GP's On Strategic Business Plan April 2014
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A
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DOCUMENT CONTACT Name:
Regina Ellis
Company:
GP's On
Phone:
0431 629 053
Email:
rschaening@yahoo.com.au
Mail:
28 Mossbery Street, Blair Arthur, 2560, NSW
DISCLAIMER AND INTELLECTUAL PROPERTY This document is issued by GP's On, ABN: 849 8320 8167. (“GP's On”) It is intended only for those persons to whom it is delivered personally by or on behalf of GP's On. It must not be copied or distributed to other persons without the prior written consent of GP's On. While GP's On 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 GP's On 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. GP's On does not warrant that this business plan is complete or that it contains all material information related to GP's On. GP's On 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 GP's On and the risks relevant to an investment in GP's On 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 GP's On. 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 GP's On.
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BUSINESS SNAPSHOT
A sole trader focused on delivering tangible growth in the General Practice Medical Services in Australia market
Estimated Annual Net Operating Cash Inflows of $1,696,608 by the end of year 5
The business solves a key problem for customers in the Setting up medical centres Niche
A
series
specifically
of to
services meet
designed researched
customer needs
A clear market entry and growth
D
strategy
Only turnkey General Practice setup provider in Australia
Established
contact
with
potential
staff
A team with a clear vision to establish a profitable business
Our business model that enables us to scale rapidly whilst maintaining sustainable cash flow
Our sustainable competitive advantage is derived from our independence in the market which allows us to work for any medical clinic without compromising our business
Our experience in setting up 3 medical centres positions us strongly to capture the forecast operating cash flows
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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 Marketing ............................................................................................................................ 10 Market Size and focus ...................................................................................................... 10 The Customer .................................................................................................................. 12 Positioning ....................................................................................................................... 13 services............................................................................................................................ 13 Distribution ..................................................................................................................... 13 The Operational Business Model ...................................................................................... 14 Summary ......................................................................................................................... 17 Operations .......................................................................................................................... 18 Team – Executive Capability............................................................................................. 18 Business Development Schedule ...................................................................................... 19 SWOTM Analysis .................................................................................................................. 22 Strengths ......................................................................................................................... 22
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Weaknesses ..................................................................................................................... 22 Opportunities .................................................................................................................. 22 Threats and Mitigation ..................................................................................................... 23 Governance and Ownership ................................................................................................. 24 Owners and Directors ...................................................................................................... 24 Assets .............................................................................................................................. 25 Financials ............................................................................................................................ 26 Investment ....................................................................................................................... 26 Cash Flow Projections ...................................................................................................... 27 Analysis of the Base Case Scenario .................................................................................. 28 Analysis of the Best Case Scenario ................................................................................... 33 Analysis of the Worst Case Scenario ................................................................................. 35 Summary ............................................................................................................................. 37
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EXECUTIVE SUMMARY testing
OVERVIEW
we
have
decided
to
off
the
for
the
following services:
GP's On sets up and recruits staff for medical clinics.
Organize
accreditation
Our goal is to establish a profitable
practice which would add be an
business.
income from the government of
GP's On’s current services are targeted at
80% of all billings
the General Practice Medical Services in Australia. To date, our achievements include the following; set up 3 new medical clinics in NSW with a total of 60 staff including 16 doctors, and; set up 3 new pharmacies to
machines and Medicare
centres
and
pharmacies
are
specific,
Manager
identified
numbers
for
the
Buy the relevant equipment that is Recruit
staff
database
by
leveraging
of
doctors,
administrators, and nurses
GP's On was founded in June 2013 by, Ellis,
PKI
needed and required by law
FOUNDERS AND TEAM Regina
Organize
practice identification
profitable which is a testament to the organised way they were set up.
Get the provider number for the practice
complement the medical centres. Both the medical
Register for billings with HICAP
to
address
opportunity
in
a the
Setting up medical centres market.
