Business Plan for Erika Medical Suppliers
Company Overview
Erika Medical Suppliers will offer supplies of medical and surgery products. The business is a small retail store situated at Sunset Park area in Brooklyn, New York. Erika is a start-up form that shall distribute a complete line of ailment medications and therapies. It will provide additional complementary products that are deemed suitable for the company’s strategy.
The differentiation source shall be within marketing and distribution strategies. Erika shall leverage corporate account associations alongside generate programs for marketing to drive demands for the product solutions within each level of corporate (Honig and Karlsson, 2004, p.30). The business will establish exceptional networks of medical and surgery sales products, first in New York, then the entire United States. Through reaching out to the whole nation, Erika stands to be a facility that will provide value to healthcare facilities. The business will be owned and operated by two friends. The friends will be responsible for capital contributions.
Summary of the start-up
We shall create strategic business plans then determine corporate positioning and identity strategies. Again, it would be wide to establish the location as well as the place of conducting the business (Zimmerer and Scarboroug 2005). We shall put up a field of medical sales focusing on great New York, where the market will start its operations. All the legal requirements shall be met I order to draw up agreements of employments and different legal requirements prepared. The office stationery and supplies purchased with new information of the company branded into such assets. General insurance liability acquired for the facility and rent for the building operation paid. The business cost $15,580 for a start, with the starting expenses projected at $3,305 and the total asset of $12, 275 as indicated below.
Products and Services
Erika Medical supplies offer systems for medical therapies for homecare use. The company’s medical and surgery supplies will assist residents who have been diagnosed with various ailments from the healthcare professional. It will charge no additional costs to the Brooklyn residents. The retail store shall offer other services like initial consultations, managing paperwork in support of order placements, reimbursement, and billing, conducting training for various systems upon delivery to the customers, and annual management of reordering processes. With time, Erika shall contract the services of leading suppliers in New York to do the distribution of its products. Erika retail store shall offer complementary products that are used in doing the management of complications arising from the various diseases.
Market Analysis
Today, in New York, 16,130 retail facilities are serving 1,683,068 patients. The rate of utilization for these facilities stands at 86 percent that is translating to 1,440,768 patients averagely. The disease prevalence for the entire population is believed to be 18 percent for the people aging 60 years and above. Over 12 percent of residents have a medical cover by Medicare as 20% covered by other sources privately. The remaining lot, 68 percent have Medicaid covers. Between 60 to 70 percent of the patients in Brooklyn suffer from symptoms that are related. These symptoms place them at higher risks of getting complications like ulcers as well as other problems. About 15 – 25 patients are projected to undergo various difficulties in their lifetimes. Per year, approximately 86,000 are done, of which 50 percent of these are deemed preventable. For one to manage a complication, this calls for $2000 to $13,500 per annum following any surgery executed (Abrams 2003). Anchored on these figures, the market size of Erika is projected to be as indicated below:
The highest priority targeted markets shall be those residents of homecare chains who are at risk. Again the retail stores shall be targeting AL chains that are at risk too. Through the Aland Homecare chains, the management would be capable of leveraging relationships at corporate levels to gain access to various facilities for the members efficiently. The markets of Homecare and AL shall continue growing as a result of the increment of the elderly populations. The elderly are prone to various diseases.
Competitive edge
Through the years in the retails and equipment supplies, Erika will build industry networks and relationships, which shall assist in leveraging business operations. The key areas of competitive edge for the Erika include:
- The rapport with decision-makers of the healthcare supply chains
- The capability to effectively put up robust national medical sales teams
- The ability to build a complete long-range strategy for marketing and creating a compelling program of the therapeutic system
- The capacity to secure a relationship for distribution with unique combinations bringing about the creativity of suppliers through generating effective distribution channels, which shall make the company obligatory.
Marketing Strategy
Just as outlined earlier, the primary market for Erika will be offering homecare agency residents, as well as facilities for post and care for the people, are having covers. The medical supplies will be made to those deemed to be at risk of getting various complications after surgery or treatment. In the beginning, the business will put more focus on serving patients within facilities. The facilities shall be part of assisted living (AL) and homecare chains within New York.
