why is a business plan essential for a healthcare business

Why should a healthcare business need a solid business plan

By Jamie Frew on Jun 16, 2024.

Fact Checked by Ericka Pingol.

Starting a healthcare practice

Starting a healthcare business practice can be a bit of a tricky thing, as there are a lot of aspects involved in its operations. Without a business plan, it can get complicated very quickly, so to avoid becoming entrapped in the common pitfalls of healthcare, it’s best to plan out every process and procedure. Making a plan is essential, and quite simply, is part of healthcare startup 101. With techniques such as, you can have more effective preparations in place to face any challenge posed to you, as well as better understand where to make adjustments, improvements, and allocate your resources. With the right plan implemented, you can take off in no time, and work on expanding and prioritizing growth in addition to your client's needs. 

Reasons why your healthcare business must have a strong business plan

There are multiple reasons why your healthcare business should have a strong business plan in place, including the following. 

To understand your step-by-step strategy for future

A business plan outlines all the resources you need across business operations and can provide a solid backbone to prepare you for potential future challenges. A plan provides a clear direction for all business areas and allows you to know what steps to take in regard to growth and expansion. 

To effectively manage your cash flow

Every healthy business needs a positive cash flow to secure investments and ensure there’s enough to be able to supply resources to meet client needs. A business plan can help you avoid breaking even and allow more transparency when it comes to seeing money flows, and can also improve your receivables and payables. Any delays can be accounted for, and when it comes to external financial services, you can appropriately receive reimbursements on time. 

To get additional funding for expansion

Continuing with the theme of finances, if successful, you’re likely to face important investment decisions to promote growth and expansion within your business. Sometimes cash flow isn’t enough, and additional funding is needed to accommodate more resources, such as a data warehouse. Having a detailed, and well-outlined business plan can contribute to a higher likelihood of being awarded the right funds to generate higher cash flows through expansion. 

To help identify any potential weaknesses

Plans are a great way to outline all your ideas and resources, and presenting information through this clarified format can often highlight areas that you may need to spare additional attention to. Using plans can identify areas of weakness that you may need external support and advice on, and having everything viewable from one place can allow for more valuable discussion. 

To communicate your ideas with stakeholders

Businesses are highly concerned with stakeholders and investors, and having a business plan in healthcare serves as a great communication tool for liaison with important institutions. You can use it to hire additional staff, as well as apply for credit and loans for investment purposes. This doesn’t need to be a complicated plan, but if stakeholders are to have a share in your operations, having an outline of your ideas and plans is the least you could do for their peace of mind. 

What should your business plan include?

You may be wondering about what needs to be included in a business plan; after all, they can be very detailed, and serve very different purposes depending on your business. Fortunately, we’re here to help, and every business plan should include the following. 

Executive summary

Your executive summary should be a concise description of your plan, including summarized details of every core aspect. This may include short descriptions of your market analysis, your value set, as well as finances. Keep in mind that this is a summary, and so it should be written after the plan is fully completed. 

Marketing strategy

Your marketing strategy should focus on answering the four Ps of product, price, promotion, and place. You should clearly describe the product or service that you are selling, in addition to the fees you charge. Promotion should outline all the marketing healthcare strategies that you’ll employ, and the place describing where you’ll be located.  

Competitive analysis

One of the most important aspects of a plan is considering your competitors, and how your service offers value that differentiates and sets you apart. Ideally, you should discuss your direct competitors and your indirect competitors, or those who target a different market within the same realm of healthcare. 

Description of your healthcare practice

Naturally, you should describe your healthcare practice in terms of its operations, mission, and how you’ll run. It should cover all the basics, so all clients and stakeholders who read it can grasp the essentials of what you’re about. 

Financial goals

Because investors and lenders will need to see evidence of your financial plans, it’s absolutely vital that you include this aspect. This is one of the most important sections of any business plan, as information such as income and cash flow statements, as well as balance sheets, all need to be included. Profitability should be emphasized at every point, and in regard to a future exit strategy. 

Organization and management policies

You should include details concerning your management teams, or any managerial type staff, as well as outlines concerning how you will manage your business data. Data security solutions are important, and so it’s important to make sure that you have considered this in regard to every operation. Investing in healthcare compliance software can help ensure you have the right organizational policies in place.

Customer analysis

Similar to a target market, you need to crack down on the specifics of your service, and what exact demographic you’re catering to. 

Healthcare business plan template

To help you get started, we’ve covered all of the basics and compiled it into one business plan for you to follow and implement in your business practice and overcome revenue. For success in your business, consider expanding on the following aspects. 

1. Executive Summary

• Business Overview
• Products Served
• Customer Focus
• Success Factors
• Financial Highlights

2. Company Overview

• Who You Are
• Your History
• Your Products/Services

3. Industry Analysis

4. Customer Analysis

• Demograpic profile of target market
• Customer segmentation

5. Competitive Analysis

• Direct and Indirect Competitors
• Competitive Pricing
• Compeitive Advantage 

6. Marketing Plan

• Promotions Strategy

7. Operations Plan

• Functional Roles

8. Management Team

• Management Team
• Hiring Plan

9. Financial Plan

• Revenue and Cost Drivers
• Capital Requirements and Use of Funds
• Key Assumptions

Take home message

Every successful healthcare business must implement a business plan to be held accountable and to have a clear direction for the future of its services. Plans can help you have an outline according to your resources and aids in a better understanding of where to allocate your time and energy in improving business operations. You can identify your strengths and weaknesses, and gain a closer relationship with your business procedures and processes to further growth and expansion in the future. Additionally, having a business plan can help you understand your target market, and prioritize client needs. Plans enable you to do what you do best and capitalize on healthcare technology trends to promote growth and learning in the long term.

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Further reading:

• How to Start a Healthcare Business: The Ultimate Guide
• Four Reasons Why Your Company Must Have A Strong Business Plan At Any Phase

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7 steps to writing a business plan for your healthcare business

Creating a strong business plan is the key to a successful private healthcare business.

When it comes to building your private healthcare business, writing a strong business plan and implementing it properly is perhaps the most effective strategy to propel your business to success. Whether you are just starting out, or are already an established healthcare practice, it is never too late to write your business plan and put it in place.

We’ve put together seven steps to help you write a healthcare business plan and then implement it. You can also find a sample private practice business plan PDF here to get you started!

Download our free Business Plan template here!

1. Identify your end goal

Perhaps the most important step of writing a business plan is identifying what it is you are trying to achieve. Identifying clear business goals will enable you to build a step-by-step plan to ultimately achieve these aims. 

Dr Gero Baiarda, Clinical Director at GPDQ, states the importance of knowing your practice’s aims in our ‘Launching a Private Practice’ ebook. He states that identifying your purpose, vision, and mission, will help keep you consistent and accountable to your goals. Knowing exactly what you are seeking to achieve in your business will mean that your business plan is tailored to achieving that goal at every step.

2. Get to know your business in numbers

To write a business plan that will enable you to reach your goals, you need to understand how your business is currently performing . Obtaining a complete and in-depth overview of the health of your business will help you to make concrete and achievable goals based on accurate data. 

Tracking data is also essential as you progress further with your business. You can’t make a successful business plan without knowing your business inside and out, and you won’t be able to understand how you are performing against your business plan without measuring data as you go.

Make sure you have access to business management tools that allow you to track the key data, such as revenue, patient numbers, cash flow, and other financial and patient demographics which will be useful for your growth goals.

Find out more about Semble’s business management tools here.

3. Break it into smaller steps

With a business goal in mind, the best way to create a business plan is to break it down into smaller, achievable steps. By doing this you will be able to map out a clear trajectory for your business over the next months or years and it will be easier to track your progress against your aims and expectations. 

Work backwards from the end goal to create smaller steps, each with a clear, quantifiable goal, such as reaching a revenue goal in a certain month or number of patients reached. If you work well with visuals, experiment with creating a visual diagram or board that you can keep close at hand to check and measure up against as you grow your healthcare business.

4. Identify key successes and failures

A business plan is about improving and growing your business, and to do this it is important to understand your strengths and weaknesses. Consider what has worked well for your business and what has not. 

For example, how is your staff management? Does your team work well together, understand their individual roles, and achieve tasks efficiently ? 

By identifying main strengths, you can work them into your plan to help you improve business performance. Identifying any weaknesses will enable you to know areas that need some attention and a greater input of time and resources to help you build an all-around stronger business. 

5. Get to know your target market

An understanding of your patient’s needs is essential to performing well in the market. Your patient population will depend to an extent on the healthcare services you are offering, but conducting key market research into the specific needs of your patients will help you to create a unique and tailored service that will perform better in the market.

Oliver Capel, Managing Director at Medico Digital, explains that market research and patient demographics such as age, gender, religion, income level, and more, can help you to cultivate a more targeted and effective marketing strategy because it provides insight into what sort of marketing materials will be best received by patients. For example, a young mother will respond differently to marketing than a 60-year old male retiree.

Explore how to use patient market research to improve your business performance in Chapter 2 of the ‘Launching a Private Practice’ ebook . 

6. Schedule regular time for business management

You can’t expect to see results in business growth if you don’t invest the time and energy into nurturing it. Whether that be investing in your own development with business management learning time, or setting aside a weekly hour for growth strategy and progress reviewing, it is essential that you carve out time to work on your business.

There are many online courses, books, and guides for basic business management which could help you learn invaluable skills for managing and growing your healthcare business.  Start by identifying areas where you have less knowledge and schedule in an hour a week for learning, planning, and strategy. 

Even as little as one hour a week will have a profound effect on your business skills and management, and the results will soon be evident!

7. Get your team on board

There is little point in setting goals if your team is unaware of what they are. Sharing business goals with your team and employees means that everyone can do their part to reach certain milestones and improve the business. It also helps to create a stronger network that you can rely on to carry out delegated tasks and ease the burden of both business management and the day-to-day running of your private healthcare practice.

Whether it be improving customer service with better bedside manner, or making changes to workflows to improve efficiency, making your team aware of the end goal will help them understand why change is needed and thus more likely to get on board.

Get started writing your business plan with this free private healthcare practice business plan PDF!

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How to Create a Profitable Healthcare Business Plan for Your Medical Practice

Marketing is crucial for any industry, and healthcare industry is no exception. Whether you are a big hospital or private practice, creating and implementing an effective marketing plan will help to attract new patients, retain the existing ones and maintain relationships with your staff and patients. An effective marketing strategy will play an integral role in increasing revenue, building patient trust, improving online reputation and expanding your reach.

A healthcare business plan can help you define and identify the target audience and key prospects. It can also assist in evaluating and comparing your practice data against your industry. Clearly, a business plan is necessary, so does your practice have one? Here are some more benefits of creating a strategic plan for your medical practice:

• Physician business plan provides clear direction to your marketing initiatives, preventing random activities that may work against each other.
• The process of developing a strategic plan offers an opportunity for everybody involved to collaborate in shaping the future of the practice. Active participation of all the stakeholders ensures the success of projects and priorities.
• A strategic healthcare business plan helps the physician set marketing goals and priorities for the medical practice.
• Clarity of aims and objectives can improve the quality of patient care.

Strategic business planning offers great long-term value. After the initial planning is done, a practice can use it as the benchmark for measuring progress and monitoring areas of improvement.

The process for preparing a strategic business plan is not clear-cut, but it is one of the most important things you should do for the strategic growth of your practice. A well-defined marketing plan will outline how you will retain existing patients and attract new patients, retain staff and communicate your message in the most efficient manner.

You do not need to hire expensive consultants to create a marketing plan for your healthcare practice. All that you need is the willingness to put in time and effort. An ideal healthcare marketing plan should address every aspect related to promoting your practice, and to effectively plan, you must do some research.

Identify your target audience

The first step in any business plan is to figure out who is going to seek your service. If you have a specialty practice, you probably know the answer. According to industry experts, your marketing efforts will be effective only if they are targeted. So to identify your potential patients, start by defining the common characteristics of your current patients. Always remember, your marketing plan is all about reaching your target audience and adjusting your approach to fit their preferences. Beyond demographics, try to learn the reasons why your potential patients will come to your practice, know your competition and understand your competitors’ approach in reaching the target audience. Examine how your competitors market their practice and then compare their approach, services and marketing strategies with yours. You must also determine your unique selling proposition and understand what makes you different from your competition.

Marketing is all about keeping up-to-date. So make sure while doing your research, you stay updated on current affairs. The idea is to keep up-to-date with financial, political and marketing trends that influence the medical community so you can create an effective business plan that responds to changing market conditions.

Time for some brainstorming sessions

After you have identified your potential market and patients, you will need to categorize and address critical operational questions about your medical practice. You may need to set up brainstorming sessions with people you trust, including family, friends, team members or other professionals. During these sessions, try to find answers to these basic but critical questions:

Question: Which marketing platforms will make be most suitable for promoting your services?

Pro tip: You will need to think regarding how to present or sell your services. For instance, consider offering packages that are generic in nature and offer value for money.

Question: What is the best time and frequency of marketing your service?

Pro tip: Too much promotion can create a negative brand image in the minds of potential patients. Too much advertising tends to make patients suspicious. So depending on your target audience, determine the best time for promoting your practice.

Question: What are you trying to achieve from your business plan? How do you plan to measure these goals?

Pro tip: According to experts, your marketing plan should include basic tasks that have short-term goals so that you do not end up compromising on the patient experience. You can consider using big data to evaluate and measure results and their impact on ROI.

Penning the business plan

Now that you have completed the groundwork, it is time to put all your facts and figures into words. Here are some basic steps for creating a business plan for your medical practice:

• Define your mission and vision: This is where you need to determine your goals. You have to understand where you want your practice to be in five to seven years. You will need to prepare a list of all the marketing techniques and tactics and determine what options will work best for your practice. Some of the effective marketing tactics are networking, direct marketing, print advertising, training sessions, media, open houses, social media, blogs, third-party websites and much more.
• Identify your team: In order to build support and generate enthusiasm, you should determine the outgoing personalities in your organization. Find people who will help support your marketing efforts by hosting open houses, patient training sessions, interviews and other public relations initiatives.
• Market segmentation: Consider potential patients think outside the box. Look within your organization first – you may find some of your best customers and marketers there. You must understand where your patients come from and dive deeper into your business model. Is your practice mainly run by physician referrals, or do patients refer directly? You need to create an extensive list of potential patients and categorize them.
• Create patient personas: Patient personas are representations of your ideal patients. You must create patient personas based on your research and reflect on their needs and issues. For instance, if one of your buyer personas is a diabetic, his or her needs will be different from a flu patient.
• SWOT analysis: SWOT matrix is another important component of the business plan. You can use this analysis to assess your practice’s strengths, weaknesses, opportunities and threats. This study will help you understand your market situation better and discover growth opportunities. For a successful SWOT analysis , you must be specific, realistic, compare different situations and keep your business plans and goals updated.
• Prepare a budget: Now that you have all the market information you need and have established the best way to reach your potential patients, focus on your budget to support your marketing campaign. To begin with, it is advisable to stick with the 80/20 rule. According to this rule, 80 percent of your business volume will often come from 20 percent of your patients.
• Share your vision: The first step is to make sure the plan is received and understood by your organization’s leadership. Next, make sure your plan becomes a part of the organizational culture. You must encourage employees to come up with ideas that will support your idea. Always share your plans with physicians, volunteers, employees, board members and top leadership.
• Plan the rollout: To begin with, introduce your campaign internally. Your organization’s leadership and staff are often your best support. If they get the message, your marketing efforts will be successful.
• Measure and evaluate: You should regularly track new patients, physician referrals, leads, website hits and procedure volumes in order to assess the success of your business plan.

Don’t forget the 7Ps

Even the most insightful services, supported by the best business plan, will not survive on the market if they are unable to reach potential patients. That is why practices need to invest in strategies that will bridge the gap between them and the target audience. For your marketing initiatives to be successful, you must address the 7Ps in order to evaluate and measure your business activities. These seven Ps are product, price, promotion, place, packaging, positioning and people. These 7Ps will help you review and define key issues that impact your marketing activities.

