The Business Behind the Business Plan

THE BUSINESS

DETAILS ABOUT THE BUSINESS BEHIND THE BUSINESS MODEL/PLAN

David Holdford, RPh, MS, PhD, FAPhA

Professor, Department of Pharmacotherapy & Outcomes Science

Virginia Commonwealth University School of Pharmacy

LEARNING OBJECTIVES

1. Know the importance of the business behind the business model/plan

2. List details about the business behind the business model/plan

3. Assess the coherence of a model/plan with business’s mission, history, people, positioning, portfolio, and markets served

THE BUSINESS (OR ORGANIZATION) DESCRIPTION IS A COMPONENT OF ALL BUSINESS PLANS AND BUSINESS MODELS

Organization's Operation - Specific

background about the organization where the product/service will be

provided

Strengths, Weaknesses - Your capabilities to

serve targeted customers

Service/ Product – What you are offering

Secondary Customers - all other people you

may serve

Partners - People or businesses who can

help you serve customers Value Proposition - The

case you make to customers

Opportunities, Threats -Potential for success or

failure in the market

Competitors - People or businesses who

compete for your customers

Primary Customers -People or businesses

you want to serve

Costs - Financial and nonfinancial inputs

needed to serve customers

Pricing & Reimbursement - Sources of revenue to sustain your value proposition

Communication Plan -How your value proposition is

communicated to customers

Implementation - Details about critical factors for success of business

Business Model Canvas for Pharmacy Services

Lean Canvas is adapted from The Business Model Canvas (http://www.businessmodelgeneration.com) and is licensed under the Creative Commons Attribution-Share Alike 3.0 Un-ported License.

KNOWING THE BUSINESS BEHIND A VALUE PROPOSITION HELPS TO UNDERSTAND ITS POTENTIAL FOR SUCCESS AND SUSTAINABILITY

A MISMATCH BETWEEN THE BUSINESS AND THE VALUE PROPOSITION IS A RED FLAG FOR INVESTORS AND OTHER STAKEHOLDERS

The Business Description…

May describe just an element of the overall business. The ‘business’ may detail:

a pharmacy department within a large hospital or other business,

an individual pharmacy, group of pharmacies, or business unit within a large business,

a network of pharmacies or an association, or

any organization or entity offering the value proposition.

The Business Section of the Business Plan…

Tells what the business is and wants to be

Provides its backstory

Documents the business's legitimacy and capability to offer the value proposition

THE RATIONALE FOR THE BUSINESS DESCRIPTION IS THAT…

PEOPLE DON’T INVEST IN BUSINESSES.

THEY INVEST IN THE PEOPLE AND STORIES BEHIND THOSE BUSINESSES.

PEOPLE DON’T INVEST IN BUSINESSES.

THEY INVEST IN THE PEOPLE AND STORIES BEHIND THOSE BUSINESSES.

THIS IS AN IMPORTANT POINT FOR PHARMACISTS,

SO LET ME REPEAT IT.

PEOPLE DON’T INVEST THEIR TIME, MONEY, EMOTIONAL CAPITAL, AND EFFORT IN BUSINESSES.

THEY INVEST IN THE PEOPLE AND STORIES BEHIND THOSE BUSINESSES.

FOR EXAMPLE…

A PERSON PITCHES AN IDEA FOR A BUSINESS BEHIND AN INNOVATIVE PHARMACY APP…

WITHOUT KNOWING ANYTHING ABOUT THE APP, DO YOU THINK IT HAS A CHANCE TO SUCCEED?

YOUR ANSWER WILL LIKELY BE “I DON’T KNOW”

WHAT IF I TOLD YOU THAT THE APP WAS DEVELOPED BY TOP PROGRAMMERS AT THE AMAZON CORPORATION AND IT WILL RECEIVE THE FULL BACKING OF JEFF BEZOS, AMAZON’S CEO?

DOES THAT INCREASE THE LIKELIHOOD THAT YOU THINK IT MIGHT SUCCEED?

YES! BECAUSE…

THE PEOPLE IN THE BUSINESS AND THE BUSINESS’S STORY MAKES A DIFFERENCE

AND THE BUSINESS DESCRIPTION CAN MAKE A DIFFERENCE IN THE SUCCESS OR FAILURE OF A MODEL/PLAN PITCH TO STAKEHOLDERS

Details about the business model depend on whether the business is a:

Startup or an established enterprise

Single product or multi-product operation

Sole proprietor, partnership, or investor owned endeavor

Small, medium, or large organization

Local, regional, or global firm

WHAT TYPICALLY GOES INTO THE BUSINESS DESCRIPTION?

The descriptive information of the business behind the model might include:

1. The organization’s name

2. The type of business

3. Its mission

4. Its history

5. How it positions itself

6. Key personnel

7. Its portfolio

8. The market served

DETAILS ABOUT MOST BUSINESSES CAN BE FOUND ON THEIR WEBSITES, ANNUAL REPORTS, AND PRESS ARTICLES ABOUT THEM

FOR EXAMPLE

WHAT IF YOU NEEDED TO DESCRIBE FRED’S PHARMACY IN A BUSINESS PLAN FOR A PHARMACIST DIRECTED MANAGEMENT PROGRAM?

YOU MIGHTLOOK ON FRED’SWEBSITE

1. organization’s name

2. type of business

3. its mission

4. how it positions itself

5. key personnel

6. its portfolio

7. market served

HOW MANY OF THE FOLLOWING CAN BEFOUND ON FRED’SWEBSITE?

Mission

Type of Business

General Merchandise & Pharmacy

History

Fred's Pharmacy traces its history back to 1947, when it opened its original store in Coldwater, Mississippi.

How it positions itself

Key Personnel

The key personnel behind the diabetes management program depends on whether the program is being offered at one store or company wide

This information may not be readily available on the website but can be easily attained by contacting Fred’s

Portfolio

Market Served

The business description allows stakeholders to judge whether the proposed diabetes management program is right for Fred’s Pharmacy

Mission

Does it fit its mission?

Does it fit a General Merchandise & Pharmacy Business?

History

Fred's Pharmacy traces its history back to 1947, when it opened its original store in Coldwater, Mississippi.

It is consistent with its history?

Is it consistent with how it positions itself?

Key Personnel

The key personnel behind the diabetes management program depends on whether the program is being offered at one store or company wide

This information may not be readily available on the website but can be easily attained by contacting Fred’s

Are the people right for a diabetes management program?

Portfolio

Does diabetes management add to the portfolio?

Market Served

Does diabetes management fill a need in the market served?

If the answer is yes to all of these questions, stakeholders will be more likely to support the proposed diabetes management program at Fred’s Pharmacy

Summary

You now should be able to:

List specific details about the business behind your business model/plan

Understand the coherence of your model/plan with business’s mission, history, people, positioning, portfolio, and markets served

Use that understanding to improve your pitch to stakeholders