Professional Documents
Culture Documents
Business Plan Sample
Business Plan Sample
This business plan has been developed to present our company to prospective supplier partners,
employers, and investors. Zenergy Medical Industries is a start-up company focused initially on
distribution of leading brands of therapeutic systems for use by residents of Homecare and
Assisted Living facilities at risk of complications from X disease. After establishing a market
presence with this product niche, we will expand to offer other products related to further
treating and managing complications of the disease.
The market is currently served poorly and inconsistently by a patchwork of local pharmacies and
distributors. We will offer a regional, and ultimately national, network of clinical sales
professionals, which will make us the partner of choice for large, geographically diverse
Homecare and Assisted Living (A.L.) chains, and will make us attractive to potential supplier
partners.
Market Potential
The two major market opportunities are "at risk" residents with the disease in Homecare
and Assisted Living. There are an estimated 345,784 Homecare at risk residents, with a
potential $59.6 million revenue, and an estimated 66,671 Assisted Living at risk residents, with a
potential for $17.6 million in revenue.
Competitive Advantage
The product technology is available to all players in this market. We will differentiate ourselves
by adding value through our distribution strategy and channels, and our comprehensive product
lines and programs that make working with us incredibly easy. We are uniquely positioned to
gain market share in this segment due to our corporate account relationships, our ability to build
a regional (ultimately national) field clinical sales team quickly, and our ability to create
compelling marketing programs. The competition is largely smaller, more local distributors and
pharmacists who are not approaching this market in a sophisticated or coordinated way.
Strategy
1. Using relationships with decision makers at major homecare chains to gain unique access
to sell into their facilities. This will allow us to provide "pre-qualified" sales opportunities
to our field-based clinical sales team.
2. Effectively building a strong national clinical sales team capable of building strong
relationships with clinical decision makers at the facility level.
3. Creating marketing strategies and tactics to position ourselves as leaders in providing
clinical product solutions to help facilities manage the complications of disease.
4. Gaining distribution relationships with a unique combination of top suppliers to build a
comprehensive line of product solutions for managing the complications of the
disease. We will create an effective channel of distribution that will be indispensable
to suppliers as a cost effective way for them to penetrate the post-acute market.
We will utilize the therapeutic system offering as the means to gain entrance into the market and
build our organization. Then we will add complimentary products for managing complications of
the disease, followed by other products related to managing complications of heart disease and
aging.
Financial Summary
The owners will invest personal savings in the business. We are seeking an additional short-term
(3 year) loans, to supplement initial cash flows from sales for the first year. We anticipate a first
year net profit. This should grow substantialy by year three. By the end of year three, Zenergy
Medical Industries will have a very respectable net worth.
Objectives
To achieve the sales growth targets by month six and by end of year one. Aggressive
gains in market share and average monthly revenues in year two.
To grow the contracted sales team to seven field clinical sales reps by month eight and to
25 field clinical sales reps by year three.
To achieve net profit in year one, increasing in year two, by containing costs and meeting
sales goals.
Mission
Keys to Success
Company Summary
Zenergy Medical Industries will be seen by post-acute-care providers as THE source for
product solutions to manage the complications of X disease.
We are a start-up company that will initially distribute a full line of disease therapies and
medications, followed by additional complimentary products that fit with our strategy. Zenergy
Medical Industries' headquarters will be in Charleston, S.C.
Regulatory Issues
As distributors, our only relevant compliance issues are to stay in compliance with CMS's
supplier standards as regulated by the DMERCs and to stay in compliance with HIPAA
regulations regarding patient data.
Company Ownership
Zenergy Medical Industries is a division of Finkelstein and Acropolis, LLC., which is equally
owned by Acropolis, Finkelstein, and Aktum.
Capital for start-up costs will be provided out of private funds from Acropolis, Finkelstein, and
Aktum. Zenergy Medical Industries will also seek an SBA Micro-Loan to supplement the private
funding provided by the three managing executives.
Start-up Summary
The key elements in the start-up plan for the company are:
Legal fees to draw up employment agreements and various company legal documents.
Office supplies and stationery to purchase business cards and stationery with the new
company's information; this is also intended to cover basic office supplies (pens, paper,
calculators, files, etc.)
Initial cost to obtain appropriate general liability insurance policy of $300K on our
facility.
Rent (1 month rent and 1 month deposit @ $450 per month).
Office equipment lease - computer, printer/copier/scanner/fax machine.
Telecommunications - Cost of DSL internet connection, phone line listed under company
name in directory assistance; purchase of phone.
Accounting - For 7-8 hours to get our bookkeeping processes in place (accounts payable
to suppliers, lessors, etc., accounts receivable from Medicare and patient co-pay,
commission payout system, basic journal entry system for recording orders, collections,
etc.
Surety bond - per National Supplier Clearinghouse Customer Service Group, this
requirement has been waived (verified with Kimberly on 2/8/05, and Bonnie on 2/9/05).
Marketing Materials - Purchase desktop brochure software and brochure quality paper,
secure marketing materials from manufacturers, create a basic website, license use of any
research articles, and create our own flyers and brochures for corporate account use,
facility use, and use to recruit sales people.
Other - Unanticipated expenses.
Start-up assets - Working capital; product inventory; office furniture (file cabinet, desk,
book shelf).