Train staff
Set up the billing system
Source equipment
BUSINESS OBJECTIVE We aim attract a constructor of medical clinics to acquire the business. Our strategy for demonstrating near term business viability is to set up six new clinics.
C
OUR SERVICES GP's
On’s
secret
ingredient
is
our
independence in the market which allows us to work for any medical clinic without compromising our business. This unique capability has been used to develop
our
portfolio
of
services.
Following in depth market research and
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COMPETITORS Our competitors do not have experience in setting up 3 medical centres. We consider our key competitors to be: Doctor
setting
up
centers
themselves
We
are
strengths
aware and
of
our
weaknesses
We are seeking an investment of AUD $50,000 in the next 12 months. In year 1 we expect to generate average monthly
cash
$75,000.
Administration managers
FINANCIAL
receipts
This
from
figure
will
sales
of
rise
to
$181,440 by year 5 with net operating
competitor’s and
have
developed a comprehensive strategy to
income of $141,384 per month. We aim to achieve a return on investment of
556%,
achieving
capitalise on this knowledge.
$12,666,660 in year 5.
THE CUSTOMER
current
a
valuation
of
A discounted cash flow analysis reveals a valuation
of
the
business
of
$2,278,343.
GP's On’s target customers are developers of new medical centres and owners of existing medical centres. The key issue experienced by our targeted customer group is the need for an expert to smoothly set up a medical center in the shortest time possible.
THE MARKET We estimate that market for General Practice Medical Services in Australia in Australia to be $10 Billion P.A. and growing at a rate of 4% annually. We believe that this segment is growing at 7% PA and currently represents a value of $14m
P.A.
(+info:
http://www.doctoralia.com.au/sitemap/m edical-centers/county/victoria-10499).
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THE BUSINESS OPPORTUNITY THE VALUE STATEMENT GP's On has been developed with a core focus on our customer.
Before developing our
services, we focused on identifying the key value drivers for the Setting up medical centres 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 take the hassle out of setting up a medical center�
THE WINDOW OF OPPORTUNITY. The time is right for GP's On 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 due to the structure of the market where. Doctors must be a director of a medical clinic, so the experience remains in the hands of people who are not in the market for setting up a business that would benefit other clinics. The window of opportunity has emerged because nobody has identified this opportunity, currently I am the only business dedicated completely to setting up medical centres. The need has been around for decades, yet nobody has thought to build a business around it. The people who do have experience setting up clinics are usually owner operators and keep their new found knowledge to themselves. Whilst others have made early attempts to exploit the opportunity, they have failed to achieve our expected success. We expect that entering the initial window of opportunity will open up other additional business opportunities.
New opportunities would also be created:
once we have established our
business of setting up clinics and recruiting staff we can go into operating clinics to re stock their equipment. Ultimately the medical centres could join together as a buying group where equipment and supplies can be purchased in bulk
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STAGE OF DEVELOPMENT The GP's On business has been in development over the past 6 months. 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: 
Set up 3 new medical clinics in NSW with a total of 60 staff including 16 doctors.

Set up 3 new pharmacies to complement the medical centres. Both the medical centres and pharmacies are profitable which is a testament to the organised way they were set up.
These activities were delivered within the anticipated time and budget. A project plan of the further development of GP's On 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: Roll out - to build a business with regular contracts Growth - to expand nationally Buying group - to leveraged the relationships with clinics we have set up to create a buying group which allows for economies of scale
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MARKETING 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 GENERAL PRACTICE MEDICAL S ERVICES IN AUSTRALIA
SERVICES
The broader market has been identified as large and growing.
It is currently occupied by several key
industry players including: 
Doctor setting up centers themselves

Administration managers
Our preliminary research shows that the broad market size is $10 Billion 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=611. Given industry information we accessed, we estimate that the market will continue its growth at 4% for the next 3-5 years. Further to our research, this industry is made up of companies and practitioners that primarily provide general practice services.