• Product: When was the last time you took an unbiased look at your products, service, facility or value proposition? Do your products meet the needs of the patients? Do your products and services deliver value? Is your medical practice properly presented? The ‘product’ for your healthcare practice is the happiness and satisfaction of your patients, which is intangible and cannot be quantified. The only way is to know that customers receive value and comfort by way of your medical practice.
• People: Healthcare is all about people – your current patients, potential patients, staff and management – everyone delivers or receives a service plays a significant part in the product category. Your patients will evaluate the service and satisfaction based on assumptions and interactions. Usually, patients do not have much insight to your medical skills, but they will know if they are pleased based on how you deal with them. Your reputation and your image are not yours alone – it is teamwork.
• Price: It is the amount people pay in exchange for the product received. Therefore, the price must be competitive, enough to generate profit, but may vary when bundled with promotional offers. Sometimes, price is the biggest factor. Therefore, as a practice owner, you must take a serious look at those areas where there is flexibility and be open to adjusting and reducing prices to meet your patients’ needs.
• Promotion: This refers to all the direct and indirect ways of communicating about your product to your people or potential patients. This may include personal and mass interaction. In all instances, promotion should always be carried out in a professional manner. The objective of promoting your practice is to examine how, when, what and where you can offer your service to your target audience.
• Place: This points to presenting your products or services to your target audience in the right place and at the right time. Needless to say, the ‘place’ will be your office where the product will meet the user. However, in healthcare, a change in location can impact the user’s decision to buy.
• Packaging: Take an unbiased look at the appearance of your office, front office, waiting area, brochures and website and the appearance of your medical staff. You might be surprised to see what patients are observing when they walk through your front door.
• Positioning: This refers to the way your brand, products or service are perceived by your target customers. If you could get the opportunity to create the ideal impression in the minds of your patients, what would you want it to be?

For successfully growing their practice and attracting new patients, many practices are working with medical marketing agencies. As a medical marketing agency , Practice Builders knows what is suitable for different medical specialties. We can introduce you to the best marketing tactics that will draw new patients to your practice. Moreover, we know how to develop effective business plans that will lead to significant growth in your medical practice. To find out more, contact us today.

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Sharon has spent 25 years building teams and developing people to work together to help improve the client experience in the markets we serve. This ultimately benefits both customers and staff equally. Sharing best practices and ideas helps clients and team members envision new alternatives, which is quite fulfilling when positive change results. Sharon enjoys working closely with clients to understand the true drivers that are affecting their business environment. By engaging clients in meaningful exploration of their goals and challenges, she often discovers that an issue they asked for help in solving is merely a symptom of something else or something greater. Solving the real issue through truly listening and not just addressing the symptoms helps create true partnerships with clients.

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Hospital Business Planning Best Practices

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Why Strategic Planning is Important in Healthcare?

Improved communication among all chains.

It’s easy for departments at every level to become confused as to what’s going on. Both your employees and stakeholders want to ensure that your organization will have a long-lasting future. They want to know where your organization is headed and the steps it takes to get there. Effective planning in healthcare management can help you create clarity and improve communication. Your strategic plan should address the key issues, your organization’s vision and goals, and the steps to get there. Your employees and stakeholders will have improved confidence and faith in your organization.

Developing and sharing a vision

With this in mind, you can make an impact on every level of your organization. Employees will be committed and motivated to help achieve your vision. Stakeholders will have the confidence and clarity they need to make sound financial decisions. Strategic planning for healthcare facilities that’s clearly developed, executed, and communicated can help each of your individuals carry out your out vision that can lead to a fulfilling future.

Increased employee motivation and engagement

Each of your employees wants to be recognized and heard. Being recognized by their leaders can greatly impact their productivity, engagement, and safety management. Every employee wants to have the responsibility to make decisions they know will benefit your organization. This also motivates them to perform above the minimum acceptable standards as outlined in the job description or performance evaluation. Employees won’t be motivated to improve themselves for an organization that doesn’t state a clear vision or a well-executed game plan.

Transformational leadership and authority

Transformational leadership is a type of leadership that inspires your employees to work harder and to do better. It incorporates techniques that have been cited in organizational behavior literature. Transformational leaders clearly communicate their organization’s vision, believe in their individual employees, and have the abilities to produce high levels of performance. Helping your employees understand how their roles can contribute your organization’s mission and vision is a crucial part of strategic management.

Increased team cooperation and collaboration

Team collaboration and cooperation is an essential component in delivering high-quality healthcare. Employees must work together to make your organization a success. Teamwork is essential for every healthcare industry in order to improve their performance and service. Effective strategic planning models in healthcare can bring your employees together to deliver quality care, great customer service, and increased performance.

Take the time to work on your strategic plan before sharing it with your employees. A well thought-out and executed strategic plan can increase teamwork, improve performance accountability, and increase employee engagement. With all levels working harmoniously together, you can quickly achieve the long-term goals of your organization.

How to Create a Successful Healthcare Business Plan for Your Medical Practice

It is a common misconception that healthcare practices do not require marketing strategies in the same way that other companies and professions do. However, healthcare should be treated as a business and cater to consumers, or in this case, patients.

A successful business plan is essential for medical practices to attract new patients, retain current patients, and maintain a positive relationship with the community.

Without a business plan, practices may find themselves disorganized, lost, and unable to adapt to any changes in business, such as decreased visits or increased appointment cancellations.

Why is a Business Plan Necessary?

Creating a business plan for your healthcare practice means laying out where you are now and where you want to be in order to fill in strategic goals and benchmarks needed to track progress. Without a finished business plan to rely on, healthcare practices will not have any insight or idea of their returns.

Additionally, the attracting and retaining of patients will not be prioritized or managed. Opportunities for improvement may get overlooked, revenue may not increase, and patient trust may be lost.

How to Create a Healthcare Business Plan

Clearly, a business plan is non-negotiable for healthcare practices. But where do you start? What should you focus on?

Most practices that put together business plans rely on these basic guidelines to get a head start. Keep in mind that any of these parts can be adjusted or changed according to what makes the most sense for your healthcare practice.

#1: Identify Your Ideal Patient

Healthcare practices are essentially promoting services to an audience, or, patients. Start identifying and defining your target audience by assessing who uses your services. Marketing plans should be developed with this target audience in mind in order to be effective.

If you have a wide range of patients varying in age, gender, etc., consider segmenting them into different, smaller groups or learn about what each patient has in common outside of traditional demographics.

#2: Define Your Vision

Solidify your goals by defining them in the largest business plan. Brainstorm and write down goals, significant milestones, and where you see the practice in 3 years, 5 years, etc. Document how you will achieve these goals and set dates for major milestones.

#3: Assemble a Team

It takes a village to run a successful healthcare practice, from the front office staff to third-party contractors. Take this time to document who will be involved with this business plan and to what degree.

Outline roles, responsibilities, and initiatives for each team member. Make sure to tie this all in with your overall vision. For example, if you envision a significant effort in social media marketing within the next year, define the role(s) that will be responsible for this.

#4: Build Patient Personas

When other businesses create their business plans, they often run an exercise to build “buyer personas.” These are essentially profiles that represent ideal customers , based on real data.

This exercise includes giving these personas creative and explanatory names, incomes, budgets, careers, and more, to help guide business and marketing decisions.

In healthcare, creating a patient persona works the same. Sit down with your team and create 1-2 profiles of your ideal patient. Give them a name, a medical condition or need, income, family status, personality attributes, etc. based on your actual patients. For example, a profile might look like this:

“Clever Cathy,” has diabetes, age 65, works in customer service, researches her conditions thoroughly/has lots of questions for doctors, makes 55k per year, has $500 to spend on care today, divorced, 3 kids out of the house.

Having these profiles on hand can help pull focus to your patient's needs during important business decisions.

#5: Perform a SWOT Analysis

Another tool to use for self-assessing your healthcare practice is a SWOT analysis . SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Draw a 2x2 grid labeled with these terms, and start listing examples.

When assessing your healthcare practice's strengths and weaknesses, consider everything from an internal perspective and what you have control over, such as unique services (strength) and only having one provider (weakness).

Writing out your practice's weaknesses helps you to place all of your thoughts for improvement in one clean list. Keep it strictly about what you have direct control over, such as long wait times or outdated appointment booking systems.

Opportunities and threats are both meant to be viewed from an external lens and are things you do not have control over but can either leverage (opportunities) or maneuver away from (threats). Opportunities can include things like new real estate in a better location, while threats can include things like loss of staff.

#6: Finalize and Share

Once you have a full business plan solidified, finalize it and share it with all physicians, staff, board members, executives, and any other stakeholders necessary.

Once everybody is on board, you can begin the rollout, enjoying the support from every team member along the way.

#7: Check-in and Evaluate

Sometimes, a plan that we thought would surely bring in 100 new patients falls flat. That's why it is important to establish a plan to check-in with your goals, benchmarks, targets, plans, etc. to see what is working, and more importantly-- what's not.

Adjust and change your plan as needed, making sure everybody is still in the loop. By measuring and evaluating your business plan consistently, your chances of success improve.

Don't Forget “The 3 Pillars of a Successful Healthcare Practice”

While assembling your new business plan, let's not forget the 3 pillars of a successful healthcare practice : a growing patient base, a stellar online reputation, and a strong online presence.

Keeping these pillars in mind for a detailed business plan, healthcare practices can increase patient acquisition and retention. Make sure to integrate these pillars into your marketing plan!

To conclude, healthcare practices must have a business plan in order to be successful and to keep growing. These plans, as you've seen, can get large and sometimes complicated.

For busy practices, hiring a marketing agency to help handle this plan is a must. It's important to find a healthcare marketing agency that believes in your business plan. This keeps everybody aligned so your practice can see success.

Ajay Prasad

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Why is a business plan important and what should it include?

Posted: Tue 12th Mar 2019

How do you go from a bright idea to a successful business? Planning. It's easy to imagine successful entrepreneurs played it by ear and got lucky. People often change direction but planning's a crucial part of testing a start-up idea and building a business.

This guide examines why you should write a business plan, what it needs to include and how to use it. We've also highlighted additional resources that can help you go through the process.

Why write a business plan?

Business plans provide accountability. They allow business owners to sense-check what they're doing and why. They provide an opportunity to get ideas out of your head and start working on them.

"Not having to report to anyone is attractive when you start up. As you grow it can be tricky not to have a sounding board. A business plan can be useful for that," said Jonathan Bareham , co-founder of accountancy firm Raeden.

He highlights the role of goal setting in the planning process. Why are you starting a business? Is it because you want a good work-life balance? Do you want to make an environmental impact? It's likely a combination of factors. Writing down your motivation provides a reference for big decisions and makes sure you don't lose focus.

Business plans help explain what you're doing to other people. The process of writing everything down makes sure you can answer key questions about what you're doing.

Hiring people, opening a premise or buying equipment requires significant investment. Planning and justifying what you're going to spend is important. Sharing them externally helps reassure partners, whether you're looking to borrow money or win over a mentor.

What basic things should a business plan include?

Whatever format and length you decide on there are several common topics to cover in a business plan. Bareham outlines five points to include:

A summary of what you're going to do

Details of the market you're going into

What you have that other businesses don't (your unfair advantage)

A cash-flow forecast

Personnel needed

Business owners need to think about the strengths and weaknesses they have, he added. Be honest and make sure you identify where you will need help.

Your cash-flow forecast is crucial. It shows the money coming into your business from customers and what you're spending. This includes costs like buying raw materials, office space, marketing and paying employees. This plan will evolve into a document you look at regularly when the business is up and running.

Enterprise Nation founder Emma Jones compares having a business plan to a route map and uses the acronym 'I'm off' as a memory aid on what to include:

Operations: What kit do you need?

Friends: A support network

You can tailor your business plans to specific audiences and we'll go into the main formats in the next section.

Watch this detailed video with Enterprise Nation adviser and accountant Jonathan Bareham sharing tips on business plans, cash flow, accounts and more.

What business plan format should I use?

There are several formats you can use to create a business plan. It's important to pick the one that's right for your situation. The key considerations are what you know so far and how you're going to use the plan.

You'll generally cover the sections we outlined in the section above but the amount of detail can vary.

If the plan's for the benefit of the business owner you need to think about how much you can know at this point. There are lots of assumptions around sales and costs that you won't know until they're tested. This will limit the level of detail you can include.

The audience is important too. You could write a five-page summary if the business plans just for you. If the business plan's for raising investment or applying for a loan it's going to require more detail and might be 15-20 pages long.

Organisations like the Prince's Trust and Start Up Loans , which offer start-up funding, have templates that they prefer or require applicants to fill out.

David Abrahamovitch, founder and CEO of London café-bar and restaurant company GRIND, told Enterprise Nation  that his founding team didn't create a business plan until they needed to borrow money. He believes a formal business plan doesn't provide much value at the concept stage.

"Business plans absolutely have their place but I see people who are spending months writing a business plan. They're worried about who's going to copy their idea about trademarks. All of these things are important, but at the moment you don't have a business. You don't have a brand to protect. You're worried about the wrong things. "You have to get to the minimum viable form of that business as quickly as possible and just test it."

Abrahamovitch added that things like pop-up stores and online tools mean the barriers to entry are lower than ever, reducing the risk of testing an idea.

What a traditional business plan looks like

What we're calling 'traditional business plans' are A4 documents that cover the key elements of your business. These include five main elements:

The executive summary: Summarise the main points of your business plan. Showcase what you're doing and sell your vision to the reader.

Opportunity analysis: Describe the business opportunity. Look at the size of the market, customer segments, competitors and the key trends.

Marketing: Highlight the key messages you want to communicate to customers and detail the channels you will use to reach them (telemarketing, social media etc.). Provide an idea of cost for this activity and, if possible, the level of business you expect to generate.

Logistics: Plan where and how you are going to operate your business. Include plans for manufacturing, transportation, office costs, staff needed etc.

Finance: Make sure that you detail all your associated costs - both your estimated start-up costs as well as your running costs. Include a cash-flow forecast that shows how your business will become sustainable.

Additional information like the founders' CVs can be included in your appendix. This often depends on what evidence your audience requires and may not be relevant for a document that's used internally.

Presentation is important because it provides credibility. Think about adding company logos, a cover page and other touches that make the document look professional.

Abrahamovitch said writing a business plan is useful to examine what's working, how much energy things take up and the margin of different products when you've tested ideas.

"Distill that down into its simplest form and put that in a business plan," he said. "Talk about how you're going to scale it. That's where it really adds value."

The lean canvas model

The length of traditional business plans can be intimidating. You may also lack the information to complete the document if you haven't started trading yet.

Lean canvas and business model canvas allow you to create a business plan on a single page. The structure examines whether a business idea is viable. The nine boxes capture entrepreneurs' key assumptions, covering topics like metrics and marketing channels.

Lean canvas is designed to provide a snapshot of your idea and challenge the assumptions you've made. It's not meant to be perfect. The inventor of lean canvas model suggests taking 20 minutes to fill everything out.

Test your assumptions through research

Launching and growing a small business is really exciting because you don't know what's going to happen. However, writing a business plan can be daunting as there are so many things you don't know yet.

Make phone calls and search the internet to strengthen your assumptions. It's possible to find information on standard services like accountants, renting desks or buying raw materials.

There are other aspects that are more difficult to predict. Projecting sales, for example, is one of the trickiest parts of forecasting. You love your product but will customers flock to the business?

One opportunity to solve this problem is to do a small amount of test trading. Paying for a market stall may cost you a thousand pounds after you pay for the stock and a location. But the investment may pay dividends if it gives you a reality check on what customers are willing to pay and how popular your offering is. What's the least you can spend to learn the most?

Research competitors offerings too. What are people paying for related products?

Service-based business can have the opportunity to trial their offering part-time. Perhaps you can take on a client while still working your day job.

Make sure you justify any forecasts in your business plan and provide a logical explanation of how you came to your conclusions.

Will a business plan guarantee success?

No. But business plans will help crystallise your goals and test your assumptions. The framework is really useful to develop ideas, particularly if they've been rattling around in your head for some time.

Make sure you return to your business plan regularly. Reinforcing your original goals will help keep you on track. Forecasting is a skill. Check your projections against performance and try to figure out what assumptions were correct and where there were issues.

The way you use business plans will evolve over time. Filling in a lean canvas might work if you have an idea and haven't started working on it yet. Eventually, you might need to create a business plan to land investment or it can provide an opportunity to reassess what you do.

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The Business of Health Care in the United States

Published june 27, 2022, courses mentioned in this post: h ealth care strategy , health care economics , digital health.

The health care sector in the United States is one of the most essential and consequential parts of our economy. All of us rely on the health care system throughout our lives. In the US, we have a complex system comprised of providers, payers (health plan providers, insurance companies, etc.), and patients who receive care. Regardless of whether a provider of care is part of a for-profit or not-for-profit institution, their maintenance of business operations, strategy, leadership, and quality of care are essential. Moreover, these organizations need to innovate to be successful and provide optimal care. Opportunities for innovation and ground-breaking research in health care are made possible by strategic financial decisions. By considering health care as a value-creating business , doctors and researchers can save more lives.

The business of health care in the United States is complicated. Leaders in this space must ensure that patients have access to care while continuing to invest in emergent, life-saving innovations. How can we ensure that patients have access to care while still adopting important, life-saving innovations that have the potential to improve health and health care?

Health care services operate differently from other consumer services. As a society, we often believe that human beings have a right to high quality health care. The expectation of availability and high-caliber services generates value for the health care industry.

Value creation and value capture are concepts that are fundamental to business strategy. Cutting edge technology, innovative treatments, and new life-saving medicines are just a few examples of benefits and value created through business transactions. Improving health care access and quality may at times require us to embrace the benefits of competition and behave strategically.

