ABC Dental Practice Strategic Business Plan April 2014
DOCUMENT CONTACT Name:
Hose Lee
Company:
Santino Dental Pty. Ltd.
Phone:
07 3868 3188
Email:
Yamboo@yahoo.com
Mail:
19 Bulli St. Hendra, 4011, Qld.
DISCLAIMER AND INTELLECTUAL PROPERTY This document is issued by Santino Dental Pty. Ltd., ABN: 96127 711504. (“ABC Dental Practice”) It is intended only for those persons to whom it is delivered personally by or on behalf of ABC Dental Practice. It must not be copied or distributed to other persons without the prior written consent of ABC Dental Practice. While ABC Dental Practice has taken due care to ensure that the information contained in this business plan is true and correct and is not misleading or deceptive, neither ABC Dental Practice nor any of its officers, employees or agents make any representations or warranties, express or implied, as to the accuracy of the information contained herein. ABC Dental Practice does not warrant that this business plan is complete or that it contains all material information related to ABC Dental Practice. ABC Dental Practice has not carried out any due diligence investigations in connection with the preparation of this business plan or any associated offer. Any investor making an assessment of ABC Dental Practice and the risks relevant to an investment in ABC Dental Practice should make its own independent investigation. Information in this business plan
(“Confidential Information”) is confidential. The
Confidential Information is provided to you solely for the purpose of evaluating the merits of ABC Dental Practice. You must not use the Confidential Information for any other purpose. You must not copy or reproduce the Confidential Information or give it to another person without the prior written approval of ABC Dental Practice.
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BUSINESS SNAPSHOT
A private company focused on delivering services to a community in need.
Location as the only dental practice in Wonga Beach where many of the residents are elderly and are not able to travel
Estimated Annual Net Operating Cash Inflows of $69,000 by the end of year 5
The business solves a key problem for customers in the Dental Services in Wonga Beach and surrounding towns Niche
A series of services designed specifically to meet researched customer needs
A clear market entry and growth strategy
Being a preferred supplier of various medical insurers will encourage people to visit the dentist regularly, though eliminating the barrier of cost
A team with a clear vision to help our patients achieve and maintain physical and emotional well-being throughout life through establishing good oral hygiene and dietary habits
Our business model enables us to scale rapidly whilst maintaining sustainable cash flow
Our sustainable competitive advantage is derived from our location adjacent to Marina Park retirement village, and a future library. The practice is on
the
main
road
coming in and out of Wonga.
Our focus on being a preferred
provider
where there is no gap to
pay
who
when have
health
clients private
insurance
receive treatment from us
positions
us
strongly serve the local community.
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Contents Document Contact ................................................................................................................ 2 Disclaimer and Intellectual Property ...................................................................................... 2 Business Snapshot ................................................................................................................. 3 Executive Summary ............................................................................................................... 6 Overview ............................................................................................................................ 6 Founders and Team ........................................................................................................... 6 Business Objective ............................................................................................................. 6 Our services ....................................................................................................................... 6 Competitors ....................................................................................................................... 7 The Customer .................................................................................................................... 7 The Market ........................................................................................................................ 7 Financial ............................................................................................................................ 7 The Business Opportunity ..................................................................................................... 8 The Value Statement .......................................................................................................... 8 The Window of Opportunity. .............................................................................................. 8 Stage of Development ........................................................................................................ 9 Stakeholders ....................................................................................................................... 10 Community Benefits ......................................................................................................... 11 Market ................................................................................................................................. 12 Relocation ........................................................................................................................ 12 Local catchment ............................................................................................................... 13 Socio Economic Index SEIFA ............................................................................................. 14 Market Size and focus ...................................................................................................... 15 The Customer .................................................................................................................. 17 Positioning ....................................................................................................................... 18 services............................................................................................................................ 18 Distribution ..................................................................................................................... 18 The Operational Business Model ...................................................................................... 19 Summary ......................................................................................................................... 23
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Operations .......................................................................................................................... 24 Team – Executive Capability............................................................................................. 24 Hours of Operation .......................................................................................................... 25 Training ........................................................................................................................... 25 Infrastructure ................................................................................................................... 25 Business Development Schedule ...................................................................................... 26 SWOTM Analysis .................................................................................................................. 29 Strengths ......................................................................................................................... 29 Weaknesses ..................................................................................................................... 29 Opportunities .................................................................................................................. 30 Threats and Mitigation ..................................................................................................... 30 Governance and Ownership ................................................................................................. 31 Owners and Directors ...................................................................................................... 31 Assets .............................................................................................................................. 32 Financials ............................................................................................................................ 33 Funding ........................................................................................................................... 33
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EXECUTIVE SUMMARY will require an average of 15-20 patents
OVERVIEW
per week.
ABC Dental Practice provides general and preventative dental care to the people in
OUR SERVICES
the Shaston Valley Shire in particular the
ABC Dental Practice’s secret ingredient is
residents of Simbur-Mirador District and Wonga Beach-Mirador District.
Park North retirement village, and a future
There is a particular emphasis on the needs of the elderly population and young children.
and maintain physical and emotional wellthrough
establishing
good oral
hygiene and dietary habits. To date, our achievements include the following;
library. It is on the main road coming in and out of Wonga Beach. Following in depth market research our,
Our goal is to help our patients achieve being
our location which is neighboring Marina
identified
an
appropriate
general
dentistry
services
periodontics, prosthodontics,
include:
endodontics, restorative,
and
minor
oral surgery. All of our services have been developed to meet the needs of identified customers.
premises and begun the development process
including
design,
council
approval, and quotes from two builders and; successfully set up a practice which grossed $1m/ year, after 5 years of operation.
