of your new product or service?

◦ Whether you're starting a new product or service, there needs

to be a strong market for it.

How do you know there is a need?

◦ You'll have to have enough evidence to convince an investor

or funder -- and yourself.

Who are your competitors?

◦ What makes your new product/service any different or more

needed by customers? Conduct a competitive analysis.

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What is the basic purpose of your product or service?

◦ This is your mission statement, or your value proposition.

◦ Basically, the mission statement describes the overall

purpose of the product or service.

◦ When wording the mission statement/value proposition,

consider the product or services’; markets, values, concern

for public image, and maybe priorities of activities for


◦ Use the value proposition worksheet provided in pre-reads.

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How will you manage your finances?

How will you monitor and record your income and


◦ What system will you use for bookkeeping and accounting?

◦ What system will you use to document patient counselling?

◦ How will you adjudicate with Pharmacare?

◦ How will you bill the patient? (if it’s not a covered benefit)

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What are the major goals for your product or service

over the next 24 to 36 months?

What do you need to do to reach those goals?

What objectives do you need to reach along the way to each goal?

How will you know that the organization is efficiently

pursuing its goals?

◦ Knowledge of these goals will help you a great deal when

thinking about what resources/skills you will need right away.

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What skills (and people) are needed by your

organization to deliver the product or service?

How will you attract and retain the best people?

How will you organize your staff?

◦ Workforce planning, Specifying Jobs and Roles and Selecting

Your Organizational Design (who will work for whom, etc.)

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What equipment needs will you have?

◦ These needs depend very much on the resources needed to

develop, distribute and support your product/service.

◦ Facilities Management includes, cleaning, floor washing,

ventilation (HVAC), lighting, receiving dock, delivery van etc.

What computer equipment will you need?

◦ Hardware, Laptops, iPad’s, mobile phones, printers, Wi-Fi etc.

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What is the Cost of Needed Resources?

◦ Consider the costs to obtain the necessary skills, facilities

and equipment identified from addressing the questions from

all the previous.

What are your start up costs?

◦ How much money will you need to get started before

generating any revenue?

◦ Consider wages, licenses & fees, advertising, marketing &

promotion, leasehold improvements etc.

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Business summary

◦ Describes the organization, business venture or product

(service), summarizing its purpose, management, operations,

marketing and finances.

Market opportunity

◦ Concisely describes what unmet need it will (or does) fill, presents evidence that this need is genuine, and that the patients or customers will pay for the costs to meet this need.

◦ Describes credible market research on target customers (including perceived benefits and willingness to pay), competitors and pricing.

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◦ Arguably the most important part of the plan, it describes who

will be responsible for developing, marketing and operating

this venture, and why their backgrounds and skills make them

the right people to make this successful.

◦ This section is also where you should include your advisors

(board of advisors) and other healthcare professionals such

as doctors, NP’s, nurses, LTC administrators etc.

◦ Also consider others you may need to make the plan a

success; suppliers, corporate sponsor, associations, advisors

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◦ This is the how-to of the plan, where the action steps are

clearly described, usually in four areas: start-up, marketing,

operations and financial.

◦ Marketing builds on market research presented, include your

competitive niche. How will you be better than your

competitors in ways that matter to your ideal customers ?

◦ Financial plan includes, costs to launch, operate, market and

finance, along with conservative estimates of revenue,

typically for 2 to 3 years; a break-even analysis is often


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◦ Outline the most likely things that could go wrong with

implementing this plan, and how management is prepared to

respond to those problems if they emerge.

◦ What will your recovery plan be when (not if) something goes


◦ It’s not so much about trying to identify and avoid the things

that can take you off track or go wrong; it’s usually more about

how you will recover.

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You have 5 minutes to communicate

your product/service strategy that must

result in action; so, keep it simple and

get to the core issues quickly.

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Prepare and answer just three questions and you have

your presentation strategy...

HOW BIG do we want to be? ◦ Money, sales/cash flow

WHO do we want to SERVE? ◦ Ideal audience and Customer awareness

HOW will we COMPETE and WIN? ◦ Competitive advantage and Customer experience.

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HOW BIG do we want to be?

◦ Means the Financial plan for your Business Plan and product

or service idea.

◦ What are the financial goals to satisfy the owners of the


Financial goals determine the character of your strategy.

Morph from a strategy-drives-financials paradigm to a

financials-drive-strategy one.

Don’t try to squeeze better numbers out of a given strategy.

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WHO do we want to SERVE?

◦ Means the Marketing Plan of your Business Plan.

◦ Who are the ideal customers to whom you intend allocating

scarce resources because you believe they represent the

best economic opportunity?

◦ There is no such thing as a bad customer; it’s just that some

are better than others.

◦ If a customer segment (audience) can’t deliver your financial

goals why would you bother with it?

◦ Consider the Lifetime Value (LTV) of a customer as a way of

making a choice of who to serve.

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HOW will we COMPETE and WIN?

◦ Means your daily Operations Plan and how you will “deliver

the promise” in all the other parts of the Business Plan.

◦ How do you intend to compete with other companies available

to your ideal customers and win?

◦ The most critical aspect; as it puts words to why someone

should do business with you instead of with your competition.

◦ Too many objectives paralyzes progress; define the critical

few and outline them.

◦ Find the three things that will achieve 80% of the strategy.

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Step by step approach to create HOW to WIN...

◦ Select the customer needs and expectations you intend to

satisfy from the segment you have chosen to serve.

◦ Examine the internal opportunities; look broadly at the

competencies your organization currently has to deliver.

◦ Evaluate exactly where the competition is focusing their

efforts; Which segments? Their value proposition? Market

success? Vulnerabilities? (use the SWOT results)

◦ Decide on what basis you intend to compete/win and create a

unique value proposition to say how you will do it.

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Here’s an example of a value proposition...

“Our basic competitive approach will be to develop

intimate one-to-one relationships with our diabetic

patients (customers) and be the only Pharmacy in our

community that delivers disease management,

healthy living and nutrition offers to match each one’s

unique needs and preferences.”

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HOW BIG? WHO SERVE? HOW WIN? Once the answer to

each of these questions is clear the Strategic Game

Plan Statement needs to be created.

It’s developed from the answers to the 3 questions

above and looks something like this...

“We intend to (HOW BIG) by [desired time frame] by

focusing our scarce resources on (WHO to SERVE). We

will compete by (HOW to WIN).”

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We intend to grow Pharmacy revenue from the rapidly

increasing diabetic market segment from 500K to 750K by

the end of 2013. We will focus our resources on working with

our local 1st Nations Bands with a view to expand into other

Lower Mainland bands in the 1st Quarter of 2014.

We will COMPETE and WIN by...

◦ Leveraging the intimate understanding we have of the patient and

their current situation with disease management.

◦ Providing personalized holistic health & wellness based solutions

combined with nutritional solutions to improve daily living.

◦ Matching our CDE Pharmacists specifically with each patient, and

delivering knock your socks off service to our customers.

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Thank You...



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Follow Twitter: @passion4retail

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retailSOS.ca is a Vancouver-based retail consultancy guiding

Pharmacy owners to create, engage and retain great customers

by doing the right thing extraordinarily well.

Gerry Spitzner works as a management consultant supporting

community Pharmacy owners to achieve results by aligning

their vision and implementing marketing strategy with

operational execution.

Drawing on 35+ years experience in drug store multi-site retail

operations, Pharmacy ownership and Pharmaceutical

wholesale supply-chain; Gerry brings the leadership, knowledge

and market awareness of ownership and business development

to Pharmacy owners to achieve growth objectives.

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