UBC Phar400-pharmacy business planning-27jan2012

UBC – Phar400Pharmacy Management

Strategic Business PlanningJanuary 27, 2012

Gerry SpitznerretailSOS.ca

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retailSOS.ca Gerry Spitzner

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Rules of engagement; “play full on” Get my attention if you have a question or comment There are no “out of bounds” questions When I reference... Patients are customers - - customers are patients Product or service; they are the same Organization, firm, company; all these = Pharmacy “You”; almost always I am referring to your clinical

service idea or your Pharmacy business plan.

A few notes before we begin


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Your clinical service Business Plan project◦ Help you with a simple strategic framework to

create 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 3 step strategy

for your Business Plan to communicate and implement a new clinical service strategy that produces strong financial results.

My Goal for you today


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Thoughtstarters Planning in its larger context Critical role of Market Research Initial Considerations to Address About Your

Idea for a New Product or Service Another way to look at Strategic Planning

Roadmap


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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 does not necessarily mean there is a

market. Differentiate, differentiate, differentiate

What is your BIG idea?


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What is the real purpose of a business?

Dial into everybody’s favorite radio station; WIIFM It’s never about what you can get; rather it’s

about what you can give. Your job is not to sell something; rather it is to

fulfill an intention. The customers intention to do business with you; to fulfill some unmet need they have.

Value is in the applied benefits of the benefit.

Thoughtstarters


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Planning in its Larger Context

Understanding the overall context for planning can greatly help you to design and carry out the planning process in almost any planning application.


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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 outcomes.

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, or benefits for consumers, e.g., jobs for workers, enhanced quality of life for customers, etc.

Systems can be the entire organization, or its departments, groups, processes, etc.



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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 typically includes use of the following basic terms.

Goals◦ 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. (Going back to the reference to systems, 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. (Going back to the reference to systems, strategies are processes in the system.)

Quick Look at Some Basic Terms


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Objectives◦ 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. Tasks

◦ 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. (Going back to the reference to systems, resources are input to the system.)

Quick Look at Some Basic Terms


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1. Reference Some Overall Singular Purpose ("Mission") or Desired Result from System◦ During planning, planners have in mind (consciously or

unconsciously) some overall purpose or result that the plan is to achieve. For example, during strategic planning, it's critical to reference the mission, or overall purpose, of the organization.

2. Take Stock Outside and Inside the System◦ This "taking stock" is always done to some extent, whether

consciously or unconsciously. For example, during strategic planning, it's important to conduct an environmental scan. This scan usually involves considering various driving forces, or major influences, that might effect the organization.

Basic Overview of Typical Phases in Planning


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3. Analyze the Situation◦ For example, during strategic planning, planners often

conduct a "SWOT analysis". (SWOT is an acronym for considering the organization's strengths and weaknesses, and the opportunities and threats faced by the organization.)

◦ During this analysis, planners also can use a variety of assessments, or methods to "measure" the “health” of systems.

4. Establish Goals◦ Based on the analysis and alignment to the overall mission

of the system, planners 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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5. Establish Strategies to Reach Goals◦ The particular strategies (or methods to reach the goals)

chosen depend on matters of affordability, practicality and efficiency.

6. Establish Objectives Along the Way to Achieving Goals◦ Objectives are selected to be timely and indicative of progress

toward goals. 7. Associate Responsibilities and Time Lines With Each

Objective◦ Responsibilities are assigned, including for implementation of

the plan, and for achieving various goals and objectives. Ideally, deadlines are set for meeting each responsibility.



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8. Write and Communicate a Plan Document◦ The above information is organized and written in a document

which is distributed around the system or company. 9. Acknowledge Completion and Celebrate Success

◦ This critical step is often ignored -- which can eventually undermine the success of many of your future planning efforts. The purpose of a plan is to address a current problem or pursue a development goal. It seems simplistic to assert that you should acknowledge if the problem was solved or the goal met. However, this step in the planning process is often ignored in lieu of moving on the next problem to solve or goal to pursue. Skipping this step can cultivate apathy and skepticism -- even cynicism -- in your organization. Don't skip this step.



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Sources of Ideas...

Complaints from current customers Requests for Proposals (RFP’s) from large

businesses, government agencies, etc. (i.e. LTC facilities, BC Bid)

Modifications to current products (i.e. Innovation)

Suggestions from employees, customers, suppliers, doctors, healthcare professionals, etc.