Furthermore, when considering health care as a competitive industry, it’s important to consider the unique challenges it entails such as:

• Balancing ledgers and community expectations – How can health care organizations best organize their services and care to meet the needs of their patients and financial situations?
• Negotiating with intermediaries, such as insurers – How can organizations attract patients and consider the objectives of health insurance providers?
• Responding to increasing public interest and regulation – How can organizations commit to their missions and goals while meeting the expectations of public funders and patients?

Whatever differences may exist in health care, business strategy still applies–and is perhaps even more important than elsewhere. We have to view the institutions and challenges they face in the right context, a topic discussed in depth in our Health Care Strategy course.

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The relationship between health care providers and insurers is one of the most commonly debated categories of business strategy in the United States. You might be wondering how health care is different from other industries

Insurance companies are intermediaries between the providers of services and the consumers of those services. The role of these insurers in health care cannot be overstated. These insurers not only finance a great deal of a patient’s care but also often play a role in deciding which care will be covered. 

Consider this example from our Health Care Economics course: Health care is not like broccoli. For many goods and services (such as broccoli!), the cost of the product doesn’t depend on who buys it. In health care, the cost of the product does depend on who’s purchasing it, on whether or not they have insurance, and on what kind of insurance they have.

We see this frequently in the news with the cost of prescription medicine. One patient may pay thousands of dollars for the same medicine that another patient receives for free. The difference in these payments is because of the coverage, or lack thereof, from insurance providers. Insurers and their intermediaries negotiate with pharmaceutical companies to determine how much the insurer and the patient will pay for drugs, ideally settling on an amount that allows all of the stakeholders to capture value.

Health care in the United States is a complex system of patients, payers, and providers—a stakeholder mix that is uniquely different from other industries. There are over 6,600 biotech companies in the country working on innovations to solve complicated medical problems and save more lives. Similarly, $44 billion was raised globally in health care innovation, a phenomenon explored in our Digital Health course .

Competition among health care providers increases quality, reduces prices, and can increase a patient’s access to cutting-edge, life-saving care.

Health care leaders face choices every day: How can we put our resources to the best possible use to capture value and stay in business? And, if we are to treat our operations like value-creating businesses, what are the determinants of how much value is captured?

Investing in health care is important and vital. But can innovation in health care truly be equal when it hinges on financial transactions? We can work towards a more equitable future by continuing to employ strategic decisions in life-saving care.

Related Courses

Health care strategy.

Learn from HBS Professor Leemore Dafny how to align the principles of business strategy with the unique challenges and structures of health care organizations to capture value, define your mission, and lead your organization to success.

Health Care Economics

Taught by Harvard Medical School faculty, this course provides insights into the interactions between industries in the US health care sector and teaches what economic forces are shaping health care.

Digital Health

Digital technologies and big data offer tremendous opportunities to improve health care.

14 Reasons Why You Need a Business Plan

10 min. read

Updated May 10, 2024

There’s no question that starting and running a business is hard work. But it’s also incredibly rewarding. And, one of the most important things you can do to increase your chances of success is to have a business plan.

A business plan is a foundational document that is essential for any company, no matter the size or age. From attracting potential investors to keeping your business on track—a business plan helps you achieve important milestones and grow in the right direction.

A business plan isn’t just a document you put together once when starting your business. It’s a living, breathing guide for existing businesses – one that business owners should revisit and update regularly.

Unfortunately, writing a business plan is often a daunting task for potential entrepreneurs. So, do you really need a business plan? Is it really worth the investment of time and resources? Can’t you just wing it and skip the whole planning process?

Good questions. Here’s every reason why you need a business plan.

• 1. Business planning is proven to help you grow 30 percent faster

Writing a business plan isn’t about producing a document that accurately predicts the future of your company. The  process  of writing your plan is what’s important. Writing your plan and reviewing it regularly gives you a better window into what you need to do to achieve your goals and succeed. 

You don’t have to just take our word for it. Studies have  proven that companies that plan  and review their results regularly grow 30 percent faster. Beyond faster growth, research also shows that companies that plan actually perform better. They’re less likely to become one of those woeful failure statistics, or experience  cash flow crises  that threaten to close them down. 

• 2. Planning is a necessary part of the fundraising process

One of the top reasons to have a business plan is to make it easier to raise money for your business. Without a business plan, it’s difficult to know how much money you need to raise, how you will spend the money once you raise it, and what your budget should be.

Investors want to know that you have a solid plan in place – that your business is headed in the right direction and that there is long-term potential in your venture. 

A business plan shows that your business is serious and that there are clearly defined steps on how it aims to become successful. It also demonstrates that you have the necessary competence to make that vision a reality. 

Investors, partners, and creditors will want to see detailed financial forecasts for your business that shows how you plan to grow and how you plan on spending their money. 

• 3. Having a business plan minimizes your risk

When you’re just starting out, there’s so much you don’t know—about your customers, your competition, and even about operations. 

As a business owner, you signed up for some of that uncertainty when you started your business, but there’s a lot you can  do to reduce your risk . Creating and reviewing your business plan regularly is a great way to uncover your weak spots—the flaws, gaps, and assumptions you’ve made—and develop contingency plans. 

Your business plan will also help you define budgets and revenue goals. And, if you’re not meeting your goals, you can quickly adjust spending plans and create more realistic budgets to keep your business healthy.

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• 4. Crafts a roadmap to achieve important milestones

A business plan is like a roadmap for your business. It helps you set, track and reach business milestones. 

For your plan to function in this way, your business plan should first outline your company’s short- and long-term goals. You can then fill in the specific steps necessary to reach those goals. This ensures that you measure your progress (or lack thereof) and make necessary adjustments along the way to stay on track while avoiding costly detours.

In fact, one of the top reasons why new businesses fail is due to bad business planning. Combine this with inflexibility and you have a recipe for disaster.

And planning is not just for startups. Established businesses benefit greatly from revisiting their business plan. It keeps them on track, even when the global market rapidly shifts as we’ve seen in recent years.

• 5. A plan helps you figure out if your idea can become a business

To turn your idea into reality, you need to accurately assess the feasibility of your business idea.

You need to verify:

• If there is a market for your product or service
• Who your target audience is
• How you will gain an edge over the current competition
• If your business can run profitably

A business plan forces you to take a step back and look at your business objectively, which makes it far easier to make tough decisions down the road. Additionally, a business plan helps you to identify risks and opportunities early on, providing you with the necessary time to come up with strategies to address them properly.

Finally, a business plan helps you work through the nuts and bolts of how your business will work financially and if it can become sustainable over time.

6. You’ll make big spending decisions with confidence

As your business grows, you’ll have to figure out when to hire new employees, when to expand to a new location, or whether you can afford a major purchase. 

These are always major spending decisions, and if you’re regularly reviewing the forecasts you mapped out in your business plan, you’re going to have better information to use to make your decisions.

7. You’re more likely to catch critical cash flow challenges early

The other side of those major spending decisions is understanding and monitoring your business’s cash flow. Your  cash flow statement  is one of the three key financial statements you’ll put together for your business plan. (The other two are your  balance sheet  and your  income statement  (P&L). 

Reviewing your cash flow statement regularly as part of your regular business plan review will help you see potential cash flow challenges earlier so you can take action to avoid a cash crisis where you can’t pay your bills. 

• 8. Position your brand against the competition

Competitors are one of the factors that you need to take into account when starting a business. Luckily, competitive research is an integral part of writing a business plan. It encourages you to ask questions like:

• What is your competition doing well? What are they doing poorly?
• What can you do to set yourself apart?
• What can you learn from them?
• How can you make your business stand out?
• What key business areas can you outcompete?
• How can you identify your target market?

Finding answers to these questions helps you solidify a strategic market position and identify ways to differentiate yourself. It also proves to potential investors that you’ve done your homework and understand how to compete. 

• 9. Determines financial needs and revenue models

A vital part of starting a business is understanding what your expenses will be and how you will generate revenue to cover those expenses. Creating a business plan helps you do just that while also defining ongoing financial needs to keep in mind. 

Without a business model, it’s difficult to know whether your business idea will generate revenue. By detailing how you plan to make money, you can effectively assess the viability and scalability of your business. 

Understanding this early on can help you avoid unnecessary risks and start with the confidence that your business is set up to succeed.

• 10. Helps you think through your marketing strategy

A business plan is a great way to document your marketing plan. This will ensure that all of your marketing activities are aligned with your overall goals. After all, a business can’t grow without customers and you’ll need a strategy for acquiring those customers. 

Your business plan should include information about your target market, your marketing strategy, and your marketing budget. Detail things like how you plan to attract and retain customers, acquire new leads, how the digital marketing funnel will work, etc. 

Having a documented marketing plan will help you to automate business operations, stay on track and ensure that you’re making the most of your marketing dollars.

• 11. Clarifies your vision and ensures everyone is on the same page

In order to create a successful business, you need a clear vision and a plan for how you’re going to achieve it. This is all detailed with your mission statement, which defines the purpose of your business, and your personnel plan, which outlines the roles and responsibilities of current and future employees. Together, they establish the long-term vision you have in mind and who will need to be involved to get there. 

Additionally, your business plan is a great tool for getting your team in sync. Through consistent plan reviews, you can easily get everyone in your company on the same page and direct your workforce toward tasks that truly move the needle.

• 12. Future-proof your business

A business plan helps you to evaluate your current situation and make realistic projections for the future.

This is an essential step in growing your business, and it’s one that’s often overlooked. When you have a business plan in place, it’s easier to identify opportunities and make informed decisions based on data.

Therefore, it requires you to outline goals, strategies, and tactics to help the organization stay focused on what’s important.

By regularly revisiting your business plan, especially when the global market changes, you’ll be better equipped to handle whatever challenges come your way, and pivot faster.

You’ll also be in a better position to seize opportunities as they arise.

Further Reading: 5 fundamental principles of business planning

• 13. Tracks your progress and measures success

An often overlooked purpose of a business plan is as a tool to define success metrics. A key part of writing your plan involves pulling together a viable financial plan. This includes financial statements such as your profit and loss, cash flow, balance sheet, and sales forecast.

By housing these financial metrics within your business plan, you suddenly have an easy way to relate your strategy to actual performance. You can track progress, measure results, and follow up on how the company is progressing. Without a plan, it’s almost impossible to gauge whether you’re on track or not.  

Additionally, by evaluating your successes and failures, you learn what works and what doesn’t and you can make necessary changes to your plan. In short, having a business plan gives you a framework for measuring your success. It also helps with building up a “lessons learned” knowledge database to avoid costly mistakes in the future.

• 14. Your business plan is an asset if you ever want to sell

Down the road, you might decide that you want to sell your business or position yourself for acquisition. Having a solid business plan is going to help you make the case for a higher valuation. Your business is likely to be worth more to a buyer if it’s easy for them to understand your business model, your target market, and your overall potential to grow and scale. 

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• Writing your business plan

By taking the time to create a business plan, you ensure that your business is heading in the right direction and that you have a roadmap to get there. We hope that this post has shown you just how important and valuable a business plan can be. While it may still seem daunting, the benefits far outweigh the time investment and learning curve for writing one. 

Luckily, you can write a plan in as little as 30 minutes. And there are plenty of excellent planning tools and business plan templates out there if you’re looking for more step-by-step guidance. Whatever it takes, write your plan and you’ll quickly see how useful it can be.

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

Table of Contents

• 6. You’ll make big spending decisions with confidence
• 7. You’re more likely to catch critical cash flow challenges early

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20 Reasons Why You Need a Business Plan in 2024

Written by Dave Lavinsky

What is a Business Plan?

A business plan is a document that details your business concept and strategy for growth. It provides details about your company, a competitive analysis, a market analysis, a marketing strategy to reach potential customers, and a financial plan so that you make the best possible decisions to start or grow your company. A good business plan will help you take your business idea and turn it into a tangible action plan for success.

What is the Purpose of a Business Plan?

A business plan serves as an essential tool for guiding a company’s direction and decision-making processes. Its core purpose is to provide a detailed roadmap that communicates the company’s mission and vision, long-term objectives, and tailored strategies intended to steer the business towards success. This living document plays a pivotal role in streamlining operations, achieving goals, and setting a foundation for sustained growth. The purposes of a business plan include:

• Creating an Effective Growth Strategy : It outlines a comprehensive plan that identifies clear steps and strategies for expanding the market presence and ideal customer base for the business.
• Determining Future Financial Needs : By creating financial projections, a business plan helps in understanding the capital requirements to fuel growth initiatives and sustain operations.
• Attracting Investors and Lenders : A well-crafted business plan is instrumental in drawing attention from potential investors, including angel investors and venture capitalists, by showcasing the growth potential and profitability prospects of the business.

By leveraging a business plan template , entrepreneurs can significantly enhance their ability to communicate their vision, attract necessary funding, and ensure that all stakeholders are aligned with the company’s strategic direction.

20 Reasons Why You Need a Business Plan

There are countless reasons why having a well-crafted business plan is essential to the success of any company. Here are top 20 reasons why a business plan is important:

1. To Prove That You’re Serious About Your Business

A formal business plan is necessary to show all interested parties — employees, investors, partners and yourself — that you are committed to building the business. Creating your plan forces you to think through and select the strategies that will propel your growth.

2. To Establish Business Milestones

The business plan should clearly lay out the long-term milestones that are most important to the success of your business. To paraphrase Guy Kawasaki, a milestone is something significant enough to come home and tell your spouse about (without boring him or her to death). Would you tell your spouse that you tweaked the company brochure? Probably not. But you’d certainly share the news that you launched your new website or reached $1M in annual revenues.

3. To Better Understand Your Competition

Creating the business plan forces you to analyze the competition. All companies have competition in the form of either direct or indirect competitors, and it is critical to understand your company’s competitive advantages or unique value proposition. And if you don’t currently have competitive advantages, to figure out what you must do to gain them.

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4. To Better Understand Your Customer

Why do they buy when they buy? Why don’t they when they don’t? An in-depth customer analysis is essential to a great business plan and to a successful business. Understanding your customers will not only allow you to create better products and services for them, but will allow you to more cost-effectively reach them via advertising and promotions.

5. To Enunciate Previously Unstated Assumptions

The process of actually writing a business plan helps to bring previously “hidden” assumptions to the foreground. By writing them down and assessing them, you can test them and analyze their validity. For example, you might have assumed that local retailers would carry your product; in your business plan, you could assess the results of the scenario in which this didn’t occur.

6. To Assess the Feasibility of Your Venture

How good is this opportunity? The business plan process involves researching your target market, as well as the competitive landscape, and serves as a feasibility study for the success of your venture. In some cases, the result of your business planning will be to table the venture. And it might be to go forward with a different venture that may have a better chance of long-term success.

7. To Document Your Revenue Model

How exactly will your business make money? This is a critical question to answer in writing, for yourself and your investors. Documenting the revenue model helps to address challenges and assumptions associated with the model. And upon reading your plan, others may suggest additional revenue streams to consider.

8. To Determine Your Financial Needs

Does your business need to raise funds? How much? One of the purposes of a business plan is to help you to determine exactly how much capital you need and what you will use it for. This process is essential for raising capital for business and for effectively employing the capital. It will also enable you to plan ahead, particularly if you need to raise additional funding in the future.

9. To Attract Investors

A formal business plan is the basis for financing proposals. The business plan answers investors’ questions such as: Is there a need for this product/service? What are the financial projections? What is the company’s exit strategy? While investors will generally want to meet you in person before writing you a check, in nearly all cases, they will also thoroughly review your business plan.

10. To Reduce the Risk of Pursuing the Wrong Opportunity

The process of creating the business plan helps to minimize opportunity costs. Writing the business plan helps you assess the attractiveness of this particular opportunity, versus other opportunities. So you make the best decisions.

11. To Force You to Conduct Market Research and Really Know Your Market

What are the most important trends in your industry? What are the greatest threats to your industry? Is the market growing or shrinking? What is the size of the target audience for your product/service? Creating the business plan will help you to gain a wider, deeper, and more nuanced understanding of your marketplace. And it will allow you to use this knowledge to make decisions to improve your company’s success.

12. To Attract Employees and a Management Team

To attract and retain top quality talent, a business plan is necessary. The business plan inspires employees and management that your great idea is sound and that the business is poised to achieve its strategic goals. Importantly, as you grow your company, your employees and not you will do most of the work. So getting them aligned and motivated will be key to your success.

13. To Plot Your Course and Focus Your Efforts

The business plan provides a roadmap from which to operate, and to look to for direction in times of doubt. Without a business plan, you may shift your short-term strategies constantly without a view to your long-term milestones. You wouldn’t go on a long driving trip without a map; think of your business plan as your map.

14. To Attract Partners

Partners also want to see a business plan, in order to determine whether it is worth partnering with your business. Establishing partnerships often requires time and capital, and companies will be more likely to partner with your venture if they can read a detailed information about your company.

