How to write a business plan for your laboratory.
Any hospital laboratory willing to take on an entrepreneurial risk and work through the red tape that may be involved in such an undertaking can make its way in the business world. The key to such ventures is having a solid business plan with which to determine the avenues your organization should pursue. We did it at our 400-bed university hospital, and with energy, preparation, and effort, you can do it at your institution.
Besides attracting investors to help finance new projects, a well executed business plan will help guide your organization in its existing activities. Preparing the plan will force you to identify your lab's strengths and limitations as you choose the directions in which you wish to head. You'll have to define customer needs and analyze the market for services you're thinking of offering.
Investors can be found in a variety of ways. You can advertise your business opportunity and discuss your ideas with those who respond. Another option is to contact venture capitalists" interested in investing in a lab.
From a business standpoint, laboratory managers serve as general managers of their firms, responsible for generating new sources of revenue and for delivering a profitable bottom line. For managers whose background and experience are mainly technical, the prospect of writing a business plan is about as appealing as assembling a bicycle without instructions. Fear not; it isn't that complicated, and you don't have to do it alone.
In developing the business plan, a team consisting of the laboratory manager and three to five key staff members should work together. In hospital labs, it is critical to obtain the advice and suggestions of hospital administrators early in the process. Assistance from professional firms that specialize in preparing business plans is available, but this costly option does not obviate extensive input from the laboratory staff and may end up taking even more of your time than completing the project on your own. . Attend to details. Scrupulously oversee the content, organization, format, and appearance of the brochure describing the plan. Make it easy for those who read the brochure to analyze your laboratory. An overly slick presentation may give the impression that you spend money frivolously. Although the organization of your brochure into major sections will resemble those of many such plans, the precise content and format should reflect your organization's unique character.
if the document is to be more than 30 to 50 pages long, split off the last section into a second ,volume" for interested investors to use during the due diligence peri he time in which you will be required to assure the buyer that the information presented is valid-while they are making a final decision.
First impressions are lasting: Proofread painstakingly to eliminate errors in grammar, spelling, and punctuation. Just as analytical errors reflect poor laboratory techniques, numbers that fail to add up in a business plan are a serious deficiency.
Use positive language. To present a convincing argument, avoid powerless words such as "might," could ... .. probably, and "maybe. " * The cover. On the cover, include the official name, address, and telephone number of your lab and the month and year in which the plan was prepared. The title page, which should be attractive, but not flashy, should repeat the lab's name, address, and phone number as well as giving the name of the CEO, since that executive's office is the place in which first contacts are usually made. * The title page. Run a control/ copy number-a sequential numbering of the copies-on the title page. This procedure allows you to keep track of the number of copies you have distributed. Potential investors want to know that you are carefully safeguarding confidential information. * Executive summary. The few minutes spent reading this section will either pique readers' interest wi I or leave them cold. The executive summary is thus the most critical section of the entire plan.
The summary, which should run no longer than two or three pages, includes all essential information on the laboratory's current and anticipated future status as well as the business plans you have in mind. Include: * Current products and services offered; * Potential economic and other benefits, such as the financial rewards your plan will reap; * A financial forecast, including realistic projected expenses, revenues, and profits;
* Overall objectives; and
* An approximate date on which anticipated benefits are likely to begin to accrue.
Include in the executive summary a review of the current market. Factors to highlight:
* Your organization's perception of current and potential investors;
* Current and future market size;
* Economic industry trends;
* Products and services to be offered;
* Market segments (defining your niche in the market);
* Geographic distribution of the clients you want to serve;
* A rundown of existing and potential competition.
Identify your competitors. Briefly and objectively describe their strengths and weaknesses, market segments, reputation, and pricing strategies. The more profoundly you understand your competition, the more effectively you will be able to challenge it.
At the top of the next column is an excerpt from an executive summary in the business plan of a hypothetical lab. The lab is seeking backers for a prospective environmental testing program that will specialize in monitoring workers at nearby factories for the physiologic presence of toxic metals.
The next section of the plan should describe your lab and staff, the current market and competition, your overall selling and marketing strategy, the services you provide, how your lab handles research and development, financial data, the extent of investment needed for the proposed venture, and how those funds will be used.
Appendices, as needed, conclude the report. Let's examine the sections listed above.
Lab and staff. In the section introducing your company and staff, describe the organization, when it was formed and by whom, the size and credentials of your staff, the physical plant and any other facilities, and current products and services.
Outline assets of your organization that will help implement the plan. If the expertise required exceeds your lab's capabilities, explain the growth or diversification needed to accomplish your objectives.
"Introduce" the management team and the function of each member. Include brief resumes and business accomplishments of key executives.
The following section from the brochure excerpted above describes its lab in light of needs envisioned for the proposed venture in testing worksites for toxic metal exposure.
Marketing strategy. Identify the specific market segment you intend to seek. Explain why you think you will attain it. Is this niche currently being ignored? Are certain factors making things difficult for your competitors?
Does your lab have a proven track record? If not, how do you plan to overcome this deficiency, a serious one for would-be investors? Will the market allow you to price your product at a profitable level? Can you provide the required level of service and response time? Can you meet these demands if a link in the chain from specimen collection to result reporting should break?
Let's assume that your laboratory is capable of providing a viable new product or service. The next question to address is how you intend to sell it. Will you hire sales representatives or use other sales techniques, such as printed materials or telemarketing? Who will handle advertising, promotion, and product management?
In your new venture, the testing service your laboratory will market is considered the "product." What is unique about your product? What makes it better than your competitors' products?