Idea for New Product or Service


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You Need More than a Good Idea◦ Just because it seems like a great idea doesn't

mean that it can become a product. ◦ A viable product needs to be profitable (or, in the

case of a nonprofit, at least sustainable), including being producible and marketable.

◦ Also, the product 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.

Product Verification and Funding -- Can Your Idea Become a Viable Product/Service?


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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 to the market.

You'll certainly want to know how much you might charge for it (that is, its price to the customer).

Verifying that Your Idea Can Become a Good Product or Service


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Critical Role of Market Research

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 particular data collection method that you use during your market research depends very much on the particular information that you are seeking to understand.

Critical Role of Market Research


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Various methods of market research are used to find out information about markets, target markets and their needs, competitors, market trends, customer satisfaction with products and services, etc.

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.

Businesses or YOU need not to be experts at methods of research either.

How to Conduct Market Research


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1. Identify opportunities to serve various groups of 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?

2. Examine the size of the market – how many people have the unmet need.◦ Identify various subgroups, or market segments,

in that overall market along with each of their unique features and preferences.

Critical Role of Market Research Uses for market research


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3. Determine the best methods to meet the unmet needs of 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?

4. 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.

5. Clarify your unique value proposition.◦ Your proposition describes why customers should use your

organization and not the competition’s.

Critical Role of Market Research Uses for market research


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6. Conclude if the product is effectively meeting the needs of the 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.

7. Conclude if your advertising and promotions strategies are effective or not.◦ One of the best ways to make this conclusion is to

evaluate the results of the advertising. Are current and/or potential customers aware.

Critical Role of Market ResearchUses for market research


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Initial Considerations to Address About Your Idea for

a New Product or ServiceIf you'll need funding to start your new for-profit or non-profit clinical service, investors or funders are much more likely to provide money to you if they see that you've done some planning.


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Is There Really a Need for the Product or Service in Your Organization?

What Type of New Product or Service Will You Be Starting?

What Planning and Financial Skills Do You Need?

What Are Your Initial Plans?

Initial Considerations to Address About Your Idea for a New Product or Service


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What Human Resources Will Your New Product or Service Need?

What Facilities and Equipment Will You Need?

How Much Money Will You Need? Write a Strategic Plan or Business Plan

Document?

Initial Considerations to Address About Your Idea for a New Product or Service


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What is the nature of your new product or service? ◦ Whether you're starting a new product, service or

organization, there needs to be a strong market for it How do you know there is a need for your new

product or service? ◦ 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. What is a competitive

analysis?

Is There Really a Need for the Product or Service in Your Organization?


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Who are your competitors?◦ What customer needs and preferences are you

competing to meet? ◦ 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?

What is a Competitor Analysis? Competitive Intelligence?


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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?

What is a Competitor Analysis? Competitive Intelligence?


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What is the basic purpose of your organization? (This is your mission statement.)◦ Basically, the mission statement describes the overall

purpose of the organization.◦ When wording the mission statement, consider the

organization's products, services, markets, values, and concern for public image, and maybe priorities of activities for survival.

For example McDonald’s mission statement...◦ McDonald's vision is to be the world's best quick

service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile.

What Type of New Product or Service Will You Be Starting?


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How will you manage your finances? How will you monitor and record your income

and expenses? Do you know how to prepare and manage a

budget? Cash flow statement? Balance sheet?◦ 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?

What Planning and Financial Skills Do You Need?


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What are the major goals for your organization over the next three years?

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?

What Are Your Initial Plans?


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1. What skills (and people) are needed by your organization? ◦ Employee Task and Job Analysis and Job Descriptions will be

helpful. 2. How will you attract and retain the best people?

◦ Research Recruiting, Retaining Employees and any Basic Guide to Management and Supervision will help you.

3. How will you know how to organize your staff?◦ Workforce planning, Specifying Jobs and Roles and Selecting

Your Organizational Design (who will work for whom, etc.) will help you. For those in nonprofits, research Key Roles and Structures in Nonprofits and The Aspects of Nonprofit Structure will help you.



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4. How will you compensate employees? What benefits will you offer?◦ Researching Benefits and Compensation will help you.

5. How will you know what basic personnel policies you'll need?◦ The topic Policies (Personnel) will help you.

6. How will you know how to manage your organization?◦ The topic Broad List of Knowledge Areas and Skills in

Management (you don't have to master all these skills to start an organization) will help you. Also consider Boards of Directors, Chief Executive Role, Basic Overview of Supervision and Management Skills Unique to Nonprofits (for nonprofits).