15. To Position Your Brand

Creating the business plan helps to define your company’s role in the marketplace. This definition allows you to succinctly describe the business and position the brand to customers, investors, and partners. With the industry, customer and competitive insight you gain during the business planning process, you can best determine how to position your brand.

16. To Judge the Success of Your Business

A formal business plan allows you to compare actual operational results versus the business plan itself. In this way, it allows you to clearly see whether you have achieved your strategic, financing, and operational goals (and why you have or have not).

17. To Reposition Your Business to Deal with Changing Conditions

For example, during difficult economic conditions, if your current sales and operational models aren’t working, you can rewrite your business plan to define, try, and validate new business ideas and strategies.

18. To Document Your Marketing Plan

How are you going to reach your customers? How will you retain them? What is your advertising budget? What price will you charge? A well-documented marketing plan is essential to the growth of a business. And the marketing strategies and tactics you use will evolve each year, so revisiting your marketing plan at least annually is critical.

19. To Understand and Forecast Your Company’s Staffing Needs

After completing your business plan, you will not be surprised when you are suddenly short-handed. Rather, your business plan provides a roadmap for your staffing needs, and thus helps to ensure smoother expansion. Importantly your plan can not only help you understand your staffing needs, but ensure your timing is right as it is time consuming to recruit and train great employees.

20. To Uncover New Opportunities

Through the process of brainstorming, white-boarding and creative interviewing, you will likely see your business in a different light. As a result, you will often come up with new ideas for marketing your product/service and running your business. It’s coming up with these ideas and executing on them which is often the difference between a business that fails or just survives and one that thrives.

Make Your Business Planning Count

One of the most common reasons businesses fail is the lack of a clear, strategic plan that addresses key components of running a business. Business plans help in identifying and navigating the challenges that can derail a business’s success, including poor market analysis, inadequate financial planning, and an unclear business model. By taking the time to write a business plan, entrepreneurs can clarify their business strategy, identify potential obstacles before they arise, and establish company goals that will set you up for success.

About Growthink Since 1999, Growthink’s business plan experts have assisted thousands of clients in launching and growing their businesses, and raising more than $2.5 billion in growth financing.

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• Speak with a professional business plan consultant from our team.
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• Check out our business plan examples .
• Or, if you’re creating your own PPM, you can save time and money with Growthink’s private placement memorandum template .
• Learn more about us via our Growthink Business Plan Review page

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The essentials of healthcare innovation

When the winds of change blow, some people build walls, others build windmills. This Chinese proverb reminds us that crises present choices. Those choices, in turn, shape organizations’ future growth paths. Last fall, we wrote about the healthcare sector’s successful shift  from merely sustaining core operations when the COVID-19 crisis hit to driving rapid innovations that saved lives and lessened the pandemic’s impact. But the winds remain strong, with new outbreaks and variants of the virus continuing to destabilize our lives and economies, even as vaccines are rolled out. Maintaining the innovation momentum will be critical to a continued effective response.

Over the past year, the healthcare sector experienced dramatic change, with novel business models, unexpected collaborations, and accelerated timelines requiring organizations to rethink how they operate. Many of these shifts are likely to persist. When we surveyed more than 100 leaders in the industry, from pharmaceutical and medical technology companies to health systems and payers, 1 McKinsey Healthcare Innovation Through Crisis Survey, June 2020. 90 percent agreed that the pandemic will fundamentally change the way they do business, requiring new products, services, processes, and business models.

To better understand how healthcare leaders’ priorities have shifted, we interviewed executives from across the value chain. Specifically, we examined how they plan to position their organizations to deliver on their innovation aspirations and which innovation capabilities they expect to grow in importance. They highlighted two main areas where the COVID-19 pandemic has brought major changes they expect to endure.

Digital acceleration. The healthcare sector has long been a laggard in digital adoption, but the pandemic delivered a massive jolt of urgency to embrace new tools and technologies. Providers rapidly scaled offerings and were seeing 50 to 175 times the number of patients via telehealth a few months into the pandemic compared with what they did before . Providers have also more broadly embraced digital engagement with patients and communities, such as proactively messaging about COVID-19-related protocols. Meanwhile, pharmaceutical and medtech companies have expanded their investments in digitally enabled clinical trials and customer-engagement models.

Workplace of the future. Many parts of healthcare require in-person care, but the pandemic has illuminated the extent to which healthcare can be delivered remotely, such as virtual care and remote patient monitoring, and virtual collaboration for professionals in the pharmaceutical and medtech industries. This model supports greater flexibility and has enabled organizations to draw from a more diverse talent pool. “You can now attract anyone, anywhere,” one executive said in reference to hiring. Healthcare leaders are also reevaluating old workplace norms and introducing new measures, such as offering assistance to help combat videoconferencing fatigue. “COVID-19 has shone a light on culture, good or bad,” another interviewee told us, and it has led healthcare players to reassess work conditions and extend greater flexibility to employees.

Adapting to these shifts, along with myriad others, will require many healthcare organizations to transform their operations—and their mindsets. Past research  shows that prioritizing innovation during crises can help unlock growth in the recovery, provided leaders approach it with commitment and establish key capabilities and processes.

The foundation for successful innovation

As we noted in our earlier article, lasting innovation success requires eight essential practices  (exhibit). While all eight are important and span the full innovation cycle from strategy to execution, in our latest survey, healthcare leaders identified four that are, and will, remain more critical as a result of the pandemic: choose, evolve, accelerate, and extend .

Choose . In a world of dynamic change and heightened uncertainty, it is more important than ever to actively manage portfolios of innovation initiatives, consciously choosing to invest in innovation during a crisis. “There is so much chaos, it’s like a constantly changing game board,” one healthcare leader said. “We need even more discipline to make sure we don’t miss something or get overly enamored of shiny new things.” By regularly reviewing their innovation pipelines, organizations can identify initiatives that are less likely to succeed based on the latest data and assumptions, while strengthening investments in projects with high potential. Deprioritizing some initiatives will be particularly critical for organizations plagued by staff burnout and resource constraints.

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As focus on areas such as infectious diseases and testing grows, incremental innovation likely will not be enough to stay abreast of competitors. Bold bets are necessary, and multiple executives in our survey cited the value of a “start-up approach” and “scrappy mindset” in seizing opportunities. The respondents also reported a greater willingness to take risks and use agile decision making to determine how best to address new business segments. In fact, several companies have adapted their operating models to purposely select and test multiple ideas quickly rather than committing up front to a single path. One large healthcare provider, for example, has adopted a new decision-making process that includes key stakeholders from across their system, which has allowed the provider to speed up decisions across a broad portfolio of initiatives. The organization has found that this model leads to decisions and outcomes that are as good or better than under the previous model, in which they analyzed reams of data and performed weeks of analysis.

Evolve . Another priority that healthcare executives cited was evolving their business models to address new delivery constraints and client expectations. This finding is in line with our recent analysis of profit pools  in the sector, which suggests healthcare players that develop innovative business models will generate disproportionate value. Several digital health companies have embraced virtual healthcare delivery, while wearables players have adapted their offerings to include monitoring for COVID-19 symptoms. Companies are also streamlining their customer support by introducing virtual assistants and using new technologies such as augmented reality. One medical technology firm, recognizing that its customers want more flexibility, made its products available as a service, which led to a surge in demand.

Accelerate . From vaccines to new designs of personal protective equipment (PPE) and ventilators, numerous recent examples demonstrate the healthcare sector’s ability to innovate at previously unimagined speeds. In the United States, the US Food and Drug Administration deployed a range of measures (such as issuing new guidance, establishing new industry engagement models, and issuing emergency use authorizations) designed to support the COVID-19 response across the range of products it regulates. In several instances, the FDA stipulated or requested that manufacturers gather data derived from the real-world use of products in order to better characterize performance, understand supply-chain vulnerability, and support additional development activity, both throughout and beyond the pandemic.

Rapid development and deployment of innovations will continue to be critical in the postpandemic world. One executive noted that healthcare has started to embrace the “beta” mindset and “soft launch” models of releasing test versions (where safety permits) that are improved based on user feedback. Another described his life-sciences company’s shift to a product-as-a-service model in just six months—a change that in the past would have taken up to five years.

Extend . The COVID-19 pandemic has highlighted the benefits of nontraditional and creative partnerships and collaborations in quickly finding creative solutions to urgent problems—from the health and auto industries teaming up to build ventilators, to pharmaceutical sector competitors collaborating to hasten the development of a COVID-19 vaccine, to healthcare providers partnering with technology companies to deliver COVID-19 apps and solutions. Experts expect such extensions of the healthcare ecosystem to be the way of the future, with more partnerships and consortia that pool capital, assets, and capabilities, both to bring operational synergies and drive innovation. “Never in my career have I experienced less politics and a more collaborative work environment,” one healthcare leader told us.

From the rise of the sharing economy in the wake of the financial crisis to airport security measures following the 9/11 attacks, deep crises tend to create shifts that stick. The COVID-19 crisis is likewise bringing changes to the healthcare sector that are here to stay. As past downturns have shown, innovation is a critical part of any recovery and will be necessary for healthcare players to stay abreast of their industry. To succeed, leaders should place particular focus on four of the eight essentials of innovation— choose, evolve, accelerate, and extend —while ensuring that end-to-end fundamentals are in place.

Daniel Cohen is an associate partner in McKinsey’s San Francisco office, where Laura Furstenthal is a senior partner; Leigh Jansen is an associate partner in the Vancouver office.

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Healthcare innovation: Building on gains made through the crisis

Innovation: Your launchpad out of the COVID-19 crisis

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12 Reasons You Need a Business Plan In the new book "Write Your Own Business Plan," business expert Eric Butow breaks down how a solid business plan can save your startup during those tough early days.

By Dan Bova Sep 19, 2023

Running a business can be unpredictable, which is why having a solid business plan as a foundation is vital to surviving and thriving in the early days of your startup. Eric Butow, CEO of online marketing ROI improvement firm Butow Communications Group, has teamed up with Entrepreneur Media to write the second edition of our best-selling book Write Your Business Plan , providing you with a roadmap for success.

In the following excerpt, Butow explains how a well-thought-out plan can power your startup and help your vision come to life.

Business plans could be considered cheap insurance. Just as many people don't buy fire insurance on their homes and rely on good fortune to protect their investments, many successful business owners do not rely on written business plans but trust their own instincts. However, your business plan is more than insurance. It reflects your ideas, intuitions, instincts, and insights about your business and its future—and provides the cheap insurance of testing them out before you are committed to a course of action. There are so many reasons to create a business plan, and chances are that more than one of the following will apply to your business.

1. A plan helps you set specific objectives for managers.

Good management requires setting specific objectives and then tracking and following up. As your business grows, you want to organize, plan, and communicate your business priorities better to your team and to you. Writing a plan gets everything clear in your head before you talk about it with your team.

2. You can share your strategy, priorities, and plans with your spouse or partner.

People in your personal life intersect with your business life, so shouldn't they know what's supposed to be happening?

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3. Use the plan to explain your displacement.

A short definition of displacement is, "Whatever you do is something else you don't do." Your plan will explain why you're doing what you've decided to do in your business.

4. A plan helps you figure out whether or not to rent or buy new space.

Do your growth prospects and plans justify taking on an increased fixed cost of new space?

5. You can explain your strategy for hiring new people.

How will new people help your business grow and prosper? What exactly are they going to do?

6. A plan helps you decide whether or not to bring on new assets.

How many new assets do you need, and will you buy or lease them? Use your business plan to help decide what's going to happen in the long term and how long important purchases, such as computer equipment, will last in your plan.

7. Share your plan with your team.

Explain the business objectives in your plan with your leadership team, employees, and new hires. What's more, make selected portions of your plan part of your new employee training.

8. Share parts of your plan with new allies to bring them aboard.

Use your plan to set targets for new alliances with complementary businesses and also disclose selected portions of your plan with those businesses as you negotiate an alliance.

9. Use your plan when you deal with professionals.

Share selected parts of your plan with your attorneys and accountants, as well as consultants if necessary.

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10. Have all the information in your plan when you're ready to sell.

Sell your business when it's time to put it on the market so you can help buyers understand what you have, what it's worth, and why they want it.

11. A plan helps you set the valuation of the business.

Valuation means how much your business is worth, and it applies to formal transactions related to divorce, inheritance, estate planning, and tax issues. Usually, that takes a business plan as well as a professional with experience. The plan tells the valuation expert what your business is doing, when it's doing (or will do) certain things, why those things are being done, how much that work will cost, and the benefits that work will produce.

12. You can use information in the plan when you need cash.

Seek investment for a business no matter what stage of growth the business finds itself in. Investors need to see a business plan before they decide whether or not to invest. They'll expect the plan to cover all the main points.

To dig deeper, buy Write Your Own Business Plan and get 1 month of free access to business planning software Liveplan Premium.

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Why Healthcare Professionals Need Business Skills

• 18 Oct 2018

The healthcare industry is undergoing considerable change. Today’s physicians face economic pressure to reduce costs while improving care—amidst a digital transformation that’s changing how and when patients seek treatment. Consider this: Individuals can now spot symptoms with an activity tracker and then video conference their doctor to more quickly reach a diagnosis.

“The complexities of delivering medical care are rapidly changing,” says Dr. Richard Pitts , vice president of clinically integrated networks and senior medical director at St. Joseph Heritage Healthcare, which is part of an 11-state, 50-hospital health system. “There’s a constant pressure to find more effective ways to deliver healthcare while improving quality and still holding the line on costs.”

But balancing those priorities requires more than just medical know-how. Healthcare professionals also need business skills if they want to deliver a high-quality patient experience while still meeting organizational goals.

“Paying attention to the best treatments, along with the cost of those treatments, requires both business and medical skills,” Pitts says.

It’s why Pitts enrolled in CORe , an online program featuring courses in business analytics , financial accounting , and economics . At the time, he was the chief medical officer at a large teaching hospital in Southern California and wanted to understand the business more broadly, so he could better understand the implications of his decisions and more effectively communicate with colleagues.

“CORe filled in the missing pieces with respect to my business skills,” Pitts says. “I’m now able to make meaningful business comments in meetings. Colleagues appreciate my having a basic understanding of the business world.”

Pitts uses population health—summarized by the Centers for Disease Control and Prevention as “the distribution of health outcomes within a population, and the range of personal, social, economic, and environmental factors that influence the distribution of health outcomes”—as an example of where business and medicine intersect. According to Pitts, there are nine major diagnoses, including diabetes and hypertension, in population health. When they are treated aggressively, it can result in a dramatic decrease in any associated complications.

“This saves unnecessary hospitalizations and billions of dollars of healthcare expense, while dramatically improving the quality of life for patients,” Pitts explains. “The professionals heading up this effort speak the language of business and medicine almost simultaneously.”

That example is just one of many ways healthcare professionals could benefit from having business skills. Here are five other competencies physicians should consider adding to their resume.

Business Skills Every Healthcare Professional Needs

1. analytics.

Analytics can help physicians identify disease outbreaks, track health epidemics in real time, and deliver more personalized care to patients. Achieving those goals requires developing a data mindset, however, and understanding how to recognize trends, analyze relationships between variables, and estimate the accuracy of statistics.

“My business analytics course covered regression analysis and, most importantly, the meaning of statistical significance and hypothesis testing,” Pitts says. “These are essentially the same tools that are used in healthcare to decide the outcomes of various treatments in medicine.”

2. Financial Accounting

Given how focused healthcare organizations are on reducing costs, it’s imperative for physicians to have a basic understanding of financial accounting . Not only can that knowledge lead to more strategic business decisions, but it can also help physicians analyze their team’s performance, measure the impact of their work in terms of revenue, and manage the department’s budget.

3. Ability to Lead Large, Diverse Teams

The health system Pitts works for is composed of 111,000 employees, 38,000 nurses, and 20,000 physicians alone—leading to large, diverse teams. And when faced with statistics like one in four Americans has multiple chronic conditions , it’s becoming more apparent that patients require care from multiple providers for optimal results.

The New England Journal of Medicine notes that physicians who want to lead effectively need to know how to “develop a team culture of feedback to improve patient care.” This includes understanding what motivates the team, regularly soliciting advice and incorporating suggestions, providing ongoing feedback, and acknowledging successes while constructively addressing the team’s weaknesses.

4. Strategic Management

As teams grow, so do departments’ needs and priorities. It’s important for leaders to set an organizational structure and strategy to not only guide their team but also help employees determine what to pursue and what not to pursue.

Physicians should start first with defining their mission—what the organization stands for—and then begin answering the tough questions. Where are revenues coming from? Is money being spent in the right places? How can the team optimize operations to improve the patient experience? With each response will come a clearer picture of where the team should focus their efforts.