FOUNDERS AND TEAM
C
ABC Dental Practice was founded by, Hose Lee, Principal Dentist, and Susan Lee, Practices Manager to address a specific, identified
opportunity
in
the
Dental
Services in Wonga Beach and surrounding towns.
BUSINESS OBJECTIVE We aim to expand operations to one extra therapist in 12 months time, and an associate dentist in 3 years time. Our strategy for demonstrating near term business viability is to break even which
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COMPETITORS
FINANCIAL
Our competitors do not have a preferred
We are seeking an grant of $250,000 for
provider status where there is no gap to
infrastructure, and $30,000 for equipment
pay when clients who have private health
in the next 12 months.
insurance receive treatment from us.
In year 1 we expect to generate average
We consider our key competitors to be:
monthly
cash
Sapphire Coast Dental Surgery in
$6,583.
This figure will rise to $50,000
Copula
by year 5 with net operating income of
Beach Street Dental in Copula
$5,750 per month.
Shaston Dentil Practice in Shaston
Pambula Community Dental Clinic
We
are
strengths
aware and
of
our
weaknesses
competitor’s and
have
developed a comprehensive strategy to
receipts
from
sales
of
We aim to achieve a return on investment of
2244%,
achieving
a
valuation
of
$330,687 in year 5. A discounted cash flow analysis reveals a current
valuation
of
the
business
of
$14,739.
capitalise on this knowledge.
THE CUSTOMER ABC Dental Practice’s target customers are elderly and children in Wonga Beach and health care card holders in the Shaston Shire. The key issue experienced by our targeted customer group is the need for a local dentist at an affordable price.
THE MARKET We estimate that the market for Dental Services in Australia is $9B P.A. and growing at a rate of 5% annually. We have selected to focus on the dental services in Wonga Beach and surrounding towns segment of the market. We believe that this segment is growing at 5% P.A. and currently represents a value of $1.2m P.A.
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THE BUSINESS OPPORTUNITY THE VALUE STATEMENT ABC Dental Practice has been developed with a core focus on our customer. Before developing our services, we focused on identifying the key value drivers for the Dental Services in Wonga Beach and surrounding towns customer segment. To succinctly state how we provide value to our customers, we have developed a value statement that takes into account our positioning and broader business strategy within the marketplace:
“To Bring dental services closer to the people of Wonga Beach and surrounding towns.�
THE WINDOW OF OPPORTUNITY. The time is right for ABC Dental Practice to deliver on
its
value
statement.
The
opportunity
represented in this business plan is time limited. We are strongly positioned to take advantage of the window of opportunity as the set up costs of a practice are very high The window of opportunity has emerged due to the DRISS grant which opened in August 2013. The need in the community is apparent, however few dentist are willing to live in a small town. We expect that entering the initial window of opportunity will open up other additional business opportunities. Riding off our success we could set up another practice in Simbur which is also under serviced.
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STAGE OF DEVELOPMENT The ABC Dental Practice business has been in development over the past 6 years. Whilst we have made some substantial progress, we would expect the next 12 months to be critical to our commercial success. We are proud of our success in delivering two significant achievements on time and budget to date: 
Identified an appropriate premises and begun the development process including design, council approval, and quotes from two builders.

Successfully set up a practice which grossed $1m/ year, after 5 years of operation.
These activities were delivered within the anticipated time and budget. A project plan of the further development of ABC Dental Practice will be provided later in this document.
It will
outline key milestones and is tightly integrated with the financials and financial scenario analysis. The next key steps in our development schedule include: Set up - to set up the practice ready to provide dental services Marketing - to let the surrounding community know that we are open for business Growth - to expand our customer base to fully utilise the practice
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STAKEHOLDERS Any community practice does not operate in isolation. We understand the importance of engaging with stakeholders both internal and external. Our internal stakeholders are our employees. The practice manager has been identified and is planning to move with Hose to open the clinic. Once the customer base has been built up and Lemuel completes his training as an Oral Therapist he is planning to move to Wonga Beach to join the team. The Dental Assistant and Receptionist have not yet been identified but once the plans to open solidify, there will be ads placed in the local community. There are many external stakeholders and there are plans to engage with each of them: External Stakeholder
Engagement Plan
General Practitioners in Wonga Beach and
Write
Surrounding areas
personally to let them know the kinds of
letter
of
introduction
and
meet
services available and let them know we are open for referrals. People seeking employment
Job ads will be placed in both local papers and online in job boards such as Seek.
Mariner Retirement Village
A personal visit will be made to introduce ourselves as a neighbor and provider of health services to the patrons. We will offer in house treatment to those who find it difficult to leave the premises.
Oral Health District
A letter of introduction and a personal visit will be made to let them know that we are participating in the OHFFSS
Community needing dental work
Through advertising and roadside signage at our practice the community will come to know that they have their own community dentist. The signage will also mention that we are a preferred
provider
for
health
insurance
companies. Local
Schools:
Sapphire
Coast
Anglican
The schools will be contacted and we will offer
College, Shaston High School, Shaston Valley
to come in and give talks to the students on
Public Schools, Copula public schools and
oral health and hygiene.
Simbur Public schools and St. Patrick’s School Health Care Card holders
Through participating in the OHFFSS scheme word of mouth will spread the news that we are the place of chose for low-income earners, pensioners, and Aboriginal and Torres Strait Islanders.