Start-up Requirements
Start-up Expenses
Legal $500
Stationery and Office
$250
Supplies
Liability Insurance $60
Rent $900
Office Equipment Leases $125
Telecommunications $320
Accounting $150
Surety Bond $0
Marketing Materials $500
Travel $0
Other $500
Total Start-up Expenses $3,305
Start-up Assets
Cash Required $9,500
Start-up Inventory $2,500
Other Current Assets $275
Long-term Assets $0
Total Assets $12,275
Total Requirements $15,580
Products
Zenergy Medical Industries sells disease therapy systems for use by homecare and assisted living
residents who have been diagnosed with an ICD-9 code of X disease.
Over time, we will contract with leading suppliers to distribute additional complimentary
products for managing the complications of the disease.
Between 2002 and 2020 it is projected that the overall population with the disease will grow 44%
driven by increased heart disease, an aging population, and above average growth in segments of
the population considered most at risk (African American and Hispanic).
The Homecare and AL markets will continue to grow due to continued growth in the elderly
population (65+), which is projected by the Census Bureau to grow from 34.7 million in 2000 to
53.2 million by 2020, a total increase of 53%.
During that same period, the total number of elderly patients with the disease is projected to
grow from 4.6 million to 10.6 million, a total increase of 130%.
Market Segmentation
With Homecare and AL chains, we can leverage our relationships at the corporate office level to
more efficiently gain access to the member facilities.
We recommend using LivePlan as the easiest way to create automatic financials for your own
business plan.
Geographically, we will focus on facilities located in the Southern U.S. that fit within our two
top priority segments.
Our model will be to leverage our relationships with these chains to get easier and faster access
at the facility level for our field clinical sales team. This should allow us to achieve economies in
marketing, promotions, and sales costs, and should allow our field sales team to be more efficient
in working only with highly qualified facilities.
The Southern U.S. DMERC Region C will be our geographic focus because the prevalence rates
for the disease tend to be higher in the Southern U.S. (5 of the top 10 states, ranked in order of
prevalence rates, are in the Southern U.S.) and there tends to be a high number of chain facilities
located in this region.
We will begin by targeting Homecare and A.L. chains with the majority of their facilities located
in Tennessee, North Carolina, South Carolina, Alabama, Georgia, and Florida in year one, then
we will expand further into Virginia, Louisiana, Mississippi, Oklahoma, and Texas in years two
and three. In years three and four we will expand across the country into other DMERC regions
to create a national presence. Of course, our field reps will also call on non-chain accounts within
their territories where opportunities arise, but our strategic focus will be on trying to leverage
corporate account relationships to open doors at the facility level for the field reps.
Demographic trends indicate that the larger African American and Hispanic populations in this
region will cause prevalence rates to continue to grow at above average rates over the next 20
years.
Industry Analysis
The elder care market will be impacted by conflicting sets of dynamics. Consumer preference,
payor desire for lower costs, and advances in pharmaceuticals, non-invasive surgery, assistive
devices, telemedicine, and remote monitoring will continue to allow more elderly patients to be
cared for in their homes. However, the continued growth in the elderly population and continued
increase in heart disease, disease, Alzheimer's, and associated disease states will force an older
and sicker resident population into institutional settings due to the intensity of care required to
manage these disease states.
The net effect is difficult to predict, but it would appear likely that Homecare census will remain
flat or experience slight growth (1-3% per year), while Assisted Living will likely continue to
experience slightly stronger growth (3-5% per year).
HIDA estimates that the Durable Medical Equipment (DME) market's revenue has grown 4-5%
per year from 2002-2004; while total national spending on Elder care grew approximately 5%
per year during that period. HIDA also estimated that total distributed medical product sales
from 2001-2003 grew approximately 5% per year.
These revenue growth rates may decelerate somewhat over the next several years as the industry
struggles to find ways to control costs, so we conservatively estimate that growth rates in the
DME institutional elder care market will probably be in the 3% per year range.
The market is currently served inconsistently and, in some areas poorly, by a variety of players
including pharmacies, DME manufacturers, rehab facilities and therapists, and local
dealers/distributors who lack a national presence, a clear marketing strategy, and the ability to
leverage corporate chain relationships. Their field sales team mainly functions as order takers,
going out and visiting facilities, targeting only residents they believe are covered under Medicare
part B or an equivalent private pay coverage, then submitting orders for these residents.
Our growth will not come entirely from overall market growth, but also from taking market share
away from our competitors. The market is very fragmented; CMS estimates that 95% of DMEs
generate less than $350,000 per year in annual billings and 99% generate less than $5 million.
We will grow in part due to the underlying trends specific to growth in disease prevalence, but
also by consolidating a fragmented market by creating a regional (then a national) clinical sales
channel that provides a source of competitive advantage.
One study in 1995 indicated that utilization of the Medicare therapeutic disease benefit was
extremely low and could be boosted substantially via the use of a coordinated marketing
approach. We believe that the combination of market dynamics along with our sales and
marketing approach should allow us to grow revenue in this market rapidly over the next three
years.
Currently, residents may elect to purchase therapeutic disease systems for several different
reasons:
1. A medical exam may prompt the resident's physician to prescribe therapeutic systems.
2. A local DME, dealer, or distributor may recommend therapeutic systems for a resident
with Medicare coverage.
3. The resident may be prompted to purchase therapeutic systems after receiving a direct
mail piece, viewing a television advertisement, viewing a brochure, or through word-of-
mouth.
4. A disease-related complication may prompt them to purchase therapeutic systems.
Currently, no one effectively approaches this market on a regional or national level with the type
of strategy that we have outlined in this plan.
To do this we will leverage our corporate account relationships to open the door, and use our
marketing expertise to build a compelling program. This will allow our field sales team to be
much more efficient in prospecting, improving their "hit ratio" on each facility visit.