5. Effective Communication Skills

Strong communication skills go far in healthcare. Physicians need to practice empathy and know how to properly speak with patients and their family members. Beyond that, they also need to communicate with key stakeholders, including other physicians. The more effective they are, the stronger their operations and more streamlined their processes will be.

The Importance of Business Skills

“It's important for physicians at all levels of leadership to have business skills, in order to be an effective member of ever-forming teams in the modern world of medicine,” Pitts says. “Having business skills helps to cross what often is a ‘chasm of understanding’ between physicians and finance members of the healthcare team.”

Do you want to take your career to the next level? Download our free Guide to Advancing Your Career with Essential Business Skills to learn how enhancing your business knowledge can help you make an impact on your organization and be competitive in the job market.

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Strategic Management in Healthcare: A Call for Long-Term and Systems-Thinking in an Uncertain System

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Strategic management is becoming increasingly important for sustainable management in healthcare. The reasons for this can be seen in the increasing complexity, dynamics and uncertainty of the system’s regimes and the resulting need for strategic thinking in a long-term period. The scientific discussion of this issue is the aim of the present analytical framework. The starting point is the definition of the term strategic management itself, followed by a reflection on the requirements resulting from the changes in the political, social and economic value systems of our post-industrial society. In this context, Dynaxity Zone III is used to explain the long-term perspective, the high levels of complexity and uncertainty and the responsibility of strategic management as important parameters. For a practical illustration, we demonstrate two selected applications (German hospital financing systems and development process of implants) and how the implementation of strategic management in the health care system shows success.

1. Introduction

“Strategy” and “strategic management” have become buzzwords that are frequently used in the practice and theory of healthcare. However, the terms are not as simple as they might seem, and in reality, many managers are still micromanaging without a strategic perspective. Consequently, it is worthwhile to unfold the meaning of the terms and to analyse their relevance in healthcare.

The term “strategy“ stems from ancient Greek word “στρατηγός“ (strategos) meaning “general” or “leader of an army”. Thus, the original meaning of strategy is the theory or study of warfare and everything a good leader of an army should know. Carl von Clausewitz (1780–1831) developed in his famous book “ Vom Kriege ” ( About War) the first (European) theory of strategy distinguishing between tactics and strategy [ 1 ]. The first term describes the organization and fighting of forces on or near the battlefield, while the latter term goes far beyond that and tries to utilize different instruments for the final objective of winning the war. This not only includes battles but also withdrawals, alliances, negotiations and circumventions. V. Clausewitz was a Prussian officer serving the Russian Czar during the Russian Campaign (1812–1813). He realized that the French army won all battles but finally lost the war. The strategy of Prince Mikhail Illarionovich Golenishchev-Kutuzov (1745–1813) was to withdraw and even avoid battles—an approach of warfare that was unusual at that time and even made some to accuse him as coward. His credo “We must win the war—not the battle” strongly influences the strategic thinking of v. Clausewitz in his later years as the director of the Prussian “Kriegsakademie” (college of war) and enfolded his theory of strategy.

For v. Clausewitz, strategy has four dimensions that are relevant not only for warfare but are widely applied in management today such that “ Vom Kriege ” is mandatory reading in many business schools until today. These dimensions are as follows [ 2 , 3 ]:

• Long-term: Strategy always focusses on the long-term consequences of actions. The manager—as the commander-in-chief—should pay more attention to the final result than to the intermediate gains.
• Strategic apex: Strategy is the main responsibility of the top-leaders as it always covers and affects the entire organization. There is no “middle-management strategy”.
• Complexity: As the strategy covers the entire organization and long-term consequences, many different elements and dimensions are involved, i.e., strategy has to deal with a high degree of complexity.
• Uncertainty: The long-term consequences of actions are highly uncertain.

The terms “complexity” and “uncertainty” are crucial for strategy and require more explanation. “Complexity” stems from Latin “cum plectrum“, meaning connected, interwoven or interdependent. Thus, a system is not complex because it consists of many similar elements, but because the elements are different and have a high number of relations between them. These relations are frequently non-linear or even non-monotonous. Consequently, complex systems cannot be described with all their behavior even if all information on each single component exists [ 4 ].

Uncertainty means that the conditions of the environment and system behavior are not known and/or their transitions are subject to certain probabilities [ 5 ]. The longer the distance between the point of planning and the point of action, the higher the degree of uncertainty. Some uncertainty (e.g., epidemics and crop failure) is external and cannot be influenced (“Act of God”); other uncertainty includes the consequence of many small decisions and events, which add up and result in chaotic system behavior. Frequently, this kind of uncertainty exists because we have a rational opponent or antagonist. This is the field of strategy seeking to achieve one’s own objectives while expecting countermeasures of the opponent but also building alliances with protagonists [ 6 ].

Consequently, a strategy is a long-term plan of action of the strategic apex of an organization that analyses the complexity and uncertainty of the system and makes decision under the consideration of all potential stakeholders [ 7 ]. For a business unit, we have to distinguish the following:

• Domaine: What is our business field, i.e., with what products to do want to serve which group of customers with which needs?
• Competition: How do we want to set ourselves apart from competitors (quality leaders, price leaders and niche)?
• Competence: What is our core competence and how can we develop it (resources and potentials)?
• Alliance: With whom do we want to achieve our goals and how strongly do we cooperate?

It was frequently stated that operational management means “to do things right”, while strategic management means, “to do the right things” [ 8 ]. With v. Clausewitz, we could argue that it is correct but insufficient. Strategic management means “to do the right things right” by focusing on the long-term consequences of our actions in an environment of uncertainty and complexity. While we develop strategies, we do not know all the parameters, we expect new interdependencies to arise and we have to deal with stochastics and decide on alliances and competition. Strategy is the supreme discipline of management.

Figure 1 shows the strategic management process. The starting point always involves strategic objectives including the vision and mission of the enterprise. This is the domain of business ethics, i.e., strategic management without ethical reflection on the value and resulting objectives is infeasible. Based on these objectives, we analyse the environment and the enterprise for chances and risk with respect to strengths and weaknesses. This includes the development of a strategy or a set of strategies. Based on the objectives, the strategic manager selects a strategic program and implements it. In principle, the strategic management process is similar to a general management process, but the time-frame, the degree of uncertainty, the relevance of the decisions and the number of sub-units of the environment and the enterprise involved are much higher [ 7 ].

Strategic Management Process. Source own, based on [ 7 ].

These days, many healthcare services are more influenced by etatism than many other fields of business administration. The traditional time-horizon of healthcare is the annual budget provided by governments or parastatals (e.g., social health insurances) [ 9 ]. The main purpose of the “traditional” administration of healthcare services is the compliance with laws and regulations, while the efficiency and long-term development of potentials are still less focused upon. Even if the first efforts towards a strategic approach have already been made by larger healthcare systems and individual profit-oriented institutions, strategic thinking and management have not yet been sufficiently recognized and implemented in most traditional healthcare systems and non-profit organisations. In this paper, we argue that more long-term systems thinking on the strategic apex with consideration of dynamics, complexity and uncertainty are crucial for the healthcare system.

For this purpose, the next two sections discuss the characteristics of healthcare systems in the post-industrial era. Afterwards, we analyse the instruments and personal characteristics required to implement successful strategic management in the healthcare field. This knowledge is applied to examples, namely hospital financing in Germany and research and development of implants. The paper closes with some conclusions on how strategic thinking and management can contribute to the health and wellbeing of human beings.

2. Dynaxity

There seems to be general agreement that the last decades have witnessed tremendous changes in political, social, economic and value systems of our societies. The development from the industrial era to the dominance of service industries, globalisation and individualisation has frequently been discussed [ 10 ], but their impact on healthcare systems is insufficiently reflected. Rieckmann introduced the term “Dynaxity” as an artificial construct to describe the economy and society of the new millennium with the three characteristics: dynamics, complexity and uncertainty [ 11 , 12 ]. In this section, we will unfold these dimensions of Dynaxity and analyse their relevance for healthcare systems and management.

The term Dynaxity describes the dynamics, complexity and uncertainty of a system. Every an open system has a tendency to restore its steady-state-equilibrium and avoid changes because any alteration requires energy and induces uncertainty; i.e., open systems are usually homeostatic [ 13 ]. Only when the differences between goals and outcomes of the system are so strong that the formal and material structure cannot be maintained is the system has to react and adjust its structure. Otherwise, homeostasis will lead to the extinction of the system. Economic systems are constantly under the pressure to change as the environment changes frequently. Under the pressure of change, they will only survive if they can expand beyond their original limitations.

2.1. Transformation

Originally, the system is in a steady-state equilibrium. It fulfils its function in its environment and is able to absorb smaller internal or external perturbations (synchronic systems regime). If the perturbations grow so strongly that they cannot be absorbed any longer within the existing structures, the system begins to fluctuate until it reaches a bifurcation point where it is obvious that the system will never be the same again. In most cases, the system will find a new equilibrium, which is adjusted relative to the new environment and usually on a higher energy level ( Figure 2 ).

Transformation into a new systems regime. Source own, based on [ 13 ].

Changes in the environment are first absorbed by the microstructure (e.g., personnel, customers). Only if the perturbations are rather strong such that the microstructure cannot handle it will the meso structure (entire system) become involved. Moreover, the mesostructure will be passed onto the macrostructure, i.e., the economic or political system, only if it cannot absorb the fluctuations. A stable mesostructure can absorb quite an amount of pressure, but if the necessary changes are blocked by the macrostructure, the mesostructure might become inflexible or even fragile.

The development of new structures and functions of systems require a steady flow of energy. Ecological systems are finally based on the flow of energy from the sun, but social systems can utilize the creativity of human beings as the ultimate source of energy to adjust the systems. With creativity, humans develop innovations to respond to changes of the environment and survive them. Thus, innovations are the foundation of the survival of open systems, and their evolution is the condition for survival. However, innovations are not only the solution for problems but also the cause of perturbations. In a dynamic economy, an innovation will prosper the innovative enterprise but challenge other organisations based on old standard technology. As Schumpeter showed more than a century ago, competition usually means “creative destruction” [ 14 ]. One enterprise solves its challenges by an innovation, and others are driven in a crisis by exactly this innovation. They require further creativity and innovation to respond to this crisis and develop another innovation, which will then become the new standards again and cause another crisis in other enterprises.

2.2. Zones of Dynaxity

The sequence of synchronic and diachronic system regimes is not only accompanied by an increase in energy but also an increase in complexity and dynamics. Depending on the degree of complexity and dynamics, different zones of Dynaxity (I-IV) can be derived [ 15 ]. In zone I, the system consists only of a few elements and the number of interdependencies and relations between these elements is small. The number of relevant changes within a time interval (dynamics) is rather limited at well; i.e., the system can be called static. Consequently, almost all elements, their behaviour and the interdependencies are well-known; there is little uncertainty within the system. Zone I is typical for pre-industrial organisations, but even today, some private practitioners work in zone I with a small number of staff, clear hierarchies, strict control of processes and a stabile function within the village where they are located. According to Mintzberg, this is a simple structure [ 16 ].

If complexity and/or dynamics increase, simple structures will be insufficient for survival in an altered environment. Consequently, zone II is an industrial era with big organisations comprising many hierarchical levels. These organisations follow strict rules of the division of labour, leading to efficiency gains that are previously unknown. However, they are also slow because the flow of information through the different layers of hierarchy takes some time. Thus, these technocracies and bureaucracies [ 16 ] are inadequate if the dynamics or complexity grow even stronger.

The post-industrial era is characterised by very high complexity and dynamics leading to high uncertainty. The “dinosaur” organisations with long information pathways cannot adjust sufficiently rapid to survive the ongoing changes. Instead, organisations must be networks with a tremendous number of interrelations, institutional memory and intrinsic motivation of co-workers who are able and willing to sense changes of the environment early, adapt the structure of the network accordingly and develop innovations to keep the original function of the enterprise [ 11 ].

Finally, if dynamics and complexity increase even further, uncertainty will grow to a degree that makes any prediction or separation of diachronic and synchronic phases impossible. Rieckmann calls this system “Chaos” (χάος) in the sense of a state of complete disorder [ 12 ]. Proactive management becomes impossible as there is no reliable information on the interdependencies and behaviour of the multitude of different elements of the system with a complete tohu wa-bohu (( תֹהוּ   וָבֹהוּ , Genesis 1:2) without any predictability. Figure 3 shows the four zones of Dynaxity.

Zones of Dynaxity. Source own, based on [ 12 ].

The zones I-IV can also be interpreted as development pathways of systems regimes, as shown in Figure 4 [ 9 ]. In a system of zone I, the systems regime changes only rarely, i.e., the synchronic phase has a duration of at least one generation. In zone II, the synchronic phases are shorter than in zone I, but they are long enough to permit a complete stabilisation. Traditional change management includes the final stage of “freezing” which makes only sense if the period of stability is sufficiently long to establish stabile meta-structures with organisational designs, regulations and hierarchies [ 17 ]. In zone III, however, stabile phases are so short that no steady-state equilibrium is possible at all. Instead of freezing the organisational structure at the end of the diachronic systems regime, a new and fundamental perturbation waits for the system. Consequently, no fixed rules can be developed and implemented, but ad hoc decisions and structures are required to deal with a steady flow of fundamental changes. However, the decision in a highly complex environment needs a high density of information requiring turbo networks without hierarchies and with a broad span of interaction instead of slow hierarchies. The chaotic system, finally, does not allow distinguishing phases or predicting the pathways of development.

Dynaxity and Systems Regime. Source own, based on [ 9 ].

For the longest period of time in human history, societies and economies persisted in zone I. Most severe perturbations were external shocks such as famines, epidemics or wars, which could have disastrous consequences such as the medieval plague epidemic (1346–1353) that killed about 1/3 of the population in Europe. For the individual and for enterprises, these shocks were “act of Gods”; i.e., they could not proactively take action or make fundamental changes as they did not have the knowledge how to alter their fate. After the external shock was no longer a threat, life continued—in principle—unchanged, with only a few innovations of limited relevance for daily life within a lifetime. Innovations were seen for the longest period by human beings as something negative—a swear word challenging the (God-given) order of the society. For instance, Wilhelm von Conches (1080–1154) expressed his own mission with the words “sumus relatores et expositores veterum, non inventores novorum” [ 18 ] (we are the mediators and explainers of the old, not the inventors of something new). The technology and regulations of the past were right—innovations were seen with suspicion.

Several basic changes increased the speed of economies and societies and opened the doors for industrial revolution, bringing unknown dynamics and complexity until then. At least for Europe, we can state that the reformation and the age of enlightenment together with the French revolution and liberalism (for instance, Adam Smith) made it possible for innovations to become the driving force of development. “Creative destruction” started and constantly increased the speed of changes [ 19 ].

2.3. Uncertainty

In zone III, we face all forms of uncertainty: We do not know which elements of the system are relevant to us, because while we observe the system, it is changing dramatically with new elements coming up and others being left out. We do not know the interdependencies between these elements as the system has become so complex that it cannot be described in its system behaviour even if we can describe each element. Moreover, all behaviours of the elements and the system are stochastic processes with fairly unknown probabilities. There is even a risk that the system becomes chaotic where no trends can be determined and even minor changes of seemingly irrelevant parameters have major impact on the entire system.

A major cause of uncertainty is the complex system of side effects, feedback effects and knock-on effects ( Figure 5 ). Any action has a primary effect, i.e., an intended effect of a parameter A at the time of intervention. At the same time, the action has a side effect on another parameter B at the same time as the action but without any intentions. This change of parameter B might have an impact on parameter A, which can be delayed, accelerated or decelerated and is called feedback effect. Furthermore, a change of parameter B can have an impact on parameter C (knock-on effect), which will itself induce side effects, feedback effects and other knock-on effects resulting in a chain reaction, which is highly uncertain.

Side, feedback and knock-on effects. Source own, based on [ 6 ].

Summarizing these findings, we can state that the post-industrial society and economy are in Dynaxity zone III characterised by high dynamics and complexity resulting in high uncertainty without stable phases. Change is the “new normal”, and peaceful stability is the exemption. The system cannot be described or analysed to the full extent as many new elements and interdependencies develop and any action has an impact on many elements now and in future. These characteristics constitute major challenges to our ability to design systems and make meaningful decisions because our brains are not designed for systems with these characteristics.

Dörner demonstrates that the human capability to understand complex, dynamic and stochastic systems and make rational decisions within such systems is limited. Without referring to Dynaxity or the post-industrial age, Dörner shows that human beings have, in particular, problems in understanding the dynamics of exponential developments. The human brain thinks linearly, but nature grows exponentially. He shows that human brains are overburdened with increasing growth rates and systematically under-estimate the increasing speed of exponential processes. In addition, uncertainty with incomplete information (because of complexity) leads to false hypotheses about causal connections. The more complex, dynamic and uncertain a decision situation is, the more likely human beings make poor decisions, and the overburdening grows itself exponentially with the size of these three parameters.