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COMMUNITY BENEFITS ABC Dental Practice as a much needed practice in the community of Sindo Beach which will benefit the community in a number of ways: 1) Reduce waiting time for public patents: Through participating in the NSW Oral Health Fee for Service Scheme we will be helping the disadvantaged. Public patients can access services in the clinic upon presentation of vouchers issued by the Oral Health District office. This will benefit the patents because they will not have to wait a long time to receive treatment. The public hospital will also benefit through a reduced stress on the facility. 2) Improved oral health of the local community: Many of the community of Sindo Beach and Simbur are elderly and either cannot drive or do not like to drive to Copula or Shaston due to the traffic or parking issues. ABC Dental Practice will have ample parking space making it easy for the elderly and those with children. Through this ease of access the community will be more likely to get regular check ups and prevent longterm damage to their health. 3) Accessibility for emergencies on weekends and holidays. During holiday seasons the population of Sindo Beach and surrounding areas swells. At the same time the dentists in the area close their doors and take their own vacation. This leaves an already under serviced area even more under serviced. ABC Dental Practice will be open during the holiday season and take holidays during in the off-season. For emergencies, phone bookings can be made any day from 7am till 9pm. 4) Affordability for those with private health insurance: We aim to provide more affordable services to people with private dental insurance cover through being a preferred provider of various health insurers. There are no dentists who are preferred providers within the targeted catchment. 5) Accessibility to the elderly: Visitations will be made to the residents of the Mariner Retirement Village some of whom are non-ambulatory. In addition we will offer simple oral care information to the employees. 6) Education in oral health and hygiene to children: There are 6 schools in Shaston Valley Shire namely Sapphire Coast Anglican College, Shaston High School, Shaston Valley Public Schools, Copula public schools and Simbur Public schools and St. Patrick’s School. The ABC Dental Practice team will visit these schools and give talks on the importance of regular and proper tooth brushing and the harmful effect of poor diet, in particular the high intake of sugar to their teeth. We will also emphasise the need for regular dental checkups. ABC Dental Practice will also accept families eligible under the Child Dental benefit Scheme.
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MARKET RELOCATION Prevent Dental was founded by Hose 5.5 years ago and he worked there until July 2013. It is located at 1376 Anzac Ave in Kallangur, Queensland. This location in Brisbane has a RA1 remoteness status. Hose proposes to set up ABC Dental Practice in Wonga Beach which is far more remote than Kallangur with a status of RA3. The colour coded remoteness map below shows the two locations.
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LOCAL CATCHMENT With a population of over 2700 people, Wonga Beach is in great need of a local dentist. It is considered that a population of 2000 people can sustain a single clinic. Therefore ABC Dental Practice could easily be sustained by the Wonga Beach residents alone. On top of this, the population swells during peak holiday seasons when ABC Dental Practice plans to be “open for business as usual.� The aboriginal population is less than 1%, though the population of residents under 14 years or under is 14%. Though Simbur is the same distance from Shaston as it is from
Wonga
Beach
we
believe
that
many
residents,
especially the elderly, will prefer not to drive to Shaston, the nearest town with ABC Dental to avoid traffic and parking issues. Therefore we believe many customers will come to us from Simbur. Copula and Shaston have 6 dentists each, so currently the residents of Wonga Beach and Simbur will be travelling there to receive treatment. Because ABC Dental Practice will be the only dentist in the area that is a preferred provider clients with private health insurance will travel from the whole of Shaston Valley. Health care card holders from the whole of the Shaston Valley will also travel to ABC Dental Practice as it is the only dentist participating in the OHFFSS.
Total Population Aboriginal and Torres Strait Islanders % Aboriginal and Torres Strait Islanders Population under 14 % population under 14 Dentists required Dentists currently in operation
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Wonga Beach 2727 35 1%
Simbur
390 14% 1.3635 0
231 16% 0.7025 0
1405 16 1%
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SOCIO ECONOMIC INDEX SEIFA The Australian Bureau of Statistics puts together an index from each census to show the relative advantage/ disadvantage of each community. It includes inputs such as average income and level of education. A low score means that the community is more disadvantaged, a high score means that the community less disadvantaged.
Below is shown the results of the SEIFA scores. With ranking between 5 and 6 the community of Sindo Beach is on par with the average for Australia, neither disadvantaged nor advantaged. Score Index
of
Relative
Socio-economic
Ranking
1012
5.4
1040
6.4
1031
6.4
989
5.4
Advantage and Disadvantage Index
of
Relative
Socio-economic
Disadvantage Index of Economic Resources Index of Education and Occupation
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MARKET SIZE AND FOCUS Our analysis of the market has focused on a two tiered approach. 1. To understand the broad market in which the business will operate 2. To clearly identify our niche of focus Using this approach to clearly understand the market in which our business will operate has enabled us to clearly focus our positioning, distribution, promotional strategy and pricing.
1. THE MARKET FOR DENTAL SERVICES The broader market has been identified as large and growing.
It is currently occupied by several key
industry players including:
Sapphire Coast Dental Surgery in Copula
Beach Street Dental in Copula
Shaston Dentil Practice in Shaston
Pambula Community Dental Clinic
Our preliminary research shows that the broad market size is $9B P.A. The market size provided relates to Australia. This
research
has
been
compiled
from
a
variety
of
sources
including
http://www.ibisworld.com.au/industry/default.aspx?indid=613. Given industry information we accessed, we estimate that the market will continue its growth at 5% for the next 3-5 years. Further to our research, this industry includes registered general or specialist dental practitioners, or dental clinics in which a group of dentists is associated for purposes of carrying on their profession. Dental hospitals providing outpatient services only are also included in the industry.