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7. How will you ensure personnel are effectively working toward the organization's goals? ◦ The topic Employee Performance Management will

help you. 8. Do you have a banker? Financial adviser? Tax

advisor? Lawyer?◦ Research the topics Getting and Using Banker, Getting

and Using a Consultant, Getting and Using a Lawyer and Getting and Using an Accountant will help you.



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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. Researching Facilities Management might be helpful to you.

◦ Facilities Management includes, cleaning, floor washing, ventilation (HVAC), lighting, receiving

What computer equipment will you need?◦ Researching Computers, Internet & Web will help you.◦ Laptops, iPad’s, printers, Wi-Fi etc.

What Facilities and Equipment Will You Need?


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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.

How Much Money Will You Need?


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Should I write write a Basic Strategic Plan, full on Business Plan or both?◦ Usually a Business Plan is a three year outlook and used

to attract investor funding. Consider the Pharmacist/owner as an investor.

What is Strategic Planning?◦ Simply put, strategic planning determines where an

organization is going over the next 12 months or more and how it's going to get there.

◦ Typically, the process is organization-wide, or focused on a major function such as a division, department or other major function.

Write a Basic Strategic Plan or Business Plan Document?


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A business plan is often prepared when:◦ Starting a new organization, business venture, or

product (service) or◦ Expanding, acquiring or improving any of the above.

There are numerous benefits of doing a business plan, including:◦ To identify any problems in your plans before you

implement those plans.◦ To get the commitment and participation of those

who will implement the plans, which leads to better results.

Why Do a Business Plan?Uses and Benefits of a Business Plan


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To establish a roadmap to compare results as the venture proceeds from paper to reality.

To achieve greater profitability in your organization, products and services -- all with less work.

To obtain financing from investors and funders.

To minimize your risk of failure.

Uses and Benefits of a Business Plan


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To update your plans and operations in a changing world.

To clarify and synchronize your goals and strategies.

For these reasons, the planning process often is as useful as the business plan document itself.

Uses and Benefits of a Business Plan


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1. Business summary ◦ Describes the organization, business venture or product

(service), summarizing its purpose, management, operations, marketing and finances.

2. Market opportunity ◦ Concisely describes what unmet need it will (or does)

fill, presents evidence that this need is genuine, and that the beneficiaries (or a third party) 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.

Types of Content of a Business Plan


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3. People◦ 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.

◦ Ideally, each person in the management team (and key program and technical folks) are indicated by NAME.

◦ 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 etc.



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4. Implementation ◦ This is the how-to section 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, e.g., in a Market Opportunity section of the plan, including your competitive niche (how you will be better than your competitors in ways that matter to your target customers).

◦ Financial plan includes, e.g., costs to launch, operate, market and finance the business, along with conservative estimates of revenue, typically for three years; a break-even analysis is often included in this section.



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5. Contingencies◦ This section outlines 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.



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1. Strategic Analysis◦ This activity can include conducting some sort of

scan, or review, of the organization's environment (for example, of the political, social, economic and technical environment).

◦ Planners carefully consider various driving forces in the environment, for example, increasing competition, changing demographics, etc.

◦ Planners also look at the various strengths, weaknesses, opportunities and threats (an acronym for this activity is SWOT ) regarding the organization.

One Way to Look at Strategic Planning


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2. Setting Strategic Direction◦ Planners carefully come to conclusions about what the

organization must do as a result of the major issues and opportunities facing the organization.

◦ These conclusions include what overall accomplishments (or strategic goals) the organization should achieve, and the overall methods (or strategies ) to achieve the accomplishments.

◦ Goals should be designed and worded as much as possible to be specific, measurable, acceptable to those working to achieve the goals, realistic, timely, extending the capabilities of those working to achieve the goals, and rewarding to them, as well. (An acronym for these criteria is "SMARTER".)



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3. Action Planning (tactical plan)◦ Action planning is carefully laying out how the

strategic goals will be accomplished. ◦ Action planning often includes specifying

objectives, or specific results, with each strategic goal.

◦ Therefore, reaching a strategic goal typically involves accomplishing a set of objectives along the way -- in that sense, an objective is still a goal, but on a smaller scale.



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3. Action Planning (tactical plan)◦ Often, each objective is associated with a tactic, which is

one of the methods needed to reach an objective. ◦ Therefore, implementing a strategy typically involves

implementing a set of tactics along the way -- in that sense, a tactic is still a strategy, but on a smaller scale.