Consequently, management in zone III is bound to fail unless it explicitly considers dynamics, complexity and uncertainty. Traditional management was short-term, comprised rather limited sub-systems and ignored uncertainty. However, the more intensive zone III becomes, the less it will be functional. Instead, managers have to develop a strategic mindset with explicit considerations of these three dimensions, the appropriate instruments for strategic leadership and a strategic leadership style with a strategic leadership personality.

3. Management in the of Post-Industrial Era

Management in Dynaxity zone III must be different from management in zone II. In principle, management in zone II focused on operational management, but during the short diachronic phases, the elements of strategic management were added. During the fluctuations, the existing structures were broken-up (unfreezing) and new elements were designed so that the enterprise fits again with respect to the changed environment (moving). Afterwards, everything was fixed again (freezing) with the aspiration that this condition should last as long as possible. During the synchronic phase, strategic management was grossly neglected.

In zone III, there are no synchronic regimes; thus, change is an ongoing process without freezing. Consequently, managers have to perform strategic management permanently and not only during certain phases. Instead, they are constantly seeking for challenging changes of the environment and upcoming innovations, risks and potentials. Thus, strategic and operational management are not contradictory but have to be implemented simultaneously and have to be synchronised constantly. However, their instruments are quite different and this requires a completely new armamentarium of the manager.

Table 1 shows the differences between operational and strategic management. It is obvious that successful instruments and approaches of operational management are quite different from what is needed for strategic management. If the environment does not change strongly during a synchronic phase, the organisation can focus on short-term plans, leave decisions to middle- and lower-level management and limit the decision-field to a few alternatives. The main instrument here is managerial (cost) accounting, expressing business success in currency units. However, when the environment becomes turbulent, this approach is likely to fail. Adoption and adaption, changes and evolutionary jumps are required to survive in diachronic phases. Thus, accounting and focusing on finances are insufficient to conquer the future. Instead, potentials have to be developed in the end, and chances and risks as well as strengths and weaknesses have to be analyzed.

Operational and Strategic Management. Source own, adapted from [ 20 ].

Typical instruments of strategic management are portfolio analyses, causal-loop diagrams and simulations/scenarios. A portfolio analysis is a visual presentation of the different products and their relevance for the achievement of the long-term targets. Based on the classic BCG-matrix [ 21 ], many portfolio analyses have been suggested for different purposes. For instance, Schellberg designed a portfolio matrix for nonprofit organizations distinguishing the dimensions of “ethical call” and “finance ability” [ 22 ] ( Figure 6 ). The first dimension describes the relevance of a service for the achievement of the target system of the non-profit organisations (NPO); i.e., each NPO has to decide whether a specific service is crucial for the achievement of the target system of the NPO or not. The second dimension analyses whether an NPO can breakeven at a given financing regime. The arrows indicate that many products start as touchstones (high ethical call, but deficit), move towards stars (high ethical call, profit) and end as goiters (low ethical call, deficit).

Portfolio Matrix of a non-profit organisation. Source: own, based on [ 22 ].

The portfolio analysis reduces complexity by developing norm strategies for the four fields. It also allows analyzing the life cycle of products and, thus, reducing the perceived dynamics and uncertainty. Thus, it is an appropriate instrument of strategic management.

Causal loop diagrams are a visualisation of causes, consequences and interdependencies. Figure 7 shows a causal loop diagram for the infectious cycle of malaria [ 23 ]. An infected anopheles bites a non-infected human who might become infectious after some time. If another anopheles bites this infectious human, it can be infected and become—after some delay—infectious again so that the cycle starts anew. The autocatalytic cycle is the basis for exponential growth, which is very difficult to understand for human brains. However, the causal loop diagram clearly demonstrates the interdependencies between the variables. Thus, it reduces complexity and, consequently, uncertainty.

Causal Loop Diagram of Malaria. Source own, based on [ 24 ].

The balanced score card (BSC) can also be described as a causal loop diagram as it connects the different dimensions of strategic business performance [ 25 ]. While operational management frequently focusses on one performance dimension (usually profit), a BSC includes other dimensions (such as potentials, customer satisfaction, etc.) and shows their interdependencies. This approach reduces complexity and uncertainty by indicating the respective causalities of strategic success.

Finally, the degree of uncertainty grows exponentially with the distance between the day of planning and the day of action, i.e., the higher the time horizon, the higher the uncertainty. Consequently, strategic planning is planning under uncertainty with many different alternatives that can occur. This is reflected by scenarios or simulations. Uncertainty can have different dimensions, i.e., we can have uncertainty concerning parameters (e.g., medical infectivity of a virus), uncertainty about certain structures (e.g., natural reservoir of a virus) and uncertainty concerning processes (e.g., impact of an intervention program on incidence) [ 26 , 27 ]. Consequently, we simulate the impact of changes of parameters, structures and equations on the long-term results of a system or an intervention in the sense of “What-if?” Furthermore, we analyse which parameters, structures and processes are necessary for achieving a certain result in the sense of “How-to-achieve?” Finally, we develop scenarios of constellations of parameters, structures and relationship, which are “worst”, “likely” or “best” in order to determine a corridor of potential developments of outputs. Thus, scenarios and simulations are instruments for reducing uncertainty and—partly—dynamics by developing a sensation of future realities and their probabilities.

In summary, we can state that strategic management is different from operational management. Strategic management has to deal with dynamics, complexity and uncertainty and requires a different set of instruments. However, strategic management is not primarily a question of a toolbox with strategic instruments. Instead, we see our organizations and the environment with a paradigm. This mindset must be future-oriented, risk-taking, cooperative and open for innovations. The strategic manager is constantly seeking new opportunities to serve the function of his organization better.

Henning and Rieckmann introduced the term “dynaxibility” to express the ability of an individual or an organisation to deal with Dynaxity [ 28 ]. In zone III—in terms of their conclusions—technical or hierarchical solutions are insufficient for achieving organisational objectives. Instead, the networks have to be viewed as “living systems” with human beings with personalities that go beyond the traditional assumption of the agent of production “labour”. Co-workers in zone III are seen as “complex men” [ 7 ] with their own feelings, aspirations, likes and dislikes. They cannot be fully “managed” but require identifying a valuable goal, sense the meaning of their work and have a chance of personal development [ 29 ]. Table 2 shows some characteristics of effective leaders in zone II. We allocate the terms given by Rieckmann to the characteristics of zone III. It becomes obvious that the characteristics of a “good leader” in Dynaxity zone III focus on the ability to deal with dynamics, complexity, uncertainty and people. It is also obvious that no single leader can have all these abilities; i.e., management in zone III has a tendency to result in team-effort.

Characteristics of high dynaxibility. The allocations to the terms dynamics, complexity, uncertainty and people-orientation are marked with an X. Source: own, based on [ 11 , 12 ].

4. Applications

The healthcare sector of many countries is now in Dynaxity zone III. In this section, we will present different examples from the healthcare sector to underline our statements and show the impact of zone III for the management of healthcare services and systems as a call for more strategic management.

The first example follows the synchronic and diachronic phases of the pathways of German hospital financing and demonstrates the relevance of the Dynaxity model for this development. The second example provides a model of the development of innovative implants and, in particular, the need to reflect on the lifelong consequences of implants as the strategic dimension.

4.1. Hospital Financing in Germany

Figure 8 exhibits the phases of German hospital financing. We can distinguish five major phases [ 9 ]. Until 1936, hospital financing in Germany was almost free and did not have to follow any Governmental regulations. Health insurances funds negotiated rebates with the hospitals, which were based on daily rates and covered all costs (monistic financing). The system was functional for decades, but medical and social progress required more Government interferences. More and more services could be provided by hospitals and the costs exploded such that the national socialists interfered in the previously free hospital market and ordered a price stop. Hospital financing instruments (monistic and daily rate) remained unchanged, but the Government fixed the rules of calculating the rates. A consequence was that German hospitals could not follow international medical and technical developments. In 1948, the Government of Western Germany attempted to return to the original free system, but the prices exploded. Consequently, only six months later, the government interfered again and fixed the prices.

Phases of German hospital financing. Source own, based on [ 9 ].

During the first years after World War II, the prospering economy provided sufficient funds to finance hospitals (at least in Western Germany). However, the rapid technological progress of medicine as well as the first economic crisis after WWII in the 1960s placed pressure on the government to support hospitals financially. The solution was dual financing (1972), where the health insurance funds refund current expenditure while the government is responsible for funding the buildings, equipment and vehicles of hospitals irrespective of ownership. At that time, some people preferred returning to a government-free system, but dual financing strengthened the role of the government.

The innovative financing system was quite successful, but German hospitals remained quite inefficient in comparison to other countries. After reunification, Eastern German hospitals (which had had a budget-based hospital financing system since 1946) required tremendous funds to reach the Western German level such that the inefficiencies became a challenge. Consequently, policy makers searched for alternative financing regimes. Some wanted to return to the monistic system prior to 1972, but it was agreed that the system should remain dualistic but based on flat rates, which involved the so-called German Diagnosis Related Groups (G-DRG).

One consequence of this system was that the payment of the insurance schemes is a price that need to be paid and the hospitals decided how they could use this price to recover their costs. For different reasons, nurses became the piggy bank of hospitals; i.e., the number of nurses and their salaries declined in comparison to other cost items and staff categories. The result was a “nursing crisis”, which placed strong pressure on politicians. Some wanted to return to monistic financing, and others wanted to return to daily rates. The selected solution is a mixed financing regime where the cost of nursing is taken out of the G-DRG system and financed by a specific nursing budget while other recurrent costs are financed by flat rates. This system (called aG-DRG) was introduced in 2019 [ 30 ].

Based on Figure 8 , we can conclude that German hospital financing went through a number of synchronic and diachronic system regimes. The solution of the old crisis was frequently the seedling for the new crisis [ 31 ]; i.e., it is likely that the fifth phase is not the final endpoint but new phases will occur. During the five phases, the hospital financing system developed from Dynaxity zone I to zone III. The number of changes (expressed in major regulations for hospital financing) has steadily increased in the last 100 years. While there were hardly any major alterations in the first decades, there are currently several major changes per year. The dynamics has proceeded from static to turbulent.

At the same time, the system has become increasingly complex. Until the year 1983, hospitals produced only one single service unit, the bed day. From 1983 to 2003, hospitals (with some exceptions) were also financed by daily rates, but they were not calculated per bed day for the entire hospital, but for each department; e.g., a hospital with 10 departments had 10 different services. Since the introduction of G-DRGs as a compulsory financing system, hospitals have more services (year 2022), with almost 1300 different services. Thus, not only has the technology of medical services become increasingly complex but also the financing regime. Instead of having a one-product enterprise, we have a complex multi-product enterprise. There is no doubt that German hospital financing is in zone III and uncertainty with unexpected frequent substantial changes is a constant threat for hospital planning.

The introduction of G-DRGs was a major call for strategic management in German hospitals. While the annual budget was the pivotal unit in German hospital management before, DRGs forced management to think years ahead and to develop a production plan that allows fulfilling the function of the hospital and its survival on the market. Until 1983, hospitals in Germany could not make up a loss because the costs of previous years were refunded in the new year by calculating the daily rate accordingly. Even until 2003, it was rather difficult to run into a loss because, in most cases, the daily rates of the departments were calculated accordingly. However, since the introduction of DRGs, hospitals have to decide on the service portfolio, i.e., what products they want to offer for certain customers with certain needs. This is a new challenge for hospitals, and the answer to these questions goes far beyond the one-year-perspective.

A service portfolio is a typical instrument of strategic management that has only become relevant for hospital managers in the last decades. Until 1993, hospitals could not specialize on certain services but had to provide every service in their catchment area, which was obligatory at the level of the hospital. Currently, hospitals can specialize as long as the needs of the populations are covered. In the example of Figure 9 , the portfolio covers three departments (ENT, orthopaedic surgery and paediatrics) and analyses the marginal contribution and the number of competitors in the catchment area. The circles represent services, and the area of the circles is proportional to the turnover of this service.

Portfolio of a hospital. Source: own.

In this example, ENT has three different services. All of them have positive marginal contributions and should be sustained. Paediatrics has three services; two of them have a positive marginal contribution and one has a negative contribution. However, the latter is a unique service in the catchment area; i.e., it cannot be closed-down without bringing problems to the population. The other two services will have to subsidize this service. Orthopaedic surgeries also have a negative contribution, but none of them are unique in the catchment area. They can be closed without making patients suffer.

Portfolio analyses reduce complexity because norm strategies can be utilized for different constellations. Such a portfolio is highly relevant in zone III where short-term and deterministic solutions are not sufficient to cover the complexity and dynamics of the system. Instead, portfolios can be used as instruments of strategic management to make evidence-based decisions relative to the services provided.

4.2. Development of Innovative Implants

Therapy concepts with innovative implants are used more and more frequently in the treatment of chronic degenerative diseases, additionally reinforced by the high prevalence and further increasing incidence rate in the aging population [ 32 ]. In order to be able to meet these challenges adequately, a strategic approach in implant development management will be indispensable in the future.

From the initial idea of a physician or engineer of a new implant to the market-ready product and the implementation of the innovation as a standard therapy, there are many process steps to go through [ 33 ]. This includes phases of research and development, certification, reimbursement options and launch. The classic view of the implant development process ends with its adoption as a standard. However, improving the patient’s quality of life should play a decisive role in the development of innovative implants. Above all, the aim should be for the patient to use the implant for as long as possible after successful implantation. This adds a strategic dimension that expands the planning horizon by including the lifelong consequences of innovative implant.

For a long-term patient-centred perspective, specific aspects must be taken into account. First, the decision between doctor and patient of an implant must also be considered with regard to a benefit that may only occur later. Second, there should be an ethical assessment of the costs and benefits of current and future periods. Third, lifetime implants require more extensive clinical investigations and fatigue strength testing, which could create additional innovation barriers throughout the implant development process and need to be addressed.

In conclusion, a long-life perspective focused on the patient should be systematically integrated into the implant development process. This is based on several requirements for the implant, including durability, maintenance, interchangeability and compatibility with other implants and future therapies. In Figure 10 , an innovation model of the implant development process is shown, which embraced both strategic and operative management decisions. It enables a targeted orientation to the life perspective and an effective response to the high demands of an increasing residual lifetime after the first implantation.

Modified implant development process with long-life perspective. Source own.

Management in Dynaxity Zone III must take into account dynamics, complexity and uncertainty. As shown in the last section, this is already reflected in areas of healthcare. Another example is the high relevance of leadership in dealing with the COVID-19 pandemic. The greatly increased speed of interactions and the complexity of our societies require more strategic thinking when fighting pandemics than in previous centuries. Strategic COVID-19 management is not only a question of technical prognosis but also, in particular, is a question of communication, motivation and inspiration. The same applies to dealing with other “new” pathogens such as multi-resistant bacteria that healthcare facilities are confronted with today. A long-term strategy is required that takes into account the interactions between the various different health areas and the people actively addressed for networking.

5. Conclusions

It is obvious that the post-industrial society and economy are in Dynaxity zone III, which is characterised by high dynamics and complexity, which at the same time leads to an unknown degree of uncertainty without pausing stabilizing phases. Change is the “new normal”, and peaceful stability is the exception. The healthcare sector is no exception to this.

It must be understood that in today’s world is a system that cannot be fully described or analysed in a conventional manner as many new elements and dependencies are evolving and every action has an impact on many elements now and in the future. These challenges call for a response of the top management of nations, economies, health care services and all other institutions with a long-term perspective, consideration of interdependencies and synchronisation of different levels of plans. With the implementation of strategic management, the necessary long-term perspective is appropriately weighted and new analysis and planning tools are available. This has already been carried out in many areas of the health sector, as was demonstrated in this paper for several exemplifications. Other areas will inevitably follow.

At the same time, these new managerial and intellectual requirements pose a great challenge to our personal ability as human beings to design systems and organisations or to make meaningful decisions. The correct handling and use of information as well as the derivation of sustainable measures are prerequisites for strategic management, and employees are more indispensable than ever. Healthcare facilities such as hospitals must also be aware of this fact in their personnel policies and react to it. This includes investing in human capital by training and other educational opportunities to acquire comprehensive methodological and social skills. Ultimately, a completely new mindset and long-term and systematic thinking need to be established. What we require in health care—now more than ever—are co-workers with the ability to deal with complexity, survive under uncertainty, interrelate in networks and follow the values of health care with intrinsic motivation. Nobody has these strategic talents by nature, but we can foster, encourage and cultivate them in our collaborative cultures in the health care system.