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2. OUR SELECTED MARKET NICHE There are a number of niches that exist
within
the
overall
marketplace. Attempting to enter the market with a broad based product
would
not
provide
sufficient focus to achieve the desired market penetration. Following in depth analysis of the market,
we
believe
that
an
opportunity exists to focus on developing the Dental Services in Wonga
Beach
and
surrounding
towns niche. We estimate the market to be $1.2m P.A. Wonga Beach with a population of almost 3000 is in great need of ABC Dental. Several surrounding towns such as Sindo are also underserviced. A viable practice would require customer base of around 2000. The niche has emerged with an increase in population in the town without the opening of a local dentist. Although the need in the community is apparent, few dentist are willing to live in a small town. Our competitive advantage in this niche will be derived from Hose's 21 years of experience both in public and private sector. Our services have been selected specifically to appeal the needs of this niche. Our entry into the niche will be working closely with schools and retirement villages giving presentation on dental health. Our adverting will take the form of local newspaper ads as well as direct mail. The primary way that customers will come to know us is through our on sight signs at our premises on a busy road.
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THE CUSTOMER To better explain who our customer is and how they might use our services, we have developed a brief customer scenario: Magda, aged 65 and living alone in Wonga Beach has a toothache. She finds it hard to get around since she never learned to drive and her husband died 4 years earlier. Living on a pension she is very frugal with her money. After several days of putting up with the pain she finally decides to do something about it. The next door neighbor comes over after a phone call to see how he can help. He puts her in his car and drives to the Pambula Hospital, about a 20 min drive. Upon arriving they are told that the clinic is fully booked and that she would have to wait at least two weeks if she wanted to see somebody in the hospital. The other option they are told is to take a voucher and see the only dentist that is participating in the OHFFSS in the area. When Magda hears that the Dental practice is based in Wonga Beach she is delighted. She does recall seeing the modern looking new clinic, but she assumed that it would be too expensive to go to. The friendly neighbor calls ABC Dental Practice on his mobile phone and is able to make an appointment for that afternoon. Apparently ABC Dental Practice always leaves a few free slots for emergencies such as these. The same afternoon, Dr. Hose Lee alleviates Magda of her pain, and she didn’t have to pay a cent. She is so happy with the excellent service that she tells all of her neighbors about how good Dr. Lee was to her, and that he made room especially for her when he heard that she was in pain.
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POSITIONING Our position within the market place has been developed to ensure that we are focused on serving the lower socio economic community. As a reflection, our pricing will be close to the medium ADA scheduled fee.
SERVICES Our product list has been developed to address the identified customer needs of a local dentist. To meet this needs of a general dentistry practice our services include:
Periodontics
Restorative procedures
Simple orthodontics
Endodontic
Prosthodontics
Restorative
Minor oral surgery
The practice will also be open to visiting specialists when the need arises in the future. From the second year onwards we will employ an oral therapist which will make ABC Dental Practice a multidisciplinary clinic. At the early stages there will be limited to the visitations to the Mariner Retirement Village. This is due to the demands of establishing a new business.
DISTRIBUTION To connect our services with customers, the following distribution strategy will be employed: “directly to our customers at our practice or in the retirement village”
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THE OPERATIONAL BUSINESS MODEL Throughout the development stage of this business, we assessed alternate business models for this opportunity using a structured 9 element approach.
The below overview
of the preferred business model for ABC Dental Practice provides a quick snapshot of the key functions, relationships and revenue sources. The business model provided below was selected following detailed analysis.
It
provides a quick snapshot of how ABC Dental Practice will operate, generate revenue and deliver value to shareholders and customers. The 9 elements considered include: 1. The Value Proposition – What are we offering to our customers? 2. Capabilities/Resources – What skills and capacity do we require to deliver on the value proposition? 3. Partnerships – Who do we need to work with to create value and access our revenue streams? 4. Activities – What will the business actually do? 5. Relationships – What organisations can influence our buyers purchase decision (excludes partners)? 6. Costs – What significant cost types are likely to be incurred as a services company? 7. Channel to Market – Who will support us in our desire to connect Dental Services with elderly and children in Wonga Beach and health care card holders in Shaston Shire 8. Revenues – What will our customers pay for, how will we earn our revenue? 9. Customers – Who are our customers, purchasers and consumers?
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1. THE VALUE PROPOSITION Our value proposition was developed from our customer’s perspective, to ensure that ABC Dental Practice solves a key issue/opportunity for our customers.
“To bring dental services closer to the people of Wonga Beach and surrounding towns.” This value proposition has been used to guide the development of the overall business model.
2. CAPABILITIES & RESOURCES Specific skills and organisational capabilities are required to effectively deliver on our value proposition. These capabilities will be the focus of future recruitment activities. We see our business critical capabilities as:
Clinical skills in general dentistry
Skills in managing the dental software
Capability to hire and motivate staff
Ability to train staff
Capability to create strong networks in the community
We have worked hard to assemble as many as possible of these capabilities into the organisation to date and the focus of our development path will be to acquire outstanding resources to fill any capability gaps.
3. PARTNERSHIPS We understand that ABC Dental Practice does not operate in isolation, we require active engagement with existing industry participants.