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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 Setting up medical centres niche. We estimate that to be $14m P.A. (+info: http://www.doctoralia.com.au/sitemap/medical-centers/county/victoria-10499). The niche has emerged several factors: 1. Changes in the healthcare's system in that funding has been cut to hospitals which has increased waiting times. 2. People are aware that they are more likely to become infected by being in a hospital compared to going to a GP. 3. Medical clinics are closer than hospitals. 4. Although many people have the experience, they do not want to help the competition. Our competitive advantage in this niche will be derived from Regina's combination of business and medical acumen, she is better positioned than anyone else to take advantage of this opportunity. Our services have been selected specifically to appeal to this address the needs of this niche. Our entry into the niche will be to make contact with medical center construction companies, making them aware of our services. For the employment database we will work with Centerlink, employment agencies, colleges, and schools.
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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: "Dr. Brown after 15 years of working as a GP wanted to open his own practice. The only problem is that he didn’t know where to start. He was daunted by the myriad of paperwork and did not know how to go about finding staff. A college of his told him about GPs On a company specializing in setting up medical centers. He got online and phoned Regina. A week later Regina flew down to Melbourne from Sydney and came to meet Dr. Brown in the outer South Eastern Suburbs of Melbourne. They sat down and began to talk. Pretty soon Dr. Brown was even more overwhelmed by the number of tasks required to put together a practice, though at the same time he was relived to know that there was someone like Regina who could help. Dr. Brown mentioned that he was not planning on having on site pathology but Regina highly recommended it. Every day people will have to be travelling to the hospital a couple of km away and it will make your clinic less desirable. Another benefit of pathology is that you get free sharps containers and collection service. Dr. Brown was not intending to buy an autoclave, but Regina recommended it because although many procedures can be done with disposable tools, many common procedures for example to do with the eye do not have appropriate disposable tools. An Autoclave not only allows for more variety of tools it also saves money in the long term because disposable tools are quite expensive. Dr. Brown agreed and was grateful for the advice. Regina went away and prepared three proposals at different price points. The middle priced proposal was $80k with 50% due at the beginning of the contract and the remainder at completion. Dr. Brown was thrilled, he could focus on being a doctor and outsource the business development to an expert. Regina was happy to get started the next month, she moved down to the outer South Eastern Suburbs and began the 8 week engagement only once the deposit had been cleared. She runs a string practice of only investing time with a client once they had paid the deposit to reduce the risk of runaway clients who get advice and never pay. The Grand opening was on time and a complete success. Dr. Brown was extremely happy with the service. There was nothing for him to stress about, now he could get to work in his new practice. Whenever speaking to colleagues Dr. Brown was not shy to recommend GP’s On.
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POSITIONING Our position within the market place has been developed to ensure that we are positioned as an expert with the skills to get the job done right in the shortest time possible. As a reflection, our pricing is higher than employing a full time staff to do the work. However we will be able to get the clinic up and running many months quicker.
SERVICES Our product list has been developed to address the identified customer need of an expert to smoothly set up a medical center in the shortest time possible. To meet this need our services include:
Organizing accreditation for the practice which would add an income from the government of 80% of all billings
Register for billings with HICAP machines and Medicare
Get the provider number for the practice
Organize PKI numbers for the practice identification
Buy the relevant equipment that is needed and required by law
Recruit staff by leveraging her database of doctors, administrators, and nurses
Train staff
Set up the billing system
Source equipment
DISTRIBUTION To connect our services with customers, the following distribution strategy will be employed: “Payment terms will be 50% upon order and 50% upon delivery. For staff recruitment, a fee of 20% of annual salary is charged”
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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 GP's On 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 GP's On 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 setting up medical centres with developers of new medical centres and owners of existing medical centres 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 GP's On solves a key issue/opportunity for our customers. “To take the hassle out of setting up a medical center”
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:
Up to date knowledge of medical regulations on both state and federal level
Leverage relationships with clients to get more business
Project management skills
Ability to attract high quality staff
Capability to set up IT systems
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 GP's On does not operate in isolation, we require active engagement with existing industry participants. Our selection of potential partners for the development of GP's On 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 Construction companies such as Icon.