◦ Action planning also includes specifying responsibilities and timelines with each objective, or who needs to do what and by when.

◦ It should also include methods to monitor and evaluate the plan, which includes knowing how the organization will know who has done what and by when.



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Another way to Look at Strategic Planning

Your strategy must result in action, so keep it simple, get to the core issues quickly and act.


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Build a new Pharmacy clinical practice with a strategic approach and a simple tactical business plan that communicates value and benefits.

and answers the question...

“Why should I (the customer) do business with you?”

Or... what are we offering to our customers that sets us apart from the competition?

Strategic Goal


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After conducting a high level environmental scan you’ve determined a need and market for a new clinical service.

For example... You’ve heard from the Band Chief that no one in the area is serving diabetic patients in the neighbouring 1st Nations community to help band members lead a “normal” active life. He is concerned for the children.

Your Pharmacy has 2 CDE Pharmacists on staff and recently the owner was approached by a nutritionist for a possible collaboration.

You notice there are more and more Band members visiting the Pharmacy.

You know you need to move quickly to seize the opportunity

And then Opportunity knocks!


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Answer just three questions and you have your strategy...

HOW BIG do we want to be?

WHO do we want to SERVE?

HOW will we COMPETE and WIN?

Simple Strategic Approach


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HOW BIG do we want to be?◦ Means the Financial plan for your Business Plan (idea).

What are the financial goals in order to satisfy the owners of the business?

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 create the Marketing Plan for your Business Plan.

Who are the customers to whom you intend allocating scarce resources because you believe they represent the best economic opportunity for the firm?

There is no such thing as a bad customer; it’s just that some are better than others.

If a customer segment 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” of your idea in all the other parts of the Business Plan. How do you intend to compete with other companies

available to your targeted customers and win? How win is the most critical aspect of your strategy

building 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 do them.

Find the three things that will achieve 80% of the strategy and do them.



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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. Evaluate exactly where the competition is focusing their

efforts: Which segments? Their selling proposition? Market success? Vulnerabilities? (SWOT)

Decide on what basis you intend to compete, win and create a unique value proposition. I.e. what unique value benefits do you promise your chosen customers?

Create a HOW to WIN Position Statement


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Here’s an example...

“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.”

How Win Positioning Statement


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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).”

Strategic Game Plan Statement


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Here’s an example... We intend to grow Pharmacy revenue from the rapidly

increasing diabetic market segment from 500K to 750K by the end of 2012. 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 2013.

We will compete and WIN by◦ Leveraging the intimate understanding we have of the customer

(patient) and their current situation with disease management◦ Providing personalized holistic health & wellness based solutions

combined with nutritional solutions◦ Matching our CDE Pharmacists specifically with each customer, and◦ Delivering knock your socks off customer service

Strategic Game Plan Statement


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Create a strategic game plan for your clinical service idea by addressing three critical questions; HOW BIG do you want to be? WHO do you want to SERVE? HOW are you going to compete and WIN?

Develop detailed objectives and action plans that address how to implement the strategy.

Prioritize the list of objectives to determine the critical few that will have the highest impact on strategy execution.

Hold people accountable for their strategy deliverables.

Strategic Summary


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Review the progress you are making on your strategy at least once a quarter. Even daily during the first month then monthly for the first quarter.

Focus. Focus. Focus. Determine the fewest number of things that will produce 80% of the strategy results and do them. Multi-tasking can be deadly.

Cut the crap. Eliminate all activity that does not work toward implementing your new strategy. And reassign the people associated with non-strategic work.

Strategic Summary


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Be anal about execution. 90% of winning is what you do in the trenches, not how pretty your plan is.

Plan on the run. The success of your strategy will be determined by how well your organization listens to its successes and failures (customers) on a day to day basis. Use this experience to tweak your strategy on the go.

Celebrate your success every time you hit a milestone (no matter how small it is) to keep everyone engaged and moving forward.

Don’t let the “status quo” bozo’s get you down...

Strategic Summary


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Find me... Follow Twitter: @passion4retail Connect LinkedIn: Gerry Spitzner Web/Blog: retailsos.ca Email: [email protected] Digital Biz card: gerryspitzner.tel Digital Biz card: retailsos.tel

Woo Hoo We’re Done - - Thanks

UBC Phar400-pharmacy business planning-27jan2012

Business

data collection

business plan

mission statement

strategic

smaller scale

driving forces

strategic

action planning

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