The success of Erika will be dependent on putting a robust clinical sales team that can assist in bringing the company to higher levels. This will be made possible by leveraging successfully all the national accounts and marketing proposition values which the therapeutic program could provide at both facility and resident.
Erika will use therapeutic systems in providing means of gaining market entrance as well as building up the company. We shall be offering additional complementary products in support of disease management. This will be followed by the elated products, which are employment I the management of complications arising from aging and heart diseases.
Sales Strategy and forecast
The sales strategy of Erika shall call upon the assisted living and Homecare chains that are carrying out their businesses within New York. These shall be educated on the advantages of therapeutic programs. The management will seek to gain support by allowing field clinicians to make visits to their faculties to have meetings with the residents who are at risk with various complications.
On pricing, the reimbursement for the Medicare majorly used for the standard systems is pegged at $264.04 every year. This is done with 80 percent recovering and 20 percent co-pay for the services through other residential private covers. The compensation plan for the business shall be 16 percent commission paid upon receiving reimbursement for the products delivered. It is approximated that the payment cycle for Medicare will be between 30 – 45 days. The experience of Medicare biller shall be used to correct submissions to Medicare as well as assist in maximizing cash flows through shortening the cycles of reimbursement as well as maximizing the periods of collections.
The sales forecast will be done using the outlined assumptions. Firstly, seven sales representatives will be recruited from May to December. At the beginning of 12 months, every rep will have his/her territory of sales. It is presumed that every salesperson will be generating increasing volumes every month. There shall be low sales in later months because of the devoted period in servicing the customers who had received the products earlier. The net sales shall be made by calculating total sales prices at 211.32 totaling to 80 percent of the transactions made anchored on the approved rates of Medicare, which is known to be at $264.04
The cost per will be placed at $65. The shipping cost is believed to be at 5 percent of the total sales which have been made. Twenty percent of the net sales done will be the commissions given to the sales reps. The deals are forecasted to assume the bar graph below for the first year of operations.
Sales forecast bar graph for the first year
Sale forecast graphs for three years in operations.
Financial plan
The requirements of inventory, cash, expenses, and assets shall see the business operations throughout the entire year. Sales representatives will be hired and secured as per the market share increases. Even though the conservative approximations anchored on the market research as well as industry knowledge, Erika anticipates surpassing the break-even point in the first year of operations. The financial merit hugely relies on deferred salaries of principals. The principals of the company will have to start taking their wages in the second year, depending on the success of business operations as projected in other sections. The structure for commissions for sales reps and shipping methods show that variable costs often exceed the fixed costs. There are low overheads as the company invests in a small risk sale period in generating profits. Traveling for the staff, rents, payroll for the staff forms the vast operating expenses. Through the use of medical biller, reimbursements would be collected quickly and maintained in positive cash balance all through.
Loan repayment shall be made for the first three years of operation at an interest rate of 10 percent. When sales go well as projected, the loan repayments can be made sooner. The management does not expect future rounds of loans or investments because the business shall be self-sustaining at the end of the year. Going through the next three years, Erika shall have a respectable net worth.
For the first years, as mentioned previously, Erika plans to make investments in covering portions of initial start-ups for the business operations. The early years of services will see the company meeting the requirements by getting funding from the family, friends’ contributions. The SBA micro-loans will be sourced to meet the operations of the business. The cash accumulated from the ongoing operations will be reinvested. Erika will see credit terms of sixty days from the critical suppliers up to the point a sufficient cash flow shall be put up. This will enable the company to accept the net thirty terms for the operations. The financial plan of Erika has been outlined below:
References
Abrams, R.M., 2003. The successful business plan: secrets & strategies. The Planning Shop.
Honig, B., and Karlsson, T., 2004. Institutional forces and the written business plan. Journal of Management, 30(1), pp.29-48.
Zimmerer, T.W., and Scarborough, N.M., 2005. Essentials of entrepreneurship and small business management. Prentice-Hall.