Further partnerships will be developed over time including Centerlink; and Medical
equipment suppliers such as Team Med. These partner relationships will assist in building diverse revenue streams and ensuring our services are supported in the market.
4. ACTIVITIES
Several primary activities will outline what the team at GP's On is actually focused on achieving. The Meeting with potential clients will be the primary activity undertaken.
Supporting activities include:
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Shopping for equipment and supplies
Interviewing potential employees
Managing sub contractors
By executing effectively on these activities we can ensure effective progress towards setting up six new clinics 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:
Medicare
Job networks
TAFE's (Medical receptionist course)
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
Travel
Accommodation
Transport
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)
7. CHANNEL TO MARKET Reaching our customers is a key priority for GP's On. We understand the alternative market channels for General Practice Medical Services in Australia services, and the margins associated with engaging these channels. We have elected to use the following channels to reach the developers of new medical centres and owners of existing medical centres:
Direct to customers
Doctors magazine advertisements
YouTube ad
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Internet search for website
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:
Fee for setting up new medical center
Fee for screening employees
Fee for setting up pharmacy
Fee for setting up pathology
Centrelink incentives (Aboriginal, long term unemployed)
These revenue streams have been designed to maximize the “Lifetime Customer Value” of our target market to GP's On.
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 GP's On:
GPs setting up a new practice
GPs currently operating a practice
Pharmacists
Pathology owner
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 GP's On is a success.
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OPERATIONS TEAM – EXECUTIVE CAPABILITY The team has many of the requisite skills to establish a profitable business
Any additional
capabilities required will be acquired through contracting and recruitment of new team members. The team is led by Regina Ellis, Manager who has 15 years of experience as a nurse. Her qualifications include Bachelor of Nursing, Masters of Business and Bachelor of Community Development. She is responsible for all aspects of the business including winning new contracts, recruiting staff, and obtaining the legal licenses necessary to set up a medical practice. Nancy and Dianna’s role will be as the Virtual Assistant based in Sydney.
Her primary
responsibility will be answer phone calls, and emails. Mark, Stephan, and Elijah are Investigators who will travel to a site to take photos, and report back. TBD, Administrator, will work on the documentation and all of the tasks required to set up a new clinic. She will work under the guidance of Regina.
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BUSINESS DEVELOPMENT SCHEDULE In building a path forward for GP's On, we have identified three significant development milestones.
We will
monitor the achievement of both time and
cost
achievement closely.
parameters of
Any
these
in
the
milestones
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: ROLL OUT We believe this stage is critical in order to build a business with regular contracts Core tasks to be undertaken in this stage include: a) Build website b) Set up virtual office c) Network with construction companies d) Set up agreement with construction company e) Advertise in "The Doctor Magazine"
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.
MILESTONE 2: GROWTH Our objective in the delivery of this stage is to expand nationally. Key actions to deliver this milestone will include: a) Sign first contract b) Execute first contract c) Execute 5th contract d) Execute 12th contract
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e) Employ full time administrator Successful delivery of this milestone will be judged by the efficiency of the growing and setting up medical centres.