Strategic management is based on strategic thinking. Consequently, any healthcare strategy must begin with a change in mindset or even the underlying paradigm. Strategic management is not primarily an application of management tools (although there is a lot to know and learn about these tools), but it is a mindset: the mindset for a dynamic, complex and stochastic postmodern world with ever-increasing speed, dependencies and uncertainty. These meta-parameters must come to mind for healthcare decision makers if they are to successfully manage change. Moreover, it helps to summarize these parameters in one concept or one word: Dynaxity. Therefore, knowing the fundamentals of Dynaxity can guide the thinking, decisions and actions of healthcare managers by directing their thoughts in the right direction.

Funding Statement

The project “Analyses of effectiveness and efficiency of regional MDRO-Networks—EARN” was funded by the BMG (grant: 2516FSB107). The ‘partnership of Innovation in Implant Technology (RESPONSE)’ was funded by the BMBF (grant 03ZZ0914C and 03ZZ0934A).

Author Contributions

Both authors have substantially contributed to the conception, writing and revising of the manuscript. All authors have read and agreed to the published version of the manuscript.

Institutional Review Board Statement

Not applicable.

Informed Consent Statement

Data availability statement, conflicts of interest.

The authors declare no conflict of interest.

Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations.

How to Start a Healthcare Consulting Business

Below you will learn the key steps to starting a healthcare consulting business.

Download the Ultimate Consulting Business Plan Template

10 Steps to Starting a Healthcare Consulting Business

1. conduct market research to determine demand.

An important step to starting a healthcare consulting business is conducting market research. To begin, you must learn what services your clients want and how much they are willing to pay for them. There are two ways you can go about conducting this research:

• Survey your target market . This can be done through online surveys, focus groups, or interviews with potential clients.
• Perform a competitive analysis . This involves studying your competition and understanding the consulting services they offer, as well as what prices they charge.

Once you have analyzed the survey data, determine which types of businesses are likely to hire you and how much they are willing to pay. Use this information to set your consulting prices.

2. Name Your Healthcare Consulting Firm

Once you have analyzed your market and determined what services clients want, it’s time to name your business. While naming a business can be difficult, there are a few rules of thumb to keep in mind:

• Keep it Short : Your business name needs to be short enough for clients to remember and say.  
• Keep it Relevant : Your business name should be relevant to the healthcare consulting services you offer and your ideal client’s needs.
• Keep it Memorable : Using clever ideas and words, help your audience connect with your business.
• Focus on Your Target Audience :  Make sure that whoever sees or hears your company name understands who you are targeting as clients.

Read our article about choosing the right business name .

3. Choose Your Business Structure and Set-Up Your Company’s Legal Entity

As with any business, the type of legal entity you set up is critical.  After all, you want your company to be treated as a separate entity, not just an extension of yourself.  There are several types of structures in which you can start your healthcare consulting company. Three popular options are sole proprietorship, S-corporation and LLC (limited liability company).

• Sole Proprietorship :  A sole proprietorship is one in which the business and the owner are considered to be one entity. Therefore, you are personally responsible for all debts and liabilities your healthcare consulting firm may incur. One benefit of this type of structure is that it’s easy to set up and there are no formal filings required.
• S-Corporation : An S corporation is a type of C Corporation that was designed by the IRS to help small corporations minimize their paperwork while still gaining many of the tax benefits of incorporating. It also offers protection for business owners in case of lawsuits and other liabilities.
• Limited Liability Company (LLC) :  An LLC is a structure in which the company is considered a separate legal entity from its owners. This means that the company is responsible for its own debts and liabilities. This type of structure offers protection for business owners in case of lawsuits.

Read our article comparing the most common consulting business structures .

4. Write a Healthcare Consulting Business Plan

A business plan is a document that outlines your business goals, strategies, and how you plan to achieve them. For a healthcare consulting company, your business plan should include the following:

• Business Description : Describe what your company does, who your target market is, and how you will differentiate yourself from the competition.
• Industry & Market Analysis : Detail your research on the healthcare industry and what consulting services clients are most likely to want.
• Financial Plan : Outline your estimated income and expenses for the next three to five years.

Other sections of your plan will answer other key questions such as the following:

• What are your areas of expertise?
• What services can you offer your clients?
• Who is your target audience?
• How will you differentiate yourself from the competition?

Your business plan should also include several sections that detail your company’s history, current financial situation, and future goals. These sections will allow an investor to learn more about your company before they commit to investing in it.

Read our article about how to write a consulting business plan .

5. Apply for a Business License and Necessary Health Licenses

You must register your healthcare consulting company as a legal entity with the state in which you plan to do business.

To file your business with the state, obtain the necessary forms from the Secretary of State’s website or local County Clerk’s office. You will be required to pay a small fee for filing your business with the state.

Registering with the federal government may or may not be required. You can register your business on the federal level by obtaining an Employer Identification Number (EIN) from the IRS.

Read our article about obtaining the proper consulting business licenses .

6. Determine Your Budget & Apply for Funding as Needed

As with any business, you will need to use your own capital to finance the initial stages of your health consulting business.  Your budget may also include several other costs including marketing expenses and the salary you wish to pay yourself.  

After determining how much money you will invest in starting your business, review some options for financing your business.  Here are several financing options that may be available to you:

• SBA Loans : The Small Business Administration (SBA) is a government agency that provides financial assistance to small businesses in the U.S.  
• Bank Loans : Many small business owners are able to secure loans from their local banks. Often, you can borrow money for any purpose that relates to the growth of your company.
• Friends and Family : You can consider getting loans and/or equity investments from friends and family members..
• Angel investors : Angel investors may provide debt or equity funding to you.

Read our article about the costs associated with starting a consulting business to help you determine if funding is needed.

7. Get the Technology & Software Needed to Run Your Healthcare Consulting Company Efficiently

As a healthcare consulting firm, you will need different types of technology to complete projects and keep track of your company’s operations. To simplify the process of starting a consulting business, we’ve provided a list below detailing some items that you’ll need:

Computers : Even if most of your work is done remotely with clients on the other side of the country or world, you will need at least one computer that is dedicated to your healthcare consulting company.

Software : Software is an essential component of any consulting business. The right software can help you manage projects, track expenses, and communicate with clients more effectively.

Here are some popular software platforms that may be beneficial to your business:

• Microsoft Office : This software suite includes a variety of applications that can help you manage your company, including Word, Excel, and PowerPoint.
• QuickBooks : This software is designed for small businesses and can help you track income and expenses, create invoices, and manage payroll.
• Basecamp : This project management software can help you manage multiple projects simultaneously and keep track of deadlines and milestones.
• Gmail : Google’s email platform offers several features that can be helpful for consulting firms, including the ability to access the same email from multiple devices.
• CRM : Customer relationship management software can help you track customer communication, manage leads, and create reports that detail your sales activities.

Additional software specific to healthcare consulting may include:

• EHR software : This software is used by healthcare providers to manage patient data.
• HIPAA compliance software : This software helps organizations comply with the Health Insurance Portability and Accountability Act (HIPAA).
• EMR software : This software is used by healthcare providers to manage patient information and track medical appointments.

Read our article about the technology and software you need to run a consulting business .

8.  Market Your Healthcare Consulting Firm to Potential Clients

Once you’ve established your healthcare consulting company, the next step is to market it to potential clients.

Here are some common marketing strategies used for healthcare consulting firms:

• Website : A website is an essential component of any marketing strategy. It provides potential clients with information about your company, including the consulting services you offer and the team of professionals who work for you.
• Online marketing : Marketing your business online, such as through a business website and pay-per-click and/or social media marketing, can help you reach a larger audience looking for your services.
• Direct Mail : Direct mail is a traditional marketing strategy that can be used to reach potential clients. You can send flyers, brochures, or letters to potential clients that provide information about your company and the services you offer.
• Trade Shows : Trade shows are a great way to connect with potential clients in person. You can exhibit at healthcare-focused trade shows or attend trade shows in other industries to reach potential clients who may need your services.
• Networking Events : Networking events are a great way to meet potential clients and connect with other professionals in your industry. Attending events such as Chamber of Commerce meetings or breakfast meetings can help you build relationships with potential clients.

You should also consider ways to incentivize potential clients to choose you over another healthcare consulting firm. Some incentives that work well include:

• Lower rates : Many healthcare consulting firms offer lower rates on their consulting services to attract new clients.
• Discounts on services : Offering discounts on certain projects may help you win bids against other healthcare consulting firms.
• Free consultation : Providing potential clients with a free consultation can help them determine if your company is the best one for their needs.

Learn more about how to market your consulting business .

9.  Establish a Price Structure and Billing System

There are a few factors to consider when establishing your price structure:

• Hourly rates : Charging by the hour is a common way to price consulting services. This allows clients to budget for your services and gives you the flexibility to charge more for complex projects.
• Project rates : Charging a flat fee for a project can be beneficial for both the client and the consultant. It ensures that clients know what they are paying up front, and it allows healthcare consultants to charge more for more complex projects.
• Retainers : A retainer is a set amount of money that the client pays upfront for consulting services. This can be a good option for clients who need regular consulting services.

No matter which pricing structure you choose, be sure to clearly communicate it to your clients. Additionally, have a detailed invoice template that includes all the healthcare services you provided so the client knows exactly what they are paying for.

10.  Manage Client Relationships and Deliver Projects

After finding new clients and marketing your healthcare consulting business, you should begin delivering the projects and getting paid. This means managing client relationships and making sure that clients are happy with your work. Some of the ways to manage relationships with your healthcare clients include:

• Regular communication : Make sure to stay in touch with your clients, even if there is not a lot of work to be done. By keeping in touch regularly, you can ensure that they know you are available and that they will be the first ones you contact when new projects arise.
• Project updates : Keep your clients updated on the progress of each project. This can be done in a variety of ways, such as through emails, reports, or presentations.
• Frequent contact : In some cases, it may be necessary to contact your clients more often than usual. If there are major changes to the project, for example, or if you need additional information from them.

Delivering projects on time and within budget is essential for a healthcare consulting business. It can be beneficial to create a project management plan that outlines how each project will be completed. This will help ensure that all deadlines are met and that the client is happy with the final product.

Learn more about how to effectively manage client relationships .  

Starting a Healthcare Consulting Business FAQs

Why start a healthcare consulting business.

Healthcare consulting is a growing industry, and there are many reasons why starting a healthcare consulting business might be the right move for you. Some of the benefits of owning a healthcare consulting company include:

• You get to be your own boss
• The work is interesting and varied
• There is potential for high income
• You can help people 

What is Needed to Start a Healthcare Consulting Business?

There are a few things you will need in order to start a healthcare consulting company. These include:

• A clear understanding of the healthcare industry
• Marketing materials
• An office space or home office
• Healthcare consulting software

What are Some Tips for Starting a Healthcare Consulting Company?

The following tips can help you to start a healthcare consulting company:

• Do your research : Before you launch your business, be sure to do your research and understand the industry inside and out. This will help you to develop a strong strategy and provide valuable services to your clients.
• Establish relationships with healthcare professionals : One of the best ways to grow your business is to establish relationships with healthcare professionals. Attend conferences, meet-ups, and other events where you can network with these individuals.
• Offer a range of services : In order to be successful, it is important to offer a variety of services to your clients. This will help you to meet the needs of a wider range of clients.
• Keep up with industry changes : The healthcare industry is constantly evolving, so it is important to keep up with the latest changes. This will help you to stay ahead of the competition and provide valuable services to your clients.
• Market your business : Marketing is key when it comes to a successful healthcare consulting company. Be sure to create a strong marketing strategy and use a variety of marketing channels to reach your target audience.

Exploring the Intersection of Business and Healthcare

Emily Dixon

January 29, 2024

As the intersection of business and healthcare evolves, Georgetown University’s McDonough School of Business aims to equip future business leaders with the knowledge they need to lead innovation in the healthcare industry. For individuals considering an advanced degree in business, the MBA Certificate in the Business of Healthcare offers an interdisciplinary view of the healthcare system and how business can work across sectors to drive solutions.  Whether you are looking to pursue your MBA part-time or full-time, in-person or online, students pursuing this certificate gain valuable insights into the intricacies of healthcare management, leadership in healthcare organizations, financial management in healthcare, and the role of innovation and technology in shaping the healthcare sector. 

Navigating the Complex Landscape of Healthcare

The healthcare sector is a complex and rapidly changing industry. For individuals looking to advance their business studies with a focus on healthcare, understanding the industry’s landscape is imperative. This sector encompasses a wide array of services, from hospitals and clinics to pharmaceutical companies and health insurance providers.  Key players and stakeholders in the industry like healthcare providers, healthcare organizations, health insurance companies, pharmaceutical companies, and medical device manufacturers increasingly need business leaders to meet the growing industry demand. The U.S. Bureau of Labor Statistics consistently reports on and projects the health care sector as being one of the industries with the fastest growing output , which further emphasizes the need for the contribution of career ready professionals who can lead through change and propose solutions. Understanding the trends and challenges in the industry, such as the shift towards value-based care and the adoption of digital health technologies, is equally important. 

Health industries with the largest wage and salary employment growth

According to the U.S. Bureau of Labor Statistics , health industries across individual and family services, home healthcare services, and hospitals provide the largest wage and salary employment growth.

By staying informed and adapting to the ever-evolving healthcare industry, individuals looking to further their studies in the business of healthcare can seize opportunities and contribute significantly to improving healthcare delivery and outcomes. 

Leadership Roles in Healthcare Organizations

Effective leadership in healthcare organizations plays a pivotal role in ensuring the delivery of high-quality patient care, managing resources efficiently, and fostering a culture of innovation and continuous improvement. For individuals considering a business degree with a focus on healthcare, understanding the roles and responsibilities of healthcare leaders is crucial. 

Healthcare leaders need a comprehensive understanding of healthcare policies, regulations, and financial management. They also should possess strong interpersonal and communication skills to effectively collaborate with diverse stakeholders. Furthermore, ethical leadership is paramount in the healthcare sector, with leaders expected to demonstrate integrity, transparency, and a commitment to ethical decision-making.

The U.S. economy is projected to add almost 4.7 million jobs from 2022 to 2032…The health care and social assistance sector is projected to not only grow most rapidly of any sector, but it is also projected to create about 45 percent of all the projected job gains from 2022 to 2032. U.S. Bureau of Labor Statistics, Employment Projections: 2022-2032 Summary

The Impact of Innovation and Technology in Healthcare 

The integration of technology in healthcare has brought about significant improvements in efficiency, patient care, and access to healthcare services. For those considering a business degree with a healthcare focus, understanding the impact of technology on healthcare delivery from the business perspective to the consumer experience is critical. From the digital transformation of healthcare organizations to emerging trends in healthcare innovation like artificial intelligence, telemedicine, and wearable devices, technology is revolutionizing the way healthcare is delivered. For individuals looking to further their studies in the business of healthcare, staying abreast of these trends can provide a competitive edge in a rapidly evolving industry.

Advance your healthcare business aspirations through Georgetown’s MBA program.

The MBA Certificate in the Business of Healthcare equips students with the knowledge and skills to lead at the intersection of business and healthcare, understanding the changing dynamics and demands of the U.S. healthcare system.

• Travel Insurance

Student Travel Insurance For A Semester Abroad

Fact Checked

Updated: Mar 22, 2024, 1:26pm

Spending a semester in a foreign country can be educational and enriching, but unforeseen issues may arise. To best protect your trip investment, and your student’s health and possessions, it’s a wise choice to purchase a comprehensive travel insurance policy before they depart.

Is Travel Insurance Necessary for Studying Abroad?

Travel insurance covering a semester outside the U.S. may be required by your child’s school, so it might not be optional. Regardless, buying travel insurance to cover a semester overseas is worth considering.

Let’s say your student wipes out on a rented scooter and becomes seriously injured. Or, an emergency back home means they have to catch a last-minute flight back to the U.S. to be with your family. Things don’t always go as planned, and that’s where travel insurance comes in. It can help pay for medical costs, trip delays, lost or stolen luggage and costs associated with other unexpected problems.

Compare & Buy Travel Insurance

What travel insurance should a student abroad have.

There are many travel insurance companies that can cover the full duration of any standard study abroad program.

Daniel Durazo, a spokesperson for Allianz Travel, says these are the top types of travel insurance for students studying abroad:

• Travel medical insurance , which helps pay for medical costs if the student gets sick or injured during their time abroad
• Trip cancellation travel insurance , which reimburses you for pre-paid, non-refundable trip deposits on things like airline tickets, hotel rooms, rental cars and tours, due to qualifying reasons listed in your policy
• Baggage insurance , which can reimburse you for lost or stolen belongings
• Travel delay insurance , which helps pay for personal necessities the student needs to buy during an unexpectedly long layover

Read the fine print of the policy so you know what is and isn’t covered as exclusions apply to core coverages. You also want to be sure the policy will match the needs of your situation. There are unique benefits from different providers, so it’s wise to compare what’s offered by different companies.

Why travel medical insurance is essential for a semester abroad

Durazo cautions that medical treatment overseas can be expensive, with payments often required either prior to getting treatment or before you can leave the hospital. That’s why having travel medical insurance is vital for traveling outside the U.S.

