9 Point “Check List” for Successful Healthcare Venture!
1 – “It’s an Iceberg” - Develop Deep understanding on the Sector and Measure its Right Potential before you start sailing
Imagine you would be walking in an Amazon rain forest! From outside It may look like one of the best gift nature has offered to mankind, however when you walk in it and don’t have any clue about how to survive in there, this will be the last place where you would like to be in.
Similarly, healthcare may seem highly lucrative segment with so called high need gap, however once you get in and understand the complications of the business; this may be one the most challenging segments to make money from. The experience may really make you realize why it was untouched by many till now.
Having said that, if you spend some good time in dissecting the sector and clearly understand the “values chain” and make an attempt to identify the niche area within the established conventional business, there are possibilities you would identify new businesses from conventional offering as a spinoff product having the potential to become full-fledged standalone business. This can be relating to both services and product, however to my personal opinion, there are greater options around services part of the healthcare, which still needs to be fully explored
2 – Align your business around your strengths
There would be lot of legwork required and Healthcare business may not give you time to have the learning curve once you invest
Research on startup suggests that most of the companies have 18 – 22 months to prove their metal and market forces may not give you second chance to realign yourself. In most of the cases you would have clarity on the success of your business within 12months or so and in case you are lucky the onward journey could be relatively simple.
Given this short period towards the road to success, you would have to spend most of your energy in “Executing” or “Implementing” the plans you had and please take my words “nothing works more than playing on your own turfs”
3 – Identify your Team – “It’s better to do an investment in People first”, they are your real assets!
Everybody agrees, but no one does! For a successful healthcare venture you would need people who have a fair understanding of the business (typically 10 – 12 years+ ) and have the right attitude to be in a startup. You should start building team / identifying people even before you have the business plan so that the these people not only add value to your plan, but also you can use this “Valuable” time in transferring your plans to them, so that they can start hitting the ground from day one once you start the business.
I do accept that this may be a chicken and egg situation to have identified business first or the people and a million dollar question “what happens to people you hired if the business you are contemplating does not see the light of the day” Well, there is no structured answer to this and probably this is the reason why we call that human species as “entrepreneurs” which is so elusive!
4 – “What goes around may not come around” - Identify your Customers! Not necessarily Patients
The rule is, Identify your set of client and designing your business around. It may be the most complicated piece in the entire puzzle as Healthcare is a complicated business as there are many stake holders in the entire value chain and it would be very important for you to identify your direct and indirect clients as in many cases the consumers who are availing the services may not be your target
For example, if you see a cardiac hospital or a consumable business flourishing in a specific area and you start thinking about setting up cardiac facility as the market already have the critical volumes and somehow if you can offer a greater value preposition to the patient, there may be an opportunity to break in to existing market share. This may sound all right on paper; however you will also need to understand the enablers behind it by taking into account the referral pattern, outreach programs, partnerships, associations of your competitors and undercurrent dynamics which is helping the hospital in realizing the volumes. Once you have a fair understanding of the undercurrent, in most of the cases you will learn that patients are not the only one you need to target. It is like “Pinball” games where to place the ball in desired position, you have to hit it somewhere else to get bounced back to you.
I am sure even after reading this you would have many unanswered questions as this is the most critical piece in entire puzzle and hence needs most attention!
5 – “What goes in may not come out” - Understand the Financial Cycle of Healthcare business
There can many KPI’s to define a successful venture, however try this – your financial analyst just told you that this year’s PAT clocked 20%! How many people would really ask a second question to measure the success of the business – I think very few or maybe none.
Many of the entrepreneurs I have met over the years, financial indicator is not the ultimate indicator for measuring their success, as they also think of creating a value around their business, however no one disagrees that this is the most important of all as entire value proposing revolves around it.
This is true for many businesses and more contextual for health care that the operating expenses of the business are most of the times equally to initial capital expenditure made. This is so true for health care that even some one offers you a large hospital free of cost and ask you to take care of all the liabilities, you may have to think many times over before you commit yourself. In my opinion, one must understand in detail 1 -2 year pre operation and 7 – 10 years post operational, financial life cycle of the business and understand the viability from self-sustainability point of view before committing to the business. There are many instruments which are available today, which can be used to perform financial simulation for your business exclusively! This also gives you an opportunity to understand the effects of the critical factors on the financial health of your business in minimal cost. It is something like learning to fly an airplane in a simulator rather than flying the real one for the first time
6 – If Henry ford had asked people what they want, he would have been an excellent “Horse Breeder” – Don’t only prepare a typical Business Plan, try to re-engineer it as well.
To savor the taste of successful venture it’s important to critically analyze the impact of the business at the given time frame and future to come. Frankly speaking beyond a certain level, people (Consumers) really don’t know what they actually need as they do not have exposure to advancements in research, technology and other enablers which can be utilized to make their lives easier. What really works is if entrepreneurs can identify the issues relating peoples’ lives and constructively converge the available resources to make it happens; I think the platform for a successful venture is set. In my opinion the identification of issues clearly is 80% of job done. Healthcare is no exclusion to this rule!
7 – Keep reciting the nursery rhymes “Baa Baa black sheep – One bag for your investors, One Bag for yourself and one for the efficient employees who work round the clock!
We have learned this in our childhood and speaking to the people who are planning to start a business are very pro towards creating a structure for shareholders / stakeholders equally, still I have seen many business been paralyzed after having few successful stints and the only reason I can decipher is that the company failed to make proper provisions for sharing of profits / stakes amongst the people who actually made the success happened.
There are two clear pointers to be noted, first - one has to create a proper provision for sharing to happen and second, it needs to be clearly communicated and implemented transparently with pre defined milestones. To my view, the latter is more important and the most difficult to execute!
Many readers may feel that this issue may not be worthy of making in the priority checklist at the startup stage and can be handled once you have some initial success, but take my word it may be too late by then!
8 – Spend Judiciously on “Marketing & Branding”
By the time you have finalized your plan, I am sure that there would be many other people like you who would be ready with similar business. That’s why we call it a “Competitive world”!
It is important to let people (your target audience) know what your product or services is all about and let them know again and again and again until they really understand and let me let you it’s really hard to create brand in people mind as their experience will drive their perception.
Usually in market of product “Big Bang” theory works that you start with a well planned media campaign, however for health care where in most of the cases you would be dealing with the lives of people and hence have to plan it very precisely and let consciously give some time to take word of mouth its organic route! It’s a sincerely advices to people entering the sector not to overdo and still remain consistence their media plans. It is said best dishes are cooked over a slow flame!
9 - Believe on your “Gut” but please feed it first!
I am a true believer of taking decision based on “GUT” feeling, but this is not the complete story. To really depend on gut in making your critical decisions first you need to feed it properly and food which are prescribed are deep understanding, analysis, data points, critical information’s on the sector and most importantly setting priorities for yourself. Once you have done with this and didn't become impatient to jump to the conclusion, in most of the cases the gut will do the job for you in taking the most important decision of all and help you say “Let’s start”