MILESTONE 3: BUYING GROUP This final stage has been designed to leverage the relationships with clinics we have set up to create a buying group which allows for economies of scale. To achieve this objective, we will action the following: a) Establish contact with current clients b) First bulk purchase client c) 5th bulk purchase client
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GP's On 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
Responsible Resource(s)
Stage 1 - Roll out
Regina Ellis Regina Ellis Regina Ellis Regina Ellis Regina Ellis Regina Ellis Regina Ellis Regina Ellis Regina Ellis Regina Ellis Regina Ellis
Build website Set up virtual office Network with construction companies Set up agreement with construction company Advertise in "The Doctor Magazine"
a b c d e
2
Stage 2 - Growth Sign first contract Exectute first contract Execute 5th contract Execute 12th contract Employ full time administrator
a b c d e
3 a b c d e
Task Title/Description
Stage 3 - Buying group Establish contact with current clients First bulk purchase client 5th bulk purchase client
Regina Ellis Regina Ellis Regina Ellis Regina Ellis
Start Date
End Date
01-Jan 01-Jan 01-Jan 01-Feb 02-Apr 01-Feb 01-Mar 01-Mar 31-Mar 02-Oct 02-Oct 01-Feb 01-Feb 01-Feb 01-Jun 01-Oct
01-Feb 15-Jan 15-Jan 02-Apr 01-Jul 01-Feb 01-Dec 31-Mar 30-May 01-Dec 01-Dec 03-Mar 31-Oct 03-Mar 01-Jul 31-Oct
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 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0
1 0 0 1 0 1 1 1 1 0 0 0 0 0 0 0 0 0
1 0 0 1 1 1 1 0 1 0 0 0 0 0 0 0 0 0
1 0 0 0 1 1 1 0 1 0 0 0 0 0 0 0 0 0
1 0 0 0 1 1 1 0 0 0 0 0 0 0 0 0 0 0
1 0 0 0 1 1 1 0 0 0 0 0 0 0 0 0 0 0
1 0 0 0 0 1 1 0 0 0 0 0 0 0 0 0 0 0
1 0 0 0 0 1 1 0 0 0 0 0 0 0 0 0 0 0
1 0 0 0 0 1 1 0 0 1 0 0 0 0 0 0 0 0
1 0 0 0 0 1 1 0 0 1 0 0 0 0 0 0 0 0
1 0 0 0 0 1 1 0 0 1 0 0 0 0 0 0 0 0
1 0 0 0 0 1 1 0 0 0 0 0 0 0 0 0 0 0
1 0 0 0 0 1 1 0 0 0 0 1 1 1 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 1 0 0 0 0 0 1 0 0 0 0 0
0 0 0 0 0 0 1 0 0 0 0 0 1 0 0 0 0 0
0 0 0 0 0 0 1 0 0 0 0 0 1 0 1 0 0 0
0 0 0 0 0 0 1 0 0 0 0 0 1 0 1 0 0 0
0 0 0 0 0 0 1 0 0 0 0 0 1 0 0 0 0 0
A
SWOTM ANALYSIS Our
SWOTM
(Strength,
Weaknesses,
Opportunities Threats and Mitigation
Strengths
Strategies) analysis has been informed 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
Only turnkey General Practice setup provider in Australia
Established contact with potential staff
Ability to complete project is a short time
Proven track record of successfully establishing 3 medical centres in NSW
Business model that enables leveraging of experience. Operators usually set up their own clinics and thus the experience gained in setting up the clinic is stuck in the head of the clinic manager never to be used again.
Work with all kinds of medical providers and in all states of Australia
These strengths have been consolidated to achieve our core objective “establish a profitable business”.
WEAKNESSES
Lack of contacts in the construction industry in each state
Travel expenses not recouped if sales trips are not fruitful
No ability to see that a sales lead can actually pay for the services. This may lead to wasted time and money on dead leads
Little experience in states outside of NSW
OPPORTUNITIES
Contact construction companies to build referral relationships
Qualify clients before travelling and get them to sign an agreement that they are serious about engaging professional services
Due to receiving 50% of payment upfront, a delay would not be seriously detrimental to our business
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To research and become expert in the legal requirements around GP clinics in each state
THREATS AND MITIGATION The key potential threats have been identified, and mitigation strategies developed to minimise their impact on the business. Threats
Mitigation Strategies
Delayed delivery times of equipment
due to supplier issues
We will only work with the suppliers who have a reputation for punctuality
Delayed delivery of equipment due to
Make clear contracts that stipulates
Doctors bad management or late
payment terms as final payment due
payment
at delivery unless delayed at fault of Doctor.