Our selection of potential partners for the
development of ABC Dental Practice is critical to influence our customers to engage with our services.
We have carefully selected partners that will reflect and support our market
positioning. Our early partner development activities will be focused on Health insurance companies. Further partnerships will be developed over time including Dental suppliers; and Dental equipment servicing companies. These partner relationships will assist in building diverse revenue streams and ensuring our services are supported in the market.
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4. ACTIVITIES
Several primary activities will outline what the team at ABC Dental Practice is actually focused on achieving. The treating of patents will be the primary activity undertaken.
Supporting activities include:
Scheduling patents
Engaging the community through promoting dental health
Managing a local marketing campaign
By executing effectively on these activities we can ensure effective progress towards breaking even that will require an average of 15-20 patents per week over the coming 12 months.
5. RELATIONSHIPS There are a number of organisations that can influence our customer’s decision to purchase. We will develop relationships with the following organisations:
Marina Park Retirement Village
Local health districts
Local schools, Local General Practitioners and Pharmacists
We believe that ongoing, sustainable relationships with these organisations can be developed over the next 12-18 months.
6. COSTS Ensuring that costs remain below operating revenue is a core priority. We understand our key cost centres and the interplay of these costs with revenue. Our major cost items include:
Wages
Repairs and maintenance
Insurance
Premises
Marketing
Detailed costings for each of these items and the associated cash flow implications are provided in the financial forecasts. (See our cash flow statement in the financial section for details)
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7. CHANNEL TO MARKET Reaching our customers is a key priority for ABC Dental Practice. We understand the alternative market channels for dental services, and the margins associated with engaging these channels. We have elected to use the following channels to reach the elderly and children in Wonga Beach and health care card holders in Shaston Shire:
Directly to our patents from our practice
Referrals by the Shaston Local Health District, or Pambula Local Health District through the OHFFSS
Health insurance providers referring our services through their promotional material as a preferred provider
Word of mouth in the local community
This multi-layered approach will ensure a diverse and secure income stream.
8. REVENUES To further leverage our market entry approach and strategy, we have identified several possible revenue streams.
This breadth of revenue has been designed to maximize our return on
marketing efforts to reach our customers. Expected revenue streams to be developed include:
Payment from private patents
Payment from health insurance companies
Payment from NSW Government for OHFFSS
These revenue streams have been designed to maximize the “Lifetime Customer Value” of our target market.
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9. CUSTOMERS Combining market research with our understanding of the target market, we have identified several key customer groups. Reaching the following customers will be critical to the success of ABC Dental Practice:
Elderly in Wonga Beach
Children in Wonga Beach (1-18 ears old)
Patents eligible under the NSW Oral Health Fee for Service Scheme living in the Shaston Shire
Holiday makers
General Population in the Shaston Valley Shire
These customers have been selected to represent only those whose needs are most closely addressed by our services and can be reached effectively using the identified channels to market.
SUMMARY We believe that the unique design of this business model, demonstrated by our unique ability to combine and leverage each of these elements will ensure that ABC Dental Practice is a success.
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OPERATIONS TEAM – EXECUTIVE CAPABILITY The team has many of the requisite skills to help our patients achieve and maintain physical and emotional well-being throughout life through establishing good oral hygiene and dietary habits. Any additional capabilities required will be acquired through contracting and recruitment of new team members. The team is led by Hose Lee, Principal Dentists whose role it is to be the main provider of general dental services. Hose has 21 years of experience in both the public and private systems. He has run his own practice for 5 years, building it from a new practice to a $1m/ year business. Susan Lee’s role will be as the Practice Manager. Her primary responsibility will be to do the book keeping, assist in reception work, managing staff, paying bills and wages. She will work closely with all staff ensuring they are competent and well motivated. Lemuel Lee, Oral therapist, will focus on preventative procedures and oral health promotions in the community. He will also do limited dental work within his scope of practice. TBD, Dental Assistant, will assist Hose and carry out proper infection control protocols. TBD, Receptionist, will welcome all patents and appropriately schedule according the procedure required.
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HOURS OF OPERATION The practice will be open from 8:30am till 5:30pm Monday to Friday, and 9:00am till 1:00pm on Saturdays. There will be a contact phone number for emergencies and Hose will be available to come in on any day between 7am and 9pm. Due to the fact that Sindo Beach is a popular holiday destination ABC Dental Practice will remain open for business as usual during the holiday season. The Practice will close for vacations outside of the holiday season.
TRAINING During the first couple of years of operation while ABC Dental Practice is establishing itself, Hose will not take on a mentoring role. This is because the demands of a setting up a new practice do not allow the luxury of time and resources required. However, at any time dentists in training are always welcome to spend time at ABC Dental Practice in observation.
INFRASTRUCTURE The infrastructure needed to set up ABC Dental Practice will be a long-term asset to the community. Because of the high set up cost it is likely that ABC Dental practice will be there for decades to come.
Due
to
the
quality
of
the
infrastructure, future dentists that come to Wonga Beach will be more likely to stay longer. ABC Dental Practice will be a modest
set-up.