Make the section describing the intended product shorter than the one that explains your intended market. Investors prefer to put their money into organizations that are driven by market demand rather than by a desire to sell a specific product. It is considered easier to fill an existing need than to create one for a new product.
Outline the following factors in a way that shows your business will be able to offer them:
Service (the products you will offer);
Facilities (show that you have the capacity to provide the service);
Logistics (you will be able to deliver the goods);
Capital expenditures; and
Quality control. . Financial data. Although your business plan should provide some background detail of your organization's past track record to support the financial picture you present, include only summary figures, not a department-by-department breakdown. Detailed scrutiny will come soon enough, during the due diligence period.
Display a five-year financial projection examining each month for the first year or two and the remainder quarterly. Use footnotes to expand on key features. Include conventional formats for profit and loss statements, cash, and balance sheets showing assets, liabilities, and equity. Make your projections realistic. Investors want to know that your financial expectations can actually be realized-and how you plan to do so. . The investment. State the amount of money required to implement the plan. On the "credit" side, list your facilities and other resources that are already available. If your laboratory is in a hospital, demonstrate the administration's approval for extending services beyond current clients.
Investors and hospital administrators will want to know the anticipated return on their investment. Have the final draft critiqued with this in mind by at least three colleagues who have not participated directly in developing the plan. Request an opinion from at least one outside professional who can add perspective from an investor's viewpoint. . Sharing the finished product. Once your business plan has created interest, investors will want to meet the entrepreneurs-those involved in the start-up of the business-for a formal presentation. Present your plan in a conference room setting at or near your lab. Set the tone by having the CEO or another highly placed company official serve as moderator. Restrict your carefully orchestrated presentation to about 30 to 40 minutes, including some time for questions.
Illustrate the plan's essential features with simple visual aids. Answer questions as they arise, allowing all members of the management team to respond as appropriate to their areas of expertise. This will relay the impression that your laboratory is not a one-person show.
Consider inviting several key managers to give five-minute segments of the presentation to emphasize the strengths of the management team. Urge them in advance to describe the plan in glowing but pragmatic terms. Let your research show; this is the time to shine.
In one way or another, demonstrate the product itself. You might choose to escort your visitors on a tour of the laboratory, for example, pointing out areas in which the procedures in question are or will be performed. Rehearse the formal presentation to communicate the salient points of the plan. Since the presentation and tour will be considered to represent your best efforts, even minor snags could cause investors to be prejudiced against the business plan itself.
Despite your enthusiasm and eagerness to get started, don't expect instant results. The investor review process may take considerable time, since wise investors act cautiously before spending their money and risking their reputations. Your patience will be rewarded if your efforts enable you to embark on a new, interesting, and profitable venture for your laboratory. n
in the Workplace:
A Need We Can Fill
American industry must monitor its work force more closely now than ever before. While it has always made financial sense to maintain workers' health, the increasingly strinqent regulations imposed by Federal and state occupational and environmental laws have intensified this need. Consistently monitoring workers also helps prevent costly lawsuits by workers claiming their health has been damaged by exposure to chemicals in the laboratory, clinic, off ice, or factory.
Few laboratories in our state provide quality testing for the more than 80,000 workers who are at risk for exposure to potential hazards. In our area, biological monitoring is needed for organic solvents, pesticides, and especially toxic metals, yet only a small percentage of clinical laboratories offer these services-which our lab is especially well suited to provide. We plan to capture 35 per cent $1.4 million) of the in-state annual toxic metal testing market of $4 million in the next three years.
What's Needed at a Lob
That Tests for Toxic Metals
Like all clinical laboratory services, worksite testinq must be cost effective, efficient, and of high quality. A lab providing worksite surveillance of this type needs: PERSONNEL. Professionals experienced in the required analytical techniques must be on duty. The staff must be able to help clients interpret and act on testfindings when no occupational physician, nurse, or industrial hygienist is available. EQUIPMENT. Instrumentation for detecting the presence of trace metals tends to be esoteric. Prices range from $60,000 for a flameless atomic absorption spectrometer to $200,000 or more for an inductively coupled plasma/moss spectrophotometer unit. Lease arrangements are available to soften initial investment costs. A PHYSICAL FACILITY. Metals instrumentation may need additional room-cooling capacity to dissipate heat. Facilities in which to handle and store compressed gases, some of which are explosive (e.g., acetylene), may also be required. AN OPERATING BUDGET. The budget must include funds for instrument maintenance, either under a service contract or called for as needed. Besides needing the standard operating expenses typical of all laboratory services, the facility must plan appropriations for compressed gases and in-house instrument replacement parts.
Who Our Clients Will Be
Prospective clients for industrial biological monitoring of metals differ from those who need only conventional clinical laboratory testing.
The appropriate contact a companies is the director of the industrial medicine division. At smaller companies, safety officers or human resource directors are the key contacts. Free-standing industrial medicine clinics, which provide basic services to industry, also need standard clinical testing. These clinics are a potential source of other new clinical laboratory business as well.
What We Will Test
Several metals used in industry, either directly or as spectator elements (that is, they are part of processing), con adversely affect health when concentrated in the body in excessive amounts-even trace levels can be toxic. Some, notably lead and cadmium, have long half-lives; they therefore present the serious problem of chronic exposure.
Methods we plan to use to detect trace metals in biological specimens from clients' employees are described in the table that follows.
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|Author:||Smith, Arthur M.; Ash, K. Owen; Urry, Francis M.|
|Publication:||Medical Laboratory Observer|
|Date:||Jul 1, 1990|
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