A competitor establishes themselves
With
our
database
of
potential
who has a similar background to
employees we are better positioned
Regina
to offer a complete service including staffing and training
Decline in the demand for General Practitioner clinics
As a nimble organisation we could move into other related areas such as setting up dental practices
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GOVERNANCE AND OWNERSHIP OWNERS AND DIRECTORS The current ownership structure of GP's On is as follows: Regina Ellis, Manager owns 100% of the business. She has 15 years of experience as a nurse. Her qualifications include Bachelor of Nursing, Masters of Business and Bachelor of Community Development. She is responsible for all aspects of the business including winning new contracts, recruiting staff, and obtaining the legal licenses necessary to set up a medical practice. The owner is driving the plan set up six new clinics in the short term, and in the long term, attract a constructor of medical clinics to acquire the business.
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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 GP's On
Degrees in Business, Nursing and
Owned
The
Community Development
Masters
Degree
in
Business enables GP's On to understand
the
needs
of
investors, and be able to put together a good strategy for the
clinic.
The
Bachelor
Degree Nursing Degree helps us
to
understand
the
community healthcare needs and set up the appropriate billing
systems,
integration
withe
including Medicare.
The community Development Degree is useful in helping us choose the best and most economical
services
to
provide. Network of nurses and doctors
Owned
The network of nurses and doctors is useful in recruiting staff for new centres
Contract
Owned
The contract is an agreement that binds GP's On with the client, it includes terms and conditions, and duration of work
Membership
of
Association
of
Owned
Extraordinary Women
Through regular meetings this network is used to get in touch
with
investors
and
people who can help with advice.
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FINANCIALS INVESTMENT The business is seeking an initial investment of AUD $50,000 in order to meet planned milestones over the next 12 months. Failure to receive the funds will result in a delayed launch schedule. Beyond the initial tranche, we will fund our own growth. 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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CASH FLOW PROJECTIONS Our revenue projections outline the financial implications of our business model and strategy outlined in this document. Three alternative scenarios are presented. 1. The base case scenario represents what we believe to be the most likely scenario. 2. The best case scenario represents above expected results (the variables determining this result are outlined in the Cashflow model assumption table below). 3. The worst case scenario has been developed to “Stress Test� the business and determine the financial impact of a less than favorable operating environment. Model assumptions, analysis and graphical dashboards are provided for each scenario below.
Cash Flow Model Assumptions Forecasting period to begin on 01/01/2014 Unit of Currency AUD Discount rate for Net Present Value Calculation 35% Best Case Scenario Operating Income is higher than expected by: Operating Costs are higher than expected by: Worst Case Scenario Sales are lower than expected by: Costs are lower than expected by:
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100% 20%
50% 5%
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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 7,000,000 6,000,000
Cash Value
5,000,000 4,000,000 3,000,000
2,000,000 1,000,000
0 Year 1
Year 2
Year 3
Year 4
Year 5
Our base case forecast, representing a minimum annual cash balance of $747,420 in Year 1 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 $5,880,228 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 2,500,000
Cash Value
2,000,000
1,500,000 1,000,000
500,000 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
$75,000
in year 1 to $181,440 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
Net Cash Flows from Operations 1,800,000 1,600,000 1,400,000 Cash Value
1,200,000 1,000,000 800,000 600,000
400,000 200,000
0 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 1 , delivering
an operating annual surplus of $700,920 in that year. The minimum net annual cash flow from operations is experienced in the first year and is an average of $58,410 per month. An improved net cash flow position is experienced in year 5, increasing to an average of $141,384 per month.
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BUSINESS VALUATION
Times Earnings Based Valuation 14,000,000
Cash Value
12,000,000 10,000,000
8,000,000 6,000,000 4,000,000 2,000,000
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 General Practice Medical Services in Australia market, we believe that an earnings multiplier of 4 is reasonable. To determine the year 5 value of GP's On, we multiplied year 5 net operating cash flow ( $1,696,608 ) X 4 (the earnings multiplier) = 6,786,432 To this we added the cash at bank ( $5,880,228 ) to this calculation. The result is a valuation at end of year 5 of $12,666,660. 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 seed venture investments, we settled on a “Discount Factor� of 35%. Using this approach the Net Present Value of the business under the base case scenario is $2,278,343 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 $2,278,343 and is expected to increase to $12,666,660 over the next 5 years, resulting in a ROI (Return on Investment) of 556% and an average annual return of 111%.
