Post 8 - Business Planning
THE MEDICAL FITNESS IMPERATIVE
AN IN-DEPTH SERIES ABOUT THE HOWS AND WHYS OF
MEDICALLY-BASED FITNESS AND WELLNESS
Once the market feasibility of the proposed medical fitness center has been confirmed, the next step in the overall development process is to outline the business case for the center in a comprehensive business plan that will include financial pro forma. Medical fitness centers must operate like a retail business and still be able to speak the language of clinical care.
BUSINESS PLAN INTENT:
The purpose of the business plan is to determine the appropriate model, establish investment parameters, determine the appropriate model, establish investment parameters, determine likely revenues and expenses and provide the project performance information required to define risk and gain project development approval by the executive leadership and board of the Hospital.
- Determining the project governance model (e.g., ownership, organizational structure, management, staffing, schedule, budgets, for-profit vs. not-for-profit etc.)
- Developing the project financing model
- Providing comprehensive financial projections, revenue assumptions, start-up expenses, staffing model and operational budgets
- Providing marketing and membership sales goals and competitive strategies for the proposed center
The universal test of successful business planning is actual real-world performance in the first three years of operations. It's normal for a start-up medical fitness center to take three years to ramp up to a stable, sustainable business. First- year losses are not unusual and should be accounted for in operating capital reserves. Business performance predictions are expected to be conservative. Great building design, superb operational practices, on-target programming and professional marketing can all contribute to sensational outcomes that exceed plan projections.
PIECES OF THE PUZZLE:
Key components of the business plan include:
- Defining program components and facility space requirements
- Determining the best site for the building
- Developing conceptual and illustrative site and building block plan diagrams
- Determining facility size and estimating total project costs
- Determining the programmatic and operational requirements of the center
WHAT TO AVOID:
- Unanswered questions - Opposition and skepticism from executive leadership regarding performance goals and expectations
- Inexperienced input - Project design and cost input from inexperienced and unproven medical fitness industry resources
- Short-term thinking - Failing to plan for future programmatic needs and potential facility expansion
- Clinical bias - Planning to operate the fitness center component as a clinical department instead of the retail business that it is
- Isolation of services - Lack of meaningful integration between fitness programming and out-patient clinical services in the facility
- Misallocation of costs - Burdening center with unsubsidized discounts to achieve other organizational / departmental goal
Up next time...Post 9 - Financing.