We will grow to seven experienced clinical reps in year one, and expand to 25 by year three. We
will be unique in that we will have a large scale team of contracted clinical pros in the field,
making us attractive to chains who can use us as their one source for products supporting the
complications of X disease. At the same time we will develop streamlined internal processes to
maximize cash flow through fast reimbursement, and we will develop supplier relationships with
manufacturers of other products that are a good strategic fit.
The therapeutic system product line will be our initial entry into this market, then we will
leverage the market presence this gives us to expand to other complimentary products for
managing complications of the disease.
Competitive Edge
Through our combined 50 years of healthcare industry sales and marketing experience, we have
built industry relationships and networks that we will leverage to build our business. Our
competitive edge lies in four major areas:
To develop good business strategies, perform a SWOT analysis of your business. It's easy with
our free guide and template. Learn how to perform a SWOT analysis
Marketing Strategy
As mentioned previously, our primary market is residents of homecare agencies and post-acute
care facilities who are covered and considered to be highly at risk for complications. Initially, we
will focus on serving these patients in facilities that are part of Homecare or Assisted Living
chains in the Southern U.S.
Our success is dependent on building a strong field clinical sales team that can build
relationships at the facility level, successfully leveraging of national account relationships, and
effectively marketing the value proposition that our therapeutic system program can offer to both
the resident and the facility.
We will utilize the therapeutic system offering as the means to gain entrance into the market and
build our organization. Then we will add complimentary products for managing complications of
the disease, followed by other products related to managing complications of heart disease and
aging.
Our key to marketing success will be to effectively manage the building of our brand platform in
the market place, which will consist of the following elements:
1. Brand Vision - our envisioned future of the brand is to be THE national source for
product solutions to manage the complications of X disease in the elderly.
2. Brand Attributes - Partners, problem solvers, fast on our feet, flexible and easy to work
with.
3. Brand Essence - the shared soul of the brand, the spark of which is present in every
experience a customer has with our products, will be "Problem Solving" and
"Compassionate." This will be the core of our organization, driving the type of people
we hire and the type of behavior we expect.
4. Brand Image - the outside world's overall perception of our organization will be that we
are clinical pros who are alleviating the complications of X disease in the elderly.
5. Brand Promise - our concise statement of what we do, why we do it, and why customers
should do business with us will be, "To alleviate pain and suffering in patients with X
disease."
6. Positioning Statement - Our positioning statement is: "For Homecare Providers who
want solutions to manage the complications of X disease in their residents, we offer a
unique portfolio of product solutions and clinical support that allows providers to
alleviate resident suffering. This provides caregivers with peace of mind and a sense of
pride and satisfaction. Unlike our competitors, we focus first on understanding the needs
of caregivers to residents, then we scour the market to find the most innovative products,
and deliver them with a team of compassionate clinical professionals".
Image
Our company name will be Zenergy Medical Industries. This reflects the passion and problem
solving that are to be the essence of our brand. Our tagline will be more specific to our initial
focus on disease related products:
Our logo and color scheme will be finalized by our "go live date" of May 7th.
The communications strategy we will use in year 1 to build our brand platform will include the
following items:
1. Website - featuring product line information, research, testimonials, cost benefit analysis,
frequently asked questions, and medicare reimbursement information. This website will
be used as a tool for both our sales team and our customers.
2. Presentations, brochures and mailers geared to the facility level (ideally, distributed by
the corporate office as part of an initiative to prevent complications of disease) explaining
the benefits of our product as part of a comprehensive care plan.
3. Presentations and brochures geared to the corporate account decision maker explaining
the benefits of our program in terms of positive outcomes, reduced cost from
complications, and reduced risk of lawsuits or negative survey events.
4. A presentation and recruiting brochure geared to prospective sales people that
emphasizes the benefits of joining our organization.
5. Training materials that help every employee deliver our brand message in a consistent
manner.
Message Matrices
These six elements described above combine to create our brand platform, from which we can
develop our marketing message to our target segments. The key questions to answer in our
marketing message will be, for each key segment:
We will use these questions to develop four specific tactical level message matrices for our target
market segments - primarily Homecare chains at the corporate level, Assisted Living chains at
the corporate level, and Homecare and Assisted Living facilities. We will also develop a similar
message matrix for our prospective employees. These message matrices will be used as
templates/guidelines in developing sales and marketing pieces for these specific market
segments. They will ensure continuity between our brand vision and the tactical marketing
communication efforts we undertake on a daily basis.
Key Decision
Maker or VP of Procurement, VP of Clinical, VP of Risk Management
Influencer
What do they Ways to reduce risk; improve outcomes and quality of life for arthritic
need? residents at no cost to the facility and with minimal effort on their part
Products at no cost to them that help reduce risk of complications and
What do we offer? surgery in arthritic residents. Program for care that is easy for them to adopt.
Management of the entire process.
What are the Improved outcomes, improved quality of life, and reduced costs
tangible benefits? (complications) in arthritic residents.
What are the They create a reputation as a "Center of Excellence". They feel like
emotional innovators and shrewd business people. They have a sense of pride and
benefits? satisfaction, and gain piece of mind.
Proof, research,
Research articles, testimonials, manufacturer success stories.
success stories
Key Decision
Maker or DON, Administrator, Resident, Family members, Physicians
Influencer
What do they Greater comfort, and prevention of disease related complications. Reduced risk
of ulcers, infections, and surgeries. Reduced costs (complications) and
need? improved outcomes and quality of life. Compliance with Corporate mandated
programs.