However
we
like
to
present an environment that is clean and inviting where both patient and staff feel comfortable. The fit out will meet building code standards and Council requirements. ABC Dental Practice has engaged with a reputable local builder and tradesmen who guarantee their work and assure the timely completion of the project. By contracting local companies ABC Dental Practice is contributing to the local economy. Hose is planning on going to the Sydney ADX Dental Exhibition in March. The majority of dental equipment suppliers will be present and offering their products at special “show only� prices. The purchase decision will be made partly on price but mainly on personal preference and quality. Because of the distance between equipment service teams and Wonga Beach, breakdowns would be very costly and hold up patent treatments. Therefore quality equipment is of utmost importance. All equipment will meet infection control and manufacturing
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standards. They will be sourced from reputable manufacturer that offers good servicing support.
BUSINESS DEVELOPMENT SCHEDULE In building a path forward for ABC Dental three
Practice, we have identified significant
milestones.
development
We will monitor the
achievement of both time and cost parameters in the achievement of these milestones closely.
Any investment
into the business can be provided in tranches, pegged to these. A detailed project plan outlining how and who will be responsible for the delivery of these tasks is provided in a formal project plan on the following pages.
MILESTONE 1: SET UP We believe this stage is critical in order to set up the practice ready to provide dental services Core tasks to be undertaken in this stage include: a) Find appropriate location b) Design practice c) Local council development approval d) Quotations from Builders e) Construction We have already commenced delivery of this stage of activity and believe that we are well placed to meet the timeframes outlined in the project plan, and the costs provided in the financial section.
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MILESTONE 2: MARKETING Our objective in the delivery of this stage is to let the surrounding community know that we are open for business. Key actions to deliver this milestone will include: a) Direct marketing to Aged care and Schools b) Local advertising in newspapers c) Direct mail campaign Successful delivery of this milestone will be judged by the efficiency of the marketing of dental Services.
MILESTONE 3: GROWTH This final stage has been designed to expand our customer base to fully utilise the practice. To achieve this objective, we will action the following: a) Hire Oral Therapist b) Hire Associate Dentist c) Break even for year of operation
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Hosanna Dental Pty. Ltd. Business Plan Powered By
20 1 0 4 0 0 0 0 0 0 0 0 0 0 20 1 0 5 0 0 0 0 0 0
Company Development Roadmap Task Id 1
Stage 1 - Set up Find appropriate location Design practice Local council development approval Quotations from Builders Construction
a b c d e
2
Stage 2 - Marketing Direct marketing to Agred care and Schools Local advertising in newspapers Direct mail campaign
a b c d e
3 a b c d e
Task Title/Description
Stage 3 - Growth Hire Oral Therapist Hire Associate Dentist Break even for year of operation
Responsible Resource(s)
Start Date
End Date
Alex Lee Alex Lee Alex Lee Alex Lee Alex Lee Alex Lee Alex Lee Alex Lee Alex Lee Alex Lee
05-Jan 05-Jan 21-Jan 05-Feb 07-Mar 25-May 01-Jul 01-Jul 08-Aug 08-Aug
24-Jul 05-Feb 05-Feb 07-Mar 22-Mar 24-Jul 07-Sep 31-Jul 07-Sep 07-Sep
Alex Lee Alex Lee Alex Lee
01-Jul 01-Jul 01-Nov 01-Jul
01-Dec 31-Jul 01-Dec 01-Jul
Ja n Feb Ma r Apr Ma y Jun Jul Aug Sep Oct Nov Dec Ja n Feb Ma r Apr Ma y Jun Jul Aug
Status Select Select Select Select Select Select Select Select Select Select Select Select Select Select Select Select Select Select
1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0
1 0 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0
1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
1 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0
1 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0
1 0 0 0 0 1 1 1 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 1 0 1 1 0 0 0 0 0 0 0 0
0 0 0 0 0 0 1 0 1 1 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 1 1 0 1 0 0
0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0
SWOTM ANALYSIS Our
SWOTM
(Strength,
Weaknesses,
Opportunities Threats and Mitigation Strategies) analysis has been informed
Strengths
by our knowledge of competitors and
SWOTM
the marketplace in which we operate. Following
extensive
facilitated
discussions, the following strengths, weaknesses
and
been developed.
Weaknesses
opportunities
have
Opportunties
Threats & Mitigation
Where possible any
weaknesses have been identified as opportunities for further focus during the development of the business.
STRENGTHS
The location as the only dental practice in Wonga Beach where many of the residents are elderly and are not able to travel
Being a preferred supplier of various medical insurers will encourage people to visit the dentist regularly, though eliminating the barrier of cost
Experience in operating a successful business named Prevent Dental Suite in Kallangur
Low cost base through flexible staffing agreements as many of the staff are family.
Participating in the NSW OHFFSS will encouraged the disadvantaged to get treatment, where previously they would have had to travel for over one hour, or wait for months for treatment in the local community centre
21 years of clinical experience in both the public and private system
Extended hours of operation, catering for emergencies up until 9pm every night. We will also be open for business as usual during holiday seasons
These strengths have been consolidated to achieve our core objective, “To help our patients achieve and maintain physical and emotional well-being throughout life through establishing good oral hygiene and dietary habits”.
WEAKNESSES
No patent base which means that in the first year of business costs are likely exceed revenue
High set up cost for a new practice
Lower income per patent than private clinics due to being preferred provider
Difficulty in getting a regular customer base due to focus on voucher patents who are likely to go only in emergencies
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OPPORTUNITIES
To get grant assistance to help reduce the burden of setting up the clinic and initial cash flow shortages
To build a loyal local customer base in the community
To have a high flow of customers attracted to the lower cost
To be the only dental provider in the area focused on the disadvantaged
THREATS AND MITIGATION The key potential threats have been identified, and mitigation strategies developed to minimise their impact on the business. Threats
Mitigation Strategies
Another dentists opens in Wonga
Beach
We will build up a base of loyal clients as quickly as possible
Other dentists in the area become a
Once we have the status of preferred
preferred provider for health
provider the insurance companies will
insurance companies
not
allow
another
in
our
area.
