I work with many physician entrepreneurs with great ideas who want them to come to fruition. These physicians are often curious as to what would make their startup successful. You could argue that many ingredients go into a successful startup, and luck is undoubtedly one of them.
However, there are additional elements that are necessary for success. Physician leaders must be innovators to navigate their practices into and through the era of healthcare reform. True physician entrepreneurs take charge of change and continuously scan the outside environment for new and fresh ideas. They search for opportunities for ways to do what has never been done before.
The history of modern healthcare will continue to be filled by practices that no longer exist because their leaders refused to adapt and change until it was too late. Consequently, you must always be actively looking and listening to what is going on around you for even the most remote signal that there is something new on the horizon because today’s innovations can come from just about anywhere.
5 critical elements that are sometimes missing when beginning a startup
1. No strategy
Unfortunately, most startups—like many medical practices—do not have a strategy even though they claim that they do. Rather, these physician entrepreneurs often have mission statements or goals.
For example, they may say: “Our strategic goal is to grow 20 percent per year in revenues and profits over the next five years.” These are not strategies. These are aspirational goals or wish lists.
A strategy is a coherent set of analyses, concepts, policies, arguments, and actions that respond to a significant challenge or opportunity. A strategy should be described very simply, often with an analogy or metaphor. Arriving at this succinct conclusion, however, takes many hours of work.
2. No evidence-based business model
Sometimes a startup will have a “business plan” that describes the company and how it plans to reach target numbers in their five-year financial pro forma. The problem is that this narrative consists mostly of assumptions and judgment calls.
Business models should first start with the idea (solution and opportunity). Models should then show how each critical element of the business ecosystem works together with all the other elements to achieve repeatable, sustainable sales. Each significant assumption needs to be tested and verified so potential investors are confident of the startup’s success.
3. No compelling story
In my experience, very few physician entrepreneurs know how to craft and tailor their story to all of their audiences. Telling your story includes infographics, presentations, and most importantly, answering questions.
A standard one-size-fits-all presentation does not work. Every audience has different levels of experience, expertise, and interests. I find most of the pitches are presentations with a text-filled slide deck and a rambling list of product features.
They don’t show the bigger picture or how their idea will solve a problem. A persuasive story must take people from Point A (uninformed or skeptical) to Point B (knowledgeable and committed).
The story must also be filled with benefits that relate to the specific persons addressed.
4. No fundraising plan
Most physician entrepreneurs leave fundraising until the end of the development process. Raising funds is hard work and takes lots of time away from nurturing the business. But, you have to start early and do each of these things:
- identify when you will need additional funds
- how and from whom you are going to raise these funds
- outline a process to reach your goals
It is challenging to “sell” investors on a high-risk venture. It is better to get investors involved as early as possible and let them “sell themselves” along the way.
5. No CEO
A critical component in the company’s success can be attributed to the CEO and the leadership team. For many investors, the CEO and team’s capabilities are the first, and often most important criterion, they evaluate.
Founders with a great idea are not automatically great CEO’s. It takes a person with vision, know-how, focus, and a growth mindset.
The CEO must have the ability to make decisions under stress and uncertainty and know-how to keep score (revenues and profits). A great CEO knows the development phases of the business and is able to adjust herself and the team to meet the challenges of each phase. A talented CEO and team determine the success of the company.
These are not the only ingredients of a successful startup
These five elements are important but by no means the only ingredients. Just as in baking, a successful startup requires careful calculations, precise measurements, and fine-tuning.
With the right guidance and structured thought process, physician entrepreneurs can run their existing medical practice and also nurture that next budding idea that they have.
Good is rarely good enough. And opportunities for improvement are never lacking. Physician entrepreneurs should expect and accept disruption and resistance to change. They should also never lose sight of the fact that costs are high when change efforts go wrong.
Even the most groundbreaking practices can get stuck and fail to see the possibilities in evolving because success is comfortable. It is often too connected to the past.
Physician entrepreneurs can be characterized by having an attitude of wanting to change the business-as-usual environment. They recognize that there is no single solution to any problem and accept that not everyone will see their vision. They keep focus and balance as they push