A clear, simple program of care; an easy buying process with the assessment,
What do we
ordering, and fitting of systems managed by us with no cost, hassles, or
offer?
excessive paperwork for the facility.
What are the
Greater resident satisfaction; improved comfort and outcomes; reduced
tangible
complications (cost) and risk of adverse complications
benefits?
What are the Happier residents and family. Peace of mind. A sense of satisfaction and pride
emotional from being proactive caregivers. A sense that they provide something special
benefits? that residents could not get at other facilities.
Proof, research,
Research articles, testimonials, manufacturer success stories.
success stories
Key Decision
Maker or Field based clinical sales representatives; receptionists
improved
Good income potential, flexible hours with good family vs. career balance;
What do they freedom to be entrepreneurs; the ability to "make a difference" in improved and
need? in providing input to shape the direction of the company; the desire to belong to
a great organization and get in on the ground floor.
Flexible hours and independence. A good compensation plan; a great
What do we
organization with a growing product line; the opportunity to make a difference
offer?
in improved and in shaping an organization from the ground floor.
What are the
A nice income with flexible hours. Long range potential as part of a growing
tangible
organization. The opportunity to gain clinical sales experience.
benefits?
What are the To feel valued and valuable. To make a difference in organization and in their
emotional company. To love their job and company. to make a nice income without
benefits? sacrificing family life/personal life.
Proof, research,
Research articles, testimonials, manufacturer success stories.
success stories
Sales Strategy
Sales Strategy:
Our sales strategy will be to call on Homecare and Assisted Living chains doing business in the
Southeast to educate them on the benefits of a Therapeutic System program. We will seek to gain
their support in allowing our field clinicians to visit their facilities to meet with residents that are
at risk for complications of X disease.
We will be uniquely positioned to gain market share within our target segments because of our:
National account relationships which will open the door to pre-qualified sales
opportunities at the facility level
Large-scale field clinical sales presence, which will provide comprehensive coverage of
facilities across the entire Southeast, and eventually the entire country.
Powerful compelling marketing programs that will present a compelling cost-benefit
story for chains, facilities, and residents.
We will seek to do a comprehensive assessment of all at-risk residents in a facility, then we will
utilize different sales strategies based on their payor status, which will fit into one of the
following classifications:
1. Medicare part B will reimburse for the product. This is an easy sell because Medicare
part B will reimburse for 80% of the cost of the product.
2. Private insurance will reimburse for the product. This may require gaining a contract with
the private insurer in order to qualify for reimbursement.
3. The resident or their family must be willing to pay for the product. This will require
demonstrating to the resident and/or family members the benefits of enhanced comfort
and safety, and reduced risk of complications by using our product (which can cost
thousands of dollars) compared to $264 per year for therapeutic systems (as part of an
overall program of care).
4. The facility is willing to pay for the product out of the per diem reimbursement they
receive for the resident from either Medicare, Medicaid, private insurance, or other
private sources. This will require demonstrating the value to the facility in reduced risk,
enhanced resident comfort, and potential savings of costs associated with complications
that can run to $2,000-13,500 per year for two years.
Pricing:
Medicare reimbursement for standard systems is set at $264.04 per year, with 80% covered by
Medicare part B and the remaining 20% being a co-pay that is the responsibility of the resident.
Our compensation plan will be a straight 16% commission paid when we receive reimbursement
for delivered product. We anticipate 30-45 day payment cycles from Medicare. We will utilize
an experienced Medicare part B biller to ensure correct submissions to Medicare and help us
maximize cash flow by shortening reimbursement cycles and maximizing collection of 20%
copay amounts. We plan to coordinate the order, reimbursement and other record keeping
processes out of a central office located initially in Charleston, SC.
Sales Forecast
Seven reps are hired, in May, June, August, September, October, November, and
December
For the first 12 months each rep is in their territory, it is assumed they will generate
increasing unit volume each month. The rate of increase in unit sales slows in later
months because more time is devoted to servicing the clients who were sold earlier in the
year, leaving less available time to drive new unit volume. Units per rep tops out at a max
capacity of 50 units per rep per month.
Net sales are calculated using the average sales price of $211.32, which is 80% of the
total sales which are based on the $264.04 Medicare approved rate.
Our direct costs in year one are calculated using the following assumptions:
Seven reps hired in year one following the 12 month ramp up to max monthly capacity of
50 units.
Eight new reps hired follow the 12 month ramp up.
Our direct costs in year two are calculated using the following assumptions:
Fifteen reps hired in years one and two following the 12 month ramp up to max monthly
capacity of 50 units.
Ten new reps hired follow the 12 month ramp up.
Our direct costs in year three are calculated using the following assumptions:
We recommend using LivePlan as the easiest way to create graphs for your own business plan.
We recommend using LivePlan as the easiest way to create graphs for your own business plan.
Create your own business plan
Sales Forecast
Year 1 Year 2 Year 3
Sales
Therapy System $458,374 $1,670,845 $3,408,228
Other $0 $0 $0
Total Sales $458,374 $1,670,845 $3,408,228
Direct Cost of Sales Year 1 Year 2 Year 3
Inventory Used $112,840 $454,930 $834,900
Other $0 $0 $0
Subtotal Direct Cost of Sales $112,840 $454,930 $834,900
We recommend using LivePlan as the easiest way to create automatic financials for your own
business plan.