Therefore it will be advantageous to become
a
preferred
provider
of
several health insurance companies.
Existing practices employ more
dentists reducing their waiting time
Our customers are mainly coming to us because of location and price, so reduced
waiting
time
in
other
practices will have minimal effect on our business
Downturn in the economy
The majority of our customers will be elderly where most of their income is from a
pension
which
does not
change with economic outlook.
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GOVERNANCE AND OWNERSHIP OWNERS AND DIRECTORS The current ownership structure of Santino Dental Pty. Ltd. is as follows: Hose Lee, Principal Dentist owns 50% of the business. Hose performs general dentistry and is responsible for managing the practice Susan Lee, Practices Manager, owns 0.5 of the business. Susan is in charge of all administrative tastes including staff management, book keeping, ordering materials, and booking. The owners are driving the plan to break even which will require an average of 15-20 patents per week in the short term. In the longer term, they plan to expand operations with 1 extra therapist in 12 months time, and an assistant dentist in 3 years time.
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ASSETS The following is a catalogue of the 4 key business assets that will be used to deliver on our strategic objectives. Asset
Ownership Structure
Why it is critical to Santino Dental Pty. Ltd.
Hose has 21 years of experience in General
Dentistry,
Owned
including
periodontics,
The years of experience are essential
in
a
small
town
endodontic,
where there is long distances
prosthodontics, restorative, and oral
to travel to get a second
surgery.
opinion. The experience will reduce the likelihood of a failed
treatment
requiring
further travel, and possible long wait times. ABC Dental Practice is planning to purchase
the
117
square
Owned
meter
The facility provides a sterile environment for
commercial building. It will consist of
surgery
three surgeries, one reception area, a
comfortable and professional
waiting room for 9 patents, one
place where patents will want
sterilizing room, one disabled toilet,
to
one staff toilet, one staff room with
maintaining dental health
come
as
performing
well
to
as
a
regularly
for
kitchen, and one dentist office. The equipment includes one dental
Owned
The equipment makes certain
chair, one OPG machine, one x-ray
surgery's possible, and the
machine,
process
and
plant
equipment
of
checking
and
comprising of suction machine and
cleaning much more effective
compressor.
and efficient.
Centaur managing
software
is
financials,
used
for
Owned
booking
patents, and recording patent data
The software enables more efficient use of information. It eliminates
the
changes
of
making a double booking, and gives easy access to patents medical history which helps in diagnosis
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FINANCIALS FUNDING
The set up of the practice will be funded through grant money, savings and a bank loan. The Grant will consist of the DRISS Relocation grant of $30k, and Infrastructure grand of $250k. The bank loan will be for $100k and also Hose will be contributing $80k of his own savings. Failure to receive the funds will result in a delayed launch schedule. The investments have been assumed in our cash flow model. This model demonstrates the level of free cash flow expected generated, and produces NPV (Net Present Value) and times earnings (cash) valuations.
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ANALYSIS OF THE BASE CASE SCENARIO The base case scenario represents most closely the expected financial implications of executing on this business plan. A lack of effective cash flow management can cause significant issues in ensuring stability. We have endeavored to cover all foreseeable costs and revenue, taking into account credit terms where applicable. The most accurate form of financial forecasting is to use both market (Top Down) and Capability to deliver (Bottom Up) assumptions in preparing the forecasts.
NET CASH BALANCE
Net Cash Balance 140,000 120,000
Cash Value
100,000 80,000 60,000
40,000 20,000
0 Year 1
Year 2
Year 3
Year 4
Our base case forecast, representing a minimum annual cash balance of $
Year 5
15,687 in Year 2
ensures that all foreseeable variables are taken into account. Costs associated with executing our development plan have been accounted for in these figures. After the end of 5 years we will have $123,687 in funds available. This balance is added to the valuation multiple to determine the business value at the end of 5 years (See Valuation of Base Case Scenario)
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CASH RECEIPTS FROM S ALES
Cash Receipts from Sales 700,000 600,000
Cash Value
500,000
400,000 300,000 200,000
100,000 0 Year 1
Year 2
Year 3
Year 4
Year 5
The cash receipts from sales represent the cash we have received from customers for operating activity (Cash Revenue). We expect our Cash receipts from sales to grow from an average per month figure of
$6,583
in year 1 to $50,000 per month by Year 5. Given the market size, our entry niche and our business strategy, we believe that this is both possible and achievable.
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NET CASH FLOWS FROM OPERATIONS
Cash Value
Net Cash Flows from Operations 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 -10,000 -20,000 -30,000
Year 1
Year 2
Year 3
Year 4
Year 5
The net cash flow from operations figure excludes all financing costs, capital raised and drawings.
The operational cash flow of the business turns positive during Year 3 , delivering
an operating annual surplus of $3,000 in that year. The minimum net annual cash flow from operations is experienced in the first year and is an average of
$(1,609) per month.
An
improved net cash flow position is experienced in year 5, increasing to an average of $5,750 per month.
