Business plans, financial

The financial heart of a biotech story is a positive risk-adjusted net present value (rNPV). If the projected payback could happen very quickly, and if investors regarded a business plan as a sure thing (risk-free), then the "value" of the story would simply be the payback minus the investment. However, biotech paybacks do not happen quickly and are certainly not risk free. Hence, investors discount the payback value to reflect (1) the time value of their money and (2) the risk of failure. If discounted payback values are thought to exceed the required investments, stories get funded if this rNPV is perceived as negative, the flow of money stops. 

A corollary of Kleiner s First Law is, "Raise money when you do not need it." If you wait until your need for cash is desperate, you can be sure the financial terms will be unattractive. The less you need the money, the more leverage you will have with investors. In fact, a general principle to keep in mind is that investors love to put their money where it is not needed for survival, but rather is needed to expand the upside potential of the business plan. 

The business plan is a formal proposal for action, to be presented to the management and the finance department, to persuade them to authorize the project. The business plan should summarize the reasons behind this proposal, the actions proposed, together with the financial and other consequences. There are many possible formats for the business plan for a particular product, but the essential features are outlined here (Bangs 2002) ... 

Bangs, D. H. 2002. Business Planning Guide. Chicago, IL Dearborn Financial Publishing. 

There should be an oral presentation towards the end of the semester to the management (which is your classmates, the professor, and the invitees) on your business plan for a proposed new product on the innovative product idea, on market and technology analysis, on the financial and environmental analysis, and on your recommended action. Be prepared to answer searching questions from your management, and to hear constructive comments intended to improve your research, your analysis, your recommendation, and your presentation skills. If time permits, it would be useful to take all the comments and constructive suggestions into consideration, and make a second oral presentation. The product design project concludes with the submission of a written report, which would be in parallel with the traditional process design project. 

Financial analysis of new technology can get fairly sophisticated, and detailed business plans can contain a variety of means of projecting revenues, but the most useful starting point for thinking about the finances of a technology oppormnity is simple breakeven analysis. 

In writing a preliminary financial analysis, the main point is to determine whether the business has sufficient margins and volume to justify a business. This can range from a simple back-of-the-envelope breakeven analysis to a more complete set of 3-year pro forma. More formal texts on entrepreneurship (Timmons, 1999), business planning short courses and workbooks (www.fasttrac.org), and business planning software (www.bplan.com) can be used on the more formal end of this planning spectrum. 

The usual way to proceed with a promising TOA is to write a full business plan as a preparatory step to doing the startup. Normally, TOAs do not contain sufficient market, financial, executive team, corporate structure, or corporate operational detail to launch a new business, and writing a formal business plan starts from tlie TOA and adds the necessary detail. 

As with strategic planning, the process of business planning produces a written plan. A key point to clarify here is that the business plan needs to be written with the audience in mind. If the decision maker is the chief executive officer (CEO) and/or chief financial officer (CFO), then the plan should be written so that it is applicable to and appropriate for that audience. Business plans that do not consider the audience are less likely to be acted on favorably. A common mistake by authors of business plans (including pharmacists) is to write in a manner that is too technical or detailed, thus failing to hold the attention of executives, who might be the decision makers. 

Planning of the processes and operations helps to clarify the practical, day-to-day activities that will occur in the program. This type of planning provides critical information needed in later steps of the business planning process (i.e., for development of financial projections). 

The business planning process must include an analysis of both the costs that will be incurred to provide the service and the financial benefits that may occur as a result of the program. More detailed descriptions of the methods to project these figures are available elsewhere (Schumock, 2000). The calculations involved in this planning process may be aided... 

The next step in the business planning process is to define major milestones and an action plan of implementation and operation of the program. This action plan should detail the start and finish dates and list responsible individual(s) for each task necessary to accomplish the objectives of the business plan. The action plan should include periodic monitoring and assessment of the performance (i.e., clinical, financial, or other) of... 

As stated previously, writing the business plan is an extremely important part of business planning. The business plan should be informative and balanced in its presentation of the proposal. The document should be written with a specific audience in mind (the financial decision maker). It should be both easy to read and easy to understand and therefore must possess proper organization, grammar, punctuation, and sentence structure. 

The project should be business driven. For example, Ray Miller explains the importance of bringing value to markets—a basic but critical concept. If a project is business driven, it has a much higher probability of resulting in commercial success and in a shorter time than if it is technically driven. In general, one can assess the business driver by the existence or absence of a business plan and a financial model for the project that identifies specific applications and customers for the product(s). The business plan and financial model must be validated by repeated, critical scrutiny by successful, informed businesspeople and investors. 

Business need must be clearly defined and understood before initiating an asset development project that could require major financial investment and commitment of valuable resource. A business case must be developed that defines the strategic fit of the development within current and future business plans the short, medium, and long-term benefits of the development and the payback on investment. 

Business plan competitions are now a weU-proven tool for surfacing ideas for new businesses in both a regional and a corporate context (Fig. 9.3). In one American life sciences company, for example, 1000 ideas were generated. These were turned into 100 business plans, of which 56 received seed funding. In a business plan competition, participants develop a fuUy-fledged business plan, usually in three phases from the initial description of the business idea to concrete details such as the appointment of the management team and a financial plan (Fig. 9.4). 

It takes coaching and training to get the innovators employed in an established industrial company to write high quality business plans. The business mentality is often foreign territory to them, yet they have to write the business plans themselves. The coaches can be external trainers or internal experts from the company s new business development and financial modeling departments. Professional jury and evaluation. 

This ensures that the company s financial and human resources are only invested in high quality business plans. The professionals in question will include top managers, and, if a technology-related plan relies on expertise foreign to the company, the relevant external opinion leaders need to be involved. 

The preliminary engineering phase is where the options are designed and costed. Financial analysis is conducted and the options are recycled to business planning in an iterative fashion. 

For director of pharmacy services, five to seven years of experience are often required in a similar health system. Additional education and training, such as an advanced residency in pharmacy management or a masters degree in business administration, are often preferred or required. Ability to manage resources, personnel, planning, financial, and interprofessional relationships with good communication skills are often required. 

In the specific implementation of a safety audit project, safety audit project leader should be fully aware of the following circumstances, an initid assessment of the importance of this safety audit and audit risk (1) ask the audited entity related personnel and related management (2) access to the audited entity s operations manual, the internal control manual and other information (3) access to the audited entity annual production and safety plans, financial budget and other documents (4) check the safety activities or safety issues certificates and records (5) examine the audited unit production, business activities and the implementation of internal control (6) select the number of safety events to be tested. 

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