Recruitment:
We will focus on contracting with clinicians (LPN, RN, OT, PT, or RT) with two or more years
of sales or customer service experience, who desire part-time or flexible work schedules and are
willing to work under contract employee status. They will have minimum call activity
requirements of three to five calls per week, and we anticipate that the average revenue generated
per year will be approximately $120,000 for someone working 15-20 hours per week and
meeting the minimum sales call guidelines. Over time we will add additional products related to
supporting the complications of X disease. Mitch Finkelstein has been involved in clinical
salesforce management and recruiting for 15+ years in this area, and Yanni Acropolis has 15+
years of clinical sales experience in the Southeast as well. We plan to leverage our relationships
in the clinical sales arena to recruit top caliber sales reps, focusing first in the Southeast. Our
goal in year one will be to fill at least seven positions by December 1st in the following
territories:
The remaining unfilled territories will be filled early in year two, and we also begin to look at the
following markets for years two and three to reach at least 25 territories by early in year three.
Alabama - Birmingham
Texas - Dallas, San Antonio, Houston
Mississippi - Jackson, Gulfport
Louisiana - Baton Rouge, New Orleans
Oklahoma - Tulsa, Oklahoma City
Arkansas - Little Rock, Fort Smith
Virginia - Richmond, Norfolk
Training:
The product is straightforward and limited in scope (initially), and we will be hiring clinicians
with experience in the post-acute marketplace who are generally familiar with Medicare
reimbursement, so we anticipate the ramp-up time to full productivity to be brief (30-60
days). Training will be provided in the following areas:
A review of the company strategy, their job expectations, and our internal processes for
ordering, billing, collecting, commissions, record keeping, etc. (one-half day required)
Product-related training from the manufacturer (one day required)
Reimbursement-related training from the appropriate DMERC Region C ombudsman
(one-half to full day required)
A review of the basics of disease care, ideally conducted by a qualified physicians (one-
half to full day required)
Sales Process
We plan to contract with an experienced part B biller who will, for a flat charge per every six
line items on an order, handle the electronic claims submission, and the billing and collection of
co-pay amounts. This will minimize the time our field sales people spend chasing paperwork,
and allow them to maximize their time spent building relationships, selling, and providing
extraordinary service.
Milestones
We recommend using LivePlan as the easiest way to create graphs for your own business plan.
Milestones
Review forms/checklists/processes
3/14/2005 3/18/2005 $0 Aktum Department
with Yanni's wife
Totals $0
The Web pages viewable by the public will be designed to be extremely fast and easy to use, and
will enhance our brand image as, "clinical pros with a variety of product solutions for the
complications of X disease in the elderly." It will feature the following content:
1. Product information.
2. Contact info for the representative who covers their area.
3. Information about comprehensive programs.
4. Research articles with the latest on disease care.
5. Links to disease websites and to our suppliers' websites.
6. Customer testimonials and sales success stories.
7. Information about Medicare guidelines for the therapeutic system program.
8. Progressively expanded content relevant to homecare and post-acute care and the
complications of disease.
9. Links to other disease product companies.
10. Possible customer Web portals to allow corporate office executives to track progress of
member facilities in implementing a therapeutic system program.
We will attempt to drive customers and sales reps to use the website as our primary source of
communicating company information and any other relevant information on disease, the market,
reimbursement, etc. We will explore using Web portals as a means to get corporate office
decision makers to drive program compliance.
Development Requirements
We will develop a very basic website using standard packages and doing the development work
in-house. We will target going live with the basic site by early May, then we will enhance the
site as we go along.
Management Summary
Zenergy Medical Industries is being founded by three individuals with a combined 50+ years of
healthcare sales and marketing experience.
Mitch Finkelstein:
More than 20 years of clinical sales and technical service specializing in disease care prevention
and treatment across the healthcare continuum. Served as Area VP of Sales at A Company for
the Homecare market, managing 70+ clinical sales people across six regions in the eastern
U.S. Earned Regional Director of the year honors in XXXX and President's Council honors in
XXXXX. Went on to serve as VP of Sales and Marketing for the B Company, a start-up
electronic documentation software provider focused on outpatient facilities, before joining C
Company as Director of Corporate Accounts.
Yanni Acropolis, RN:
Over 20 years of experience in nursing and clinical sales, specializing in disease care prevention
and treatment in the post-acute marketplace. Over six years of experience in post-acute corporate
account sales and GPO sales. Yanni was consistently a top performer with ISS and then A
Company, which was rated a top healthcare salesforce in the U.S. in a best practices study
commissioned by Selling Power Magazine and earned their 1995 World Class Sales
Award. Yanni also served as Director of Corporate Accounts at D Company, and most recently
served as Executive Director for Corporate Accounts at C Company, a leader in documentation,
charting, and training systems for the post-acute marketplace. Yanni received his RN from
XXXX in XXXX and his B.S. from XXXX in XXXX.
Personnel Plan
The three founding management team members will be our sole employees during the start-up
phase until we go live at the beginning of May. They will not take a salary until the second year,
because they will be under a profit sharing agreement.
Starting May 1 we will add one sales rep per month starting on the first of each month in May,
June, August, September, October, November, and December. We will continue contracting
more representatives in 2006 to reach 15 salespeople by mid-year, and then 25 by mid-year
2007. Our sales team members will be contract employees paid straight commission, with no
expenses reimbursed or benefits. As contracted labor, their commissions are listed with other
non-inventory costs of sales in the Profit and Loss.
Our sales team will be recruited from our network of contacts within the arena of post-acute-care
clinical salespeople.
Beginning in September of 2005, we will hire a part-time office manager from a temp agency at
$12 per hour for 20 hours per week. This will move to 30 hours per week in year two and 40
hours per week in year three.