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GP's On Cash Flow Forecast Pre-Start Holdings Cash on Hand (beginning of period)
Jan-14
50,000
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Year 1
Year 2
50,000
33,660
20,820
178,980
166,140
324,300
311,460
469,620
456,780
614,940
602,100
760,260
760,260
0
0
180,000
0
180,000
0
180,000
0
180,000
0
180,000
0
900,000
747,420
Year 3
Year 4
Year 5
1,664,340
2,795,460
4,183,620
CASH RECEIPTS Revenue Collections from Credit accounts TOTAL CASH RECEIVED FOR OPERATIONS
0
0
0
180,000
0
180,000
0
180,000
0
180,000
0
180,000
0
Proceeds from Loan/ or Capital Raised TOTAL CASH RECEIPTS Total Cash Available (before cash out)
1,260,000 1,512,000 1,814,400 2,177,280
0 900,000
1,260,000
1,512,000
1,814,400
2,177,280
0 0
0
0
180,000
0
180,000
0
180,000
0
180,000
0
180,000
0
900,000
1,260,000
1,512,000
1,814,400
2,177,280
50,000
50,000
33,660
200,820
178,980
346,140
324,300
491,460
469,620
636,780
614,940
782,100
760,260
1,660,260
2,007,420
3,176,340
4,609,860
6,360,900
10,000 0 0 0 200 800 800 500 300 80 160
10,000 0 0 0 200 800 800 500 300 80 160
10,000 0 3,600 5,400 200 800 800 500 300 80 160
10,000 0 0 0 200 800 800 500 300 80 160
10,000 0 3,600 5,400 200 800 800 500 300 80 160
10,000 0 0 0 200 800 800 500 300 80 160
10,000 0 3,600 5,400 200 800 800 500 300 80 160
10,000 0 0 0 200 800 800 500 300 80 160
10,000 0 3,600 5,400 200 800 800 500 300 80 160
10,000 0 0 0 200 800 800 500 300 80 160
10,000 0 3,600 5,400 200 800 800 500 300 80 160
10,000 0 0 0 200 800 800 500 300 80 160
120,000
120,000 126,000 25,200 37,800 2,400 9,600 9,600 6,000 3,600 960 1,920
120,000 151,200 30,240 45,360 2,400 9,600 9,600 6,000 3,600 960 1,920
120,000 181,440 36,288 54,432 2,400 9,600 9,600 6,000 3,600 960 1,920
120,000 217,728 43,546 65,318 2,400 9,600 9,600 6,000 3,600 960 1,920
CASH PAID OUT Manager salary Execution staff Survey staff Travel expense Virtual office Car Advertising Website maintenance Accounting and Legal Phone Internet
0 18,000 27,000 2,400 9,600 9,600 6,000 3,600 960 1,920 0 0 0 0 0 0 0 0 0 0
TOTAL CASH PAID FOR OPERATIONS
0
12,840
12,840
21,840
12,840
21,840
12,840
21,840
12,840
21,840
12,840
21,840
12,840
199,080
343,080
380,880
426,240
480,672
NET CASH FLOWS FROM OPERATIONS
0
-12,840
-12,840
158,160
-12,840
158,160
-12,840
158,160
-12,840
158,160
-12,840
158,160
-12,840
700,920
916,920
1,131,120
1,388,160
1,696,608
500 3,000
Printing Legal expense for contract w riting
500 3,000 0 0 0
TOTAL CASH PAID OUT Cash Position (end of perioed)
0
16,340
12,840
21,840
12,840
21,840
12,840
21,840
12,840
21,840
12,840
21,840
12,840
202,580
343,080
380,880
426,240
480,672
50,000
33,660
20,820
178,980
166,140
324,300
311,460
469,620
456,780
614,940
602,100
760,260
747,420
747,420
1,664,340
2,795,460
4,183,620
5,880,228
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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 100% % increase in sales over the base case scenario and a corresponding increase in costs by 20%. All other variables used are held constant with those reflected in the base case scenario.