“Many domestic health insurance plans may not cover your child in other countries,” he explains. “If you’re not prepared to pay all the medical bills out of pocket, this is a very important reason to buy travel insurance.”

Emergency medical evacuation coverage can also be important to have in a study abroad scenario. “If the student’s illness or injury is extremely serious, the closest medical facility to campus might not be adequately equipped or staffed to provide them the care they need, and they might need to be transported to the nearest large city or even back home, depending on the policy terms,” says Scott Adamski, spokesperson for AIG Travel.

“In such a case, an evacuation could take the form of anything ranging from a family member acting as a non-medical escort to get the student back home, to a nurse, paramedic or physician escort on a commercial flight, including oxygen, to a lay-flat seat, to an actual air ambulance and stretchers or other similar amenities,” he says.

Costs for medevac services can range from “$20,000 to the six figures,” Adamski says, which is why emergency medical evacuation coverage is vital to have if you’re traveling overseas.

Check the length of travel insurance coverage

Some travel insurance policies may only offer coverage for up to 90 days so be sure the policy you select is valid for the entire duration of the immersive study period, says Durazo.

Here are examples of travel insurance plans providing up to 180 days of coverage, including trip cancellation, trip interruption and medical expense coverage, among other core benefits:

• OneTrip plans by Allianz Travel
• Essential, Preferred and Elite travel insurance plans by Arch RoamRight
• Explorer plan by World Nomads

Look for mental and psychological health coverage

Mental and psychological issues are usually excluded from travel medical expense coverage. But some plans do provide benefits, under certain conditions.

For example, AIG Travel Preferred and Deluxe plans provide coverage for treatment related to mental or psychological health.

“This coverage is included specifically to assist or treat traveling students that might have challenges abroad—related to being away from home for the first time, stressed with studies in a new environment, or anxious/depressed for any other reason,” says Adamski.

Be aware that a properly licensed medical professional must diagnose or treat the traveler in order for benefits to apply,” he says.

Also note that the student may have to be hospitalized for a certain period of time to qualify for travel medical expense coverage for mental or psychological issues. The Trip Protector Preferred plan from HTH Worldwide requires a three-day hospitalization, for instance.

24-hour hotline for emergencies

Another important benefit that travel insurance can offer students traveling abroad is a 24-hour emergency hotline. If your student has an accident and needs immediate help, or is the victim of crime, emergency assistance agents can direct your student to the help they require.

Special Considerations for a Semester Abroad

While every student traveler is different, many have a significant amount of global travel experience. A young adult’s selected activities, transportation choices and housing during their journeys all impact their risk, says Adamski.

“Students on shoestring budgets are more likely to make compromises on accommodations and transportation, such as staying in less expensive hotels, hostels, home-share rentals or campus dorms, perhaps with people they’ve only recently met,” he says. Students abroad also often walk, bike, rideshare or use trains and university-provided vans and shuttles to their destinations.

“These forms of accommodation and transportation may present different challenges than other options,” says Adamski.

Having a solid travel insurance policy is a safety net for these sometimes dicey situations.

It’s just as important to note that, compared to other types of travelers, Adamski says students who are abroad are also likely to be more adventurous and immersed in local culture, conduct more regional travel and engage in nightlife activities.

International health insurance for students

Don Van Scyoc, a spokesperson with GeoBlue, a licensee of the Blue Cross Blue Shield Association that specializes in global health plans and travel medical insurance, agrees.

“Students abroad may be away from parental supervision for the first time, or the longest time than before. They may have easier access to alcohol in other countries, than at home. Because of this, they are more likely to suffer trauma from falls, motor vehicle accidents, etc.”

If you want an international health plan designed for students, consider the Navigator plan by GeoBlue . Coverage options range from three months up to a year. Here are some key benefits:

• Meets the F1 and J1 Visa requirements
• Offers an unlimited annual and lifetime medical maximum
• Collegiate sports activities are covered
• Alcohol impairment-related incidents are covered

Coverages with the Navigator plan include:

• Contraceptive services and supplies
• Medically necessary Covid-19 testing and treatment
• Prescriptions
• ​​Preventive care (physicals, vaccinations and related lab work)
• Inpatient and outpatient medical care and services
• Physical therapy
• Diabetic supplies

“Our student Navigator plan offers inpatient and outpatient benefits for both mental health and substance abuse. For both mental health and substance abuse outpatient care, the plan deductible is waived and there is no limit on the number of visits,” says Van Scyoc.

An additional benefit that is particularly helpful to someone in a new country is unlimited telemedicine services. “Through this plan, students and faculty have access to medical professionals anytime, day or night, via our Global TeleMDTM app,” says Van Scyoc.

Common Problems for Students Abroad

AIG Travel has seen these common problems during student travel abroad:

• Language barriers
• Illness from street food , particularly if it contains ingredients unfamiliar to the traveler’s normal diet
• Lower drinking age , which can lead to overindulgence and make young students a more attractive target for criminals
• Unfamiliar traffic laws , which could lead to property damage or injury if a student borrows a bike or rents a scooter
• Unfamiliar cultural norms and expectations , which may lead to students inadvertently offending local citizens
• Financial requirements , which may surprise students if they need to be treated at a local hospital

When Should You Buy a Travel Insurance Plan?

Travel insurance is ideally purchased within 15 days of the initial deposit date for the trip, says Adamski. That way:

• You have the maximum amount of time for your trip cancellation benefits
• You have access to early purchase benefits such as “cancel for any reason” travel insurance and “interruption for any reason” travel insurance. These upgrades cost extra but partially reimburse forfeited, non-refundable trip costs, as long as you cancel or leave early during specified timeframes.
• You can qualify for a pre-existing medical condition exclusion waiver . This allows you to include coverage for medical conditions you’ve had prior to buying your travel insurance policy.

Related : Advantages to buying travel insurance when you book your trip

If you didn’t buy travel insurance when you booked the trip, don’t fret. A policy can be purchased up to 24 hours prior to the trip departure date.

It’s important to note that the cost of tuition for a study abroad program is not something that can be insured on a travel insurance policy, as it is not considered a trip cost.

Get Forbes Advisor’s ratings of the best insurance companies and helpful information on how to find the best travel, auto, home, health, life, pet, and small business coverage for your needs.

Priorities When Buying Student Travel Insurance

When buying travel insurance for a student studying abroad, these important considerations should be top of mind.

Put emphasis on medical expense coverage

Ensuring the right level of medical expense coverage for your student should be a top priority. While standard travel insurance plans usually offer some level of medical coverage, there are often enhancements available.

“For instance, we offer a product enhancement called our ‘Medical Bundle,’ which allows the traveler to double the coverage limits for medical expense and evacuation,” says Adamski of AIG Travel.

Look for travel assistance services that come with the travel insurance plan

For example, travel assistance is included in all AIG Travel Guard base plans, says Adamski, and services are available to policyholders on a 24/7 basis.

He recommends that travelers familiarize themselves with the breadth of the plan’s assistance offerings, as it can provide critical aid such as hospital or doctor recommendations and translation services across a wide range of languages. They can even provide restaurant or sightseeing recommendations.

Pandemic Coverage for a Student Studying Abroad

Covid and its variants create a greater need for travel insurance and the right coverage for medical emergencies. In addition, some international destinations have new and evolving medical insurance requirements for incoming travelers.

Changes to these requirements update frequently, so you should consult with your study abroad program and the U.S. State Department for current information.

Be sure the travel insurance policy you choose covers Covid-related cancellations and medical expenses. See Forbes Advisor’s ratings of the best pandemic travel insurance plans .

AIG Travel offers a new Quarantine Bundle (in approved states), an optional upgrade for travelers who may be required to quarantine unexpectedly while traveling abroad.

“This coverage provides a flat, per-day benefit to quarantined customers who have selected the Quarantine Bundle. It also expands the qualification for travel interruption coverage to include a circumstance that might see the traveler denied boarding because of the results from a mandatory health-related screening at the boarding site,” Adamski says.

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Erica Lamberg is a personal finance and travel writer based in suburban Philadelphia. She is a regular contributor to USA Today and her writing credits include NBC News, U.S. News & World Report, Business Insider, Oprah Magazine and Creditcards.com. Erica is a graduate of the University of Maryland at College Park.

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The importance of a business plan

Business plans are like road maps: it’s possible to travel without one, but that will only increase the odds of getting lost along the way.

Owners with a business plan see growth 30% faster than those without one, and 71% of the fast-growing companies have business plans . Before we get into the thick of it, let’s define and go over what a business plan actually is.

What is a business plan?

A business plan is a 15-20 page document that outlines how you will achieve your business objectives and includes information about your product, marketing strategies, and finances. You should create one when you’re starting a new business and keep updating it as your business grows.

Rather than putting yourself in a position where you may have to stop and ask for directions or even circle back and start over, small business owners often use business plans to help guide them. That’s because they help them see the bigger picture, plan ahead, make important decisions, and improve the overall likelihood of success. ‍

Why is a business plan important?

A well-written business plan is an important tool because it gives entrepreneurs and small business owners, as well as their employees, the ability to lay out their goals and track their progress as their business begins to grow. Business planning should be the first thing done when starting a new business. Business plans are also important for attracting investors so they can determine if your business is on the right path and worth putting money into.

Business plans typically include detailed information that can help improve your business’s chances of success, like:

• A market analysis : gathering information about factors and conditions that affect your industry
• Competitive analysis : evaluating the strengths and weaknesses of your competitors
• Customer segmentation : divide your customers into different groups based on specific characteristics to improve your marketing
• Marketing: using your research to advertise your business
• Logistics and operations plans : planning and executing the most efficient production process
• Cash flow projection : being prepared for how much money is going into and out of your business
• An overall path to long-term growth

What is the purpose of a business plan?

A business plan is like a map for small business owners, showing them where to go and how to get there. Its main purposes are to help you avoid risks, keep everyone on the same page, plan finances, check if your business idea is good, make operations smoother, and adapt to changes. It's a way for small business owners to plan, communicate, and stay on track toward their goals.

10 reasons why you need a business plan

I know what you’re thinking: “Do I really need a business plan? It sounds like a lot of work, plus I heard they’re outdated and I like figuring things out as I go...”.

The answer is: yes, you really do need a business plan! As entrepreneur Kevin J. Donaldson said, “Going into business without a business plan is like going on a mountain trek without a map or GPS support—you’ll eventually get lost and starve! Though it may sound tedious and time-consuming, business plans are critical to starting your business and setting yourself up for success.

To outline the importance of business plans and make the process sound less daunting, here are 10 reasons why you need one for your small business.

1. To help you with critical decisions

The primary importance of a business plan is that they help you make better decisions. Entrepreneurship is often an endless exercise in decision making and crisis management. Sitting down and considering all the ramifications of any given decision is a luxury that small businesses can’t always afford. That’s where a business plan comes in.

Building a business plan allows you to determine the answer to some of the most critical business decisions ahead of time.

Creating a robust business plan is a forcing function—you have to sit down and think about major components of your business before you get started, like your marketing strategy and what products you’ll sell. You answer many tough questions before they arise. And thinking deeply about your core strategies can also help you understand how those decisions will impact your broader strategy.

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2. To iron out the kinks

Putting together a business plan requires entrepreneurs to ask themselves a lot of hard questions and take the time to come up with well-researched and insightful answers. Even if the document itself were to disappear as soon as it’s completed, the practice of writing it helps to articulate your vision in realistic terms and better determine if there are any gaps in your strategy.

3. To avoid the big mistakes

Only about half of small businesses are still around to celebrate their fifth birthday . While there are many reasons why small businesses fail, many of the most common are purposefully addressed in business plans.

According to data from CB Insights , some of the most common reasons businesses fail include:

• No market need : No one wants what you’re selling.
• Lack of capital : Cash flow issues or businesses simply run out of money.
• Inadequate team : This underscores the importance of hiring the right people to help you run your business.
• Stiff competition : It’s tough to generate a steady profit when you have a lot of competitors in your space.
• Pricing : Some entrepreneurs price their products or services too high or too low—both scenarios can be a recipe for disaster.

The exercise of creating a business plan can help you avoid these major mistakes. Whether it’s cash flow forecasts or a product-market fit analysis , every piece of a business plan can help spot some of those potentially critical mistakes before they arise. For example, don’t be afraid to scrap an idea you really loved if it turns out there’s no market need. Be honest with yourself!

Get a jumpstart on your business plan by creating your own cash flow projection .

4. To prove the viability of the business

Many businesses are created out of passion, and while passion can be a great motivator, it’s not a great proof point.

Planning out exactly how you’re going to turn that vision into a successful business is perhaps the most important step between concept and reality. Business plans can help you confirm that your grand idea makes sound business sense.

A critical component of your business plan is the market research section. Market research can offer deep insight into your customers, your competitors, and your chosen industry. Not only can it enlighten entrepreneurs who are starting up a new business, but it can also better inform existing businesses on activities like marketing, advertising, and releasing new products or services.

Want to prove there’s a market gap? Here’s how you can get started with market research.

5. To set better objectives and benchmarks

Without a business plan, objectives often become arbitrary, without much rhyme or reason behind them. Having a business plan can help make those benchmarks more intentional and consequential. They can also help keep you accountable to your long-term vision and strategy, and gain insights into how your strategy is (or isn’t) coming together over time.

6. To communicate objectives and benchmarks

Whether you’re managing a team of 100 or a team of two, you can’t always be there to make every decision yourself. Think of the business plan like a substitute teacher, ready to answer questions any time there’s an absence. Let your staff know that when in doubt, they can always consult the business plan to understand the next steps in the event that they can’t get an answer from you directly.

Sharing your business plan with team members also helps ensure that all members are aligned with what you’re doing, why, and share the same understanding of long-term objectives.

7. To provide a guide for service providers

Small businesses typically employ contractors , freelancers, and other professionals to help them with tasks like accounting , marketing, legal assistance, and as consultants. Having a business plan in place allows you to easily share relevant sections with those you rely on to support the organization, while ensuring everyone is on the same page.

8. To secure financing

Did you know you’re 2.5x more likely to get funded if you have a business plan?If you’re planning on pitching to venture capitalists, borrowing from a bank, or are considering selling your company in the future, you’re likely going to need a business plan. After all, anyone that’s interested in putting money into your company is going to want to know it’s in good hands and that it’s viable in the long run. Business plans are the most effective ways of proving that and are typically a requirement for anyone seeking outside financing.

Learn what you need to get a small business loan.

9. To better understand the broader landscape

No business is an island, and while you might have a strong handle on everything happening under your own roof, it’s equally important to understand the market terrain as well. Writing a business plan can go a long way in helping you better understand your competition and the market you’re operating in more broadly, illuminate consumer trends and preferences, potential disruptions and other insights that aren’t always plainly visible.

10. To reduce risk

Entrepreneurship is a risky business, but that risk becomes significantly more manageable once tested against a well-crafted business plan. Drawing up revenue and expense projections, devising logistics and operational plans, and understanding the market and competitive landscape can all help reduce the risk factor from an inherently precarious way to make a living. Having a business plan allows you to leave less up to chance, make better decisions, and enjoy the clearest possible view of the future of your company.

Business plan FAQs

How does having a business plan help small business owners make better decisions.

Having a business plan supports small business owners in making smarter decisions by providing a structured framework to assess all parts of their businesses. It helps you foresee potential challenges, identify opportunities, and set clear objectives. Business plans help you make decisions across the board, including market strategies, financial management, resource allocation, and growth planning.

What industry-specific issues can business plans help tackle?

Business plans can address industry-specific challenges like regulatory compliance, technological advancements, market trends, and competitive landscape. For instance, in highly regulated industries like healthcare or finance, a comprehensive business plan can outline compliance measures and risk management strategies.

How can small business owners use their business plans to pitch investors or apply for loans?

In addition to attracting investors and securing financing, small business owners can leverage their business plans during pitches or loan applications by focusing on key elements that resonate with potential stakeholders. This includes highlighting market analysis, competitive advantages, revenue projections, and scalability plans. Presenting a well-researched and data-driven business plan demonstrates credibility and makes investors or lenders feel confident about your business’s potential health and growth.

Understanding the importance of a business plan

Now that you have a solid grasp on the “why” behind business plans, you can confidently move forward with creating your own.

Remember that a business plan will grow and evolve along with your business, so it’s an important part of your whole journey—not just the beginning.

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Now that you’ve read up on the purpose of a business plan, check out our guide to help you get started.

The information and tips shared on this blog are meant to be used as learning and personal development tools as you launch, run and grow your business. While a good place to start, these articles should not take the place of personalized advice from professionals. As our lawyers would say: “All content on Wave’s blog is intended for informational purposes only. It should not be considered legal or financial advice.” Additionally, Wave is the legal copyright holder of all materials on the blog, and others cannot re-use or publish it without our written consent.