Personnel Plan
Year 1 Year 2 Year 3
VP of Marketing and General
$0 $75,000 $80,000
Manager
VP of Corporate Account Sales $0 $75,000 $80,000
VP of Field Clinical Sales $0 $75,000 $80,000
Office Manager $6,720 $18,720 $24,960
Total People 4 4 4
Total Payroll $6,720 $243,720 $264,960
Financial Plan
Our Start-up requirements for cash, inventory, expenses and assets will see us through the first
year, as we hire our contracted sales representatives and secure increasing market share. Even
with our conservative estimates, based on market research and the industry knowledge of the the
founders, we will far surpass the break-even point from the first month of sales. This financial
advantage is largely a result of the deferred salaries of the principals, who will take salaries
starting in the second year based on the success of the business (projections below).
Our commission structure for contracted sales representatives, along with our shipping methods,
means that our variable costs always exceed our fixed costs - we have low overhead, and are
investing in low-risk face-to-face sales time to generate profits. Rent, travel for the founders, and
payroll for our part-time office manager are the largest operating expenses. With a qualified
medical biller, we should collect quickly on reimbursements, and maintain a positive cash
balance throughout.
We will repay the initial loan within three years, at 10% interest. If sales go better than projected,
we may pay it off sooner. We do not expect future rounds of investment or loans, since the
business will be self-sustaining by the end of year one. By the end of the third year, Zenergy will
have a respectable net worth.
Start-up Funding
We will seek credit terms of 60 days from our suppliers until we build up sufficient cash flow to
be able to accept net 30 terms.
Start-up Funding
Start-up Expenses to Fund $3,305
Start-up Assets to Fund $12,275
Total Funding Required $15,580
Assets
Non-cash Assets from Start-up $2,775
Cash Requirements from Start-up $9,500
Additional Cash Raised $0
Cash Balance on Starting Date $9,500
Total Assets $12,275
Liabilities and Capital
Liabilities
Current Borrowing $5,000
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $5,000
Capital
Planned Investment
Owner $10,580
Investor $0
Additional Investment Requirement $0
Total Planned Investment $10,580
Loss at Start-up (Start-up Expenses) ($3,305)
Total Capital $7,275
Total Capital and Liabilities $12,275
Total Funding $15,580
We recommend using LivePlan as the easiest way to create automatic financials for your own
business plan.
Important Assumptions
General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0
Break-even Analysis
The following table and chart show our break-even point in the first year, when the three VPs are
deferring compensation. With a low monthly fixed cost and variable costs (including
commission and shipping), we need to sell per month the amount calculated below to break even.
Market research and previous experience assures us that we will easily surpass the break-even
point even in our first month of sales.
We recommend using LivePlan as the easiest way to create graphs for your own business plan.
Break-even Analysis
Monthly Revenue Break-even $3,312
Assumptions:
Average Percent Variable Cost 25%
Estimated Monthly Fixed Cost $2,497
Non-inventory Costs of Goods Sold are tracked at the top of the table. These are variable
costs, such as commission and shipping.
Low payroll expense in the first year- all reps will be contract employees paid straight
commission, no expenses or benefits. The managers will not take a salary in the first year,
but will take salaries in the second and third years dependent upon first year performance
and profits. The only personnel in year one is our part-time office manager.
Marketing and promotion expenses will include website management; creation and
printing of custom "program overview" flyers for corporate accounts to distribute to
member facilities, mailers to go to facilities in a reps major MSA, and any other sales
collateral that must be developed.
Rent assumes $450 per month lease.
Telecommunications of $200 per month assumes primary phone line with call forwarding
and answering machine capabilities, tied-in to a receptionist, with a number listed under
our business name in directory assistance; DSL internet line; phone card for long-distance
calling.
General Liability insurance assumes $30 per month to cover the place of business.
Legal expenses include drafting of initial start-up documents and contracts, with minimal
additional work on a monthly basis.
Accounting assumes $20 per hour and seven hours per month to close the books, handle
commissions, etc.
Stationery and office supplies includes business cards and stationery, files, miscellaneous
supplies, etc.
Travel - left unbudgeted at this time.
Equipment assumes $1,000 purchase up-front during start-up phase.
Other - unanticipated expenses.
Note: 10% of profits will be allocated to repay initial cash investments by Acropolis,
Finkelstein, and Aktum at 5% simple interest. 10% of profits will be paid to Finkelstein
and Acropolis to cover corporate overhead costs.
We recommend using LivePlan as the easiest way to create graphs for your own business plan.
We recommend using LivePlan as the easiest way to create graphs for your own business plan.
Create your own business plan
We recommend using LivePlan as the easiest way to create graphs for your own business plan.
Because of the relatively quick ramp-up process for sales people, and our relatively low start-up
expenses, we believe we can start generating very positive cash flow within the first year. This is
all contingent on achieving our expense targets for rent, insurance and other "fixed" items,
plus contracting and training new sales reps per our plan and achieving successful
reimbursement cycles from the DMERCs.
Need actual charts?
We recommend using LivePlan as the easiest way to create graphs for your own business plan.
We recommend using LivePlan as the easiest way to create automatic financials for your own
business plan.
The Balance Sheet reflects the fact that many of our Assets will be tied up in Accounts
Receivable; billing correctly and promptly, and following up on unpaid reimbursement claims,
will be critical to the Cash balance. The Starting Balances are the requirements from the Start-up
table and the Start-up Funding. By the end of the first year, we will increase the net worth of the
business handsomely. Net Worth will continue to rise dramatically as we secure a higher market
share and continue to contain costs.