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BUSINESS VALUATION
Times Earnings Based Valuation 350,000
Cash Value
300,000 250,000
200,000 150,000 100,000 50,000
0 Year 1
Year 2
Year 3
Year 4
Year 5
The valuation represented by the above graph is determined by using a times earnings multiplier. Based on valuations of other companies in the Dental Services market, we believe that an earnings multiplier of 3 is reasonable. To determine the year 5 value of ABC Dental, we multiplied year 5 net operating cash flow ( $69,000 ) X 3 (the earnings multiplier) = 207,000 To this we added the cash at bank ($123,687) to this calculation. The result is a valuation at end of year 5 of $330,687. As an alternative valuation approach we have also run a Net Present Value (NPV) calculation on our 5 year net operating cash flow. After reviewing reasonable discount factors used for other pre-seed venture investments, we settled on a “Discount Factor� of 30%. Using this approach the Net Present Value of the business under the base case scenario is $14,739 as at January 2014.
Hence, given the assumptions used in the cash flow model, and the discount rate used, the current value of the business is $14,739 and is expected to increase to $330,687 over the next 5 years, resulting in a ROI (Return on Investment) of 2244% and an average annual return of 449%.
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ANALYSIS OF THE BEST CASE SCENARIO The best case scenario represents an optimistic outlook. The graphs and figures presented below assume a 50% % increase in sales over the base case scenario and a corresponding increase in costs by 30%. All other variables used are held constant with those reflected in the base case scenario.
Under the best case scenario,
Cash Value
Net Cash Balance
the cash balance ends Year 1 at
600,000
30,693 which is higher than the
500,000
By year 5 the cash balance
400,000
would increase substantially to
300,000
under the base case scenario.
base case scenario by 10,006.
524,593, 455,593 more than
200,000 100,000 Year 1
Year 2
Year 3
Year 4
Year 5
Cash Value
Cash Receipts from Sales 1,000,000 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 -
from
sales
have
increased directly in-line with our assumption of 50%. This drives sales growth from 9,875 per Month in year 1 to 75,000 in year 5.
Year 1
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Receipts
Year 2
Year 3
Year 4
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Our
Net Cash Flows from Operations
250,000
Cash Value
cash
flow
position
improves markedly over the base case scenario, as the gap between cash expenses and cash receipts from sales widens.
200,000 150,000
This leaves us with a substantially
100,000
better operating position at the end
50,000
of
17,475
Year 1
-50,000
1,400,000
Year 2
Year 3
Year 4
Year 5
year
per
operating
5
month
cashflow,
of
in
net
a
33%
improvement on the base case.
The optimistic scenario produces a
Times Earnings Based Valuation
times
earnings
valuation
1,153,693 at year 5. possible
1,200,000
to
execute
of
If it were on
this
scenario we would be able to
1,000,000
Cash Value
net
create an additional 823,006 in
800,000
year 5 value.
600,000
Using the NPV approach to value
400,000
the future 5 years cash flow, this
200,000
produces a current valuation of 170,563.
Year 1
Year 2
Year 3
Year 4
Year 5
Successful
delivery
on
the
optimistic scenario will produce a total return of 676%, or an average annual
return
of
135%.
These
percentage figures are calculated as return on initial valuation, and hence may be higher or lower than under the base case scenario.
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ANALYSIS OF THE WORST CASE SCENARIO The worst case scenario represents a pessimistic outlook.
It is designed to represent an
unlikely scenario that represents the worst financial outcome anticipated.
The graphs and
figures presented below assume a 20% decrease in sales over the base case scenario and a corresponding decrease in costs by 15%. All other variables used are held constant with those reflected in the base case scenario.
Under
Net Cash Balance
case
ends Year 1 at 19,634 which is lower than the base case
20,000
scenario by 1,053. By year 5
15,000
the
10,000
Cash Value
worst
scenario, the cash balance
25,000
cash
decrease
5,000
balance
would
substantially
to
17,184, 106,503 less than
-5,000
this
Year 1
Year 2
Year 3
Year 4
Year 5
that represented by the base case scenario.
-10,000
-15,000 -20,000
Receipts
Cash Receipts from Sales
sales
directly
have in-line
with our assumption of a 20% reduction in sales.
600,000
This limits sales growth from
500,000
5,267 per Month in year 1 to
400,000
Cash Value
decreased
from
40,000 in year 5.
300,000
200,000 100,000 Year 1
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Year 3
Year 4
Year 5
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Our net cash flow position
Net Cash Flows from Operations 40,000
deteriorates
significantly
when compared to the base case scenario.
30,000
This
Cash Value
20,000
with
Year 1
Year 2
Year 3
Year 4
Year 5
of 2,388 per month in net operating cashflow, a 42% lower figure than the base case.
-30,000
This
Times Earnings Based Valuation 120,000
pessimistic
scenario
produces a times earnings valuation of 103,134 at year 5.
This figure represents a
reduction in overall business
100,000
value of 227,553 in year 5
80,000
when compared to the base case scenario.
60,000
40,000 20,000 -
Year 1
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a
position at the end of year 5
-
-20,000
Cash Value
us
substantially lower operating
10,000
-10,000
leaves
Year 2
Year 3
Year 4
Year 5
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SUMMARY The financial analysis provided demonstrates that the successful execution of our strategy will deliver above average financial returns. Furthermore, given unfavorable circumstances, ABC Dental still manages to deliver a minimum net cash flow in year 5 of 28,650. We would expect our valuation at the end of year 5 to be between 103,134 and 1,153,693. Given the business model and strategy outlined throughout this document, we would expect the most likely valuation to be $330,687.
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