Under the best case scenario,
Net Cash Balance
the cash balance ends Year 1 at $1,607,604
14,000,000
is
higher
than the base case scenario by
12,000,000 10,000,000
Cash Value
which
$860,184.
By year 5 the cash
balance
would
substantially to
8,000,000
increase
$13,177,918,
$11,481,310 more than under
6,000,000
the base case scenario.
4,000,000 2,000,000 Year 1
Year 2
Year 3
Year 4
Year 5
Receipts
Cash Value
Cash Receipts from Sales 5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 -
sales
have
increased directly in-line with our assumption of 100%. This drives sales growth from $150,000 per Month in year 1 to $362,880 in year 5.
Year 1
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from
Year 2
Year 3
Year 4
Year 5
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Our
Net Cash Flows from Operations
4,000,000
net
cash
flow
position
improves markedly over the base case scenario, as the gap between cash expenses and cash receipts from sales widens.
3,500,000 Cash Value
3,000,000 2,500,000
This leaves us with a substantially
2,000,000
better operating position at the
1,500,000
end
year per
operating
500,000
5
month
cashflow,
of
in a
net 45%
improvement on the base case.
Year 1
30,000,000
Year 2
Year 3
Year 4
Year 5
The optimistic scenario produces a
Times Earnings Based Valuation
times
earnings
valuation
of
$28,288,932 at year 5. If it were possible
25,000,000
Cash Value
of
$314,813
1,000,000
to
execute
on
this
scenario we would be able to
20,000,000
create an additional $15,622,272
15,000,000
in year 5 value. Using the NPV approach to value
10,000,000
the future 5 years cash flow, this
5,000,000
produces a current valuation of $5,137,521.
Year 1
Year 2
Year 3
Year 4
Year 5
Successful
delivery
on
the
optimistic scenario will produce a total return of 551%, or an average annual
return
of
110%.
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 50% decrease in sales over the base case scenario and a corresponding decrease in costs by 5%. All other variables used are held constant with those reflected in the base case scenario.
Under
Net Cash Balance
this
worst
case
scenario, the cash balance ends Year 1 at $307,374
2,500,000
which is lower than the base case scenario by $440,046.
2,000,000
Cash Value
By year 5 the cash balance would decrease substantially
1,500,000
to $2,139,886, $3,740,342
1,000,000
less than that represented by the base case scenario.
500,000 Year 1
Year 2
Year 3
Year 4
Year 5
Receipts
Cash Receipts from Sales
from
sales
directly
have in-line
with our assumption of a 50% reduction in sales.
1,200,000
This limits sales growth from
1,000,000
$37,500 per Month in year 1
800,000
Cash Value
decreased
to $90,720 in year 5.
600,000
400,000 200,000 Year 1
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Year 2
Year 3
Year 4
Year 5
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Our net cash flow position
Net Cash Flows from Operations 700,000
deteriorates
significantly
when compared to the base case scenario.
600,000
This
Cash Value
500,000
leaves
a
position at the end of year 5
300,000
of
200,000
net operating cashflow, a
100,000
37% lower figure than the
$52,667
per month in
base case.
Year 1
Year 2
Year 3
Year 4
Year 5
This
Times Earnings Based Valuation
Cash Value
with
substantially lower operating
400,000
5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 Year 1
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us
pessimistic
scenario
produces a times earnings valuation of year
5.
represents overall
$4,667,892 at This a
figure
reduction
business
value
in of
$7,998,768 in year 5 when compared to the base case scenario.
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, GP's On still manage to deliver a minimum net cash flow in year 5 of $632,002. We would expect our valuation at the end of year 5 to be between $4,667,892 and $28,288,932. Given the business model and strategy outlined throughout this document, we would expect the most likely valuation to be $12,666,660.
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