Business Ratios
Our comparison industry is Medical Equipment and Supplies, SIC Code 5047.03. Because we
are a start-up, our sales growth rates will be much higher than the industry, especially given that
we are competing in a small niche with fragmented competition. We have constructed our
operation to keep start-up capital requirements to a minimum, building much of our expense into
our variable cost structure (sales compensation, reimbursement/collections,) or farming it out
(legal, accounting).
Because we do not have a retail storefront or extensive distribution facilities, our fixed overhead
costs are extremely low. None of our three managing executives are on the payroll in the first
year, and our sales team will be contract reps on straight commission. We have farmed out all
legal, accounting, and reimbursement/collections to outside services to keep overhead and risk to
a minimum.
As a result, we will have extremely favorable margins, SG&A, and current/quick ratios
compared to industry standards.
Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth n.a. 103.98% 4.75%
264.52%
Percent of Total Assets
Accounts Receivable 71.69% 80.67% 78.70% 29.09%
Inventory 12.97% 16.14% 14.16% 37.55%
Other Current Assets 0.18% 0.06% 0.03% 20.32%
Total Current Assets 100.00% 100.00% 100.00% 86.96%
Long-term Assets 0.00% 0.00% 0.00% 13.04%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 43.97% 23.45% 22.05% 42.28%
Long-term Liabilities 0.00% 38.21% 15.94% 10.98%
Total Liabilities 43.97% 61.66% 37.99% 53.26%
Net Worth 56.03% 38.34% 62.01% 46.74%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 30.88% 27.77% 30.50% 30.41%
Selling, General & Administrative
13.90% 21.58% 17.32% 15.33%
Expenses
Advertising Expenses 0.00% 0.00% 0.00% 1.03%
Profit Before Interest and Taxes 24.35% 9.43% 19.35% 2.74%
Main Ratios
Current 2.27 4.26 4.53 1.86
Quick 1.98 3.58 3.89 0.84
Total Debt to Total Assets 43.97% 61.66% 37.99% 57.79%
Pre-tax Return on Net Worth 130.64% 78.41% 100.61% 5.85%
Pre-tax Return on Assets 73.19% 30.06% 62.38% 13.87%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 16.98% 6.20% 13.18% n.a
Return on Equity 91.45% 54.89% 70.43% n.a
Activity Ratios
Accounts Receivable Turnover 4.00 4.00 4.00 n.a
Collection Days 42 58 68 n.a
Inventory Turnover 11.65 9.18 7.42 n.a
Accounts Payable Turnover 6.16 12.17 12.17 n.a
Payment Days 27 23 23 n.a
Total Asset Turnover 3.02 3.40 3.31 n.a
Debt Ratios
Debt to Net Worth 0.78 1.61 0.61 n.a
Current Liab. to Liab. 1.00 0.38 0.58 n.a
Liquidity Ratios
Net Working Capital $85,101 $376,641 $801,904 n.a
Interest Coverage 267.30 16.32 37.29 n.a
Additional Ratios
Assets to Sales 0.33 0.29 0.30 n.a
Current Debt/Total Assets 44% 23% 22% n.a
Acid Test 0.35 0.14 0.32 n.a
Sales/Net Worth 5.39 8.86 5.34 n.a
Dividend Payout 0.00 0.00 0.00 n.a
Appendix
Sales Forecast
Month Month
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 12
10 11
Sales
Therapy System 0% $0 $5,281 $10,562 $15,842 $23,236 $31,685 $41,190 $51,752 $58,353 $66,274 $74,195 $80,004
Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Sales $0 $5,281 $10,562 $15,842 $23,236 $31,685 $41,190 $51,752 $58,353 $66,274 $74,195 $80,004
Month Month
Direct Cost of Sales Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 12
10 11
Inventory Used $0 $1,300 $2,600 $3,900 $5,720 $7,800 $10,140 $12,740 $14,365 $16,315 $18,265 $19,695
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
We recommend using LivePlan as the easiest way to create automatic financials for your own
business plan.
Personnel Plan
Total People 3 3 3 3 3 4 4 4 4 4 4 4
Month
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11
12
Sales $0 $5,281 $10,562 $15,842 $23,236 $31,685 $41,190 $51,752 $58,353 $66,274 $74,195 $80,004
Direct Cost of Sales $0 $1,300 $2,600 $3,900 $5,720 $7,800 $10,140 $12,740 $14,365 $16,315 $18,265 $19,695
Shipping/Handling 5% $0 $264 $528 $792 $1,162 $1,584 $2,060 $2,588 $2,918 $3,314 $3,710 $4,000
Medicare Part B Billing 4% $0 $185 $370 $554 $813 $1,109 $1,442 $1,811 $2,042 $2,320 $2,597 $2,800
Uncollectible Accounts
20% $0 $1,056 $2,112 $3,168 $4,647 $6,337 $8,238 $10,350 $11,671 $13,255 $14,839 $16,001
Reserve
Sales Commission 16% $0 $845 $1,690 $2,535 $3,718 $5,070 $6,590 $8,280 $9,336 $10,604 $11,871 $12,801
Total Cost of Sales $0 $3,650 $7,300 $10,950 $16,060 $21,900 $28,470 $35,770 $40,332 $45,807 $51,282 $55,297
Gross Margin $0 $1,631 $3,262 $4,892 $7,176 $9,785 $12,720 $15,982 $18,021 $20,467 $22,913 $24,707
Gross Margin % 0.00% 30.88% 30.88% 30.88% 30.88% 30.88% 30.88% 30.88% 30.88% 30.88% 30.88% 30.88%
Expenses
Marketing/Promotion $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250
Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Rent $450 $450 $450 $450 $450 $450 $450 $450 $450 $450 $450 $450
Telecommunications $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
General Liability
$30 $30 $30 $30 $30 $30 $30 $30 $30 $30 $30 $30
Insurance
Legal Expenses $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100
Accounting Expenses $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150
Office Equipment $40 $40 $40 $40 $40 $40 $40 $40 $40 $40 $40 $40
Other $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100
Total Operating
$1,520 $1,520 $1,520 $1,520 $1,520 $2,480 $2,480 $3,480 $3,480 $3,480 $3,480 $3,480
Expenses
EBITDA ($1,520) $111 $1,742 $3,372 $5,656 $7,305 $10,240 $12,502 $14,541 $16,987 $19,433 $21,227
Interest Expense $42 $40 $39 $38 $37 $35 $34 $33 $32 $30 $29 $28
Taxes Incurred ($469) $21 $511 $1,000 $1,686 $2,181 $3,062 $3,741 $4,353 $5,087 $5,821 $6,360
Net Profit ($1,093) $49 $1,192 $2,334 $3,934 $5,089 $7,144 $8,729 $10,156 $11,870 $13,583 $14,840
Net Profit/Sales 0.00% 0.93% 11.28% 14.73% 16.93% 16.06% 17.34% 16.87% 17.41% 17.91% 18.31% 18.55%
Cash Received
Cash Sales $0 $264 $528 $792 $1,162 $1,584 $2,060 $2,588 $2,918 $3,314 $3,710 $4,000
Cash from Receivables $0 $0 $2,676 $7,693 $12,709 $18,796 $26,355 $34,917 $44,482 $52,509 $59,449 $66,974
Subtotal Cash Received $0 $264 $3,204 $8,485 $13,871 $20,380 $28,415 $37,504 $47,400 $55,823 $63,158 $70,974
Expenditures from
Operations
Bill Payments $36 $1,221 $5,093 $9,938 $15,018 $21,342 $27,973 $35,734 $44,803 $49,079 $55,601 $61,737
Subtotal Spent on
$36 $1,221 $5,093 $9,938 $15,018 $22,302 $28,933 $36,694 $45,763 $50,039 $56,561 $62,697
Operations
Principal Repayment of
$0 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150
Current Borrowing
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $36 $1,371 $5,243 $10,088 $15,168 $22,452 $29,083 $36,844 $45,913 $50,189 $56,711 $62,847
Net Cash Flow ($36) ($1,107) ($2,039) ($1,603) ($1,298) ($2,072) ($669) $661 $1,486 $5,633 $6,447 $8,127
Cash Balance $9,464 $8,356 $6,317 $4,714 $3,417 $1,345 $676 $1,337 $2,823 $8,456 $14,904 $23,031
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Starting
Assets
Balances
Current Assets
Cash $9,500 $9,464 $8,356 $6,317 $4,714 $3,417 $1,345 $676 $1,337 $2,823 $8,456 $14,904 $23,031
Accounts Receivable $0 $0 $5,017 $12,375 $19,732 $29,097 $40,402 $53,178 $67,425 $78,379 $88,830 $99,867 $108,897
Inventory $2,500 $2,500 $2,200 $2,600 $3,900 $5,720 $7,800 $10,140 $12,740 $14,365 $16,315 $18,265 $19,695
Other Current Assets $275 $275 $275 $275 $275 $275 $275 $275 $275 $275 $275 $275 $275
Total Current Assets $12,275 $12,239 $15,848 $21,568 $28,622 $38,509 $49,822 $64,269 $81,777 $95,842 $113,877 $133,310 $151,898
Long-term Assets
Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Accumulated
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Depreciation
Total Assets $12,275 $12,239 $15,848 $21,568 $28,622 $38,509 $49,822 $64,269 $81,777 $95,842 $113,877 $133,310 $151,898
Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Current Liabilities
Accounts Payable $0 $1,057 $4,767 $9,444 $14,314 $20,418 $26,792 $34,245 $43,175 $47,233 $53,548 $59,549 $63,447
Current Borrowing $5,000 $5,000 $4,850 $4,700 $4,550 $4,400 $4,250 $4,100 $3,950 $3,800 $3,650 $3,500 $3,350
Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Liabilities $5,000 $6,057 $9,617 $14,144 $18,864 $24,818 $31,042 $38,345 $47,125 $51,033 $57,198 $63,049 $66,797
Paid-in Capital $10,580 $10,580 $10,580 $10,580 $10,580 $10,580 $10,580 $10,580 $10,580 $10,580 $10,580 $10,580 $10,580
Retained Earnings ($3,305) ($3,305) ($3,305) ($3,305) ($3,305) ($3,305) ($3,305) ($3,305) ($3,305) ($3,305) ($3,305) ($3,305) ($3,305)
Earnings $0 ($1,093) ($1,044) $148 $2,482 $6,416 $11,505 $18,649 $27,378 $37,534 $49,404 $62,987 $77,826
Total Capital $7,275 $6,182 $6,231 $7,423 $9,757 $13,691 $18,780 $25,924 $34,653 $44,809 $56,679 $70,262 $85,101
Net Worth $7,275 $6,182 $6,231 $7,423 $9,757 $13,691 $18,780 $25,924 $34,653 $44,809 $56,679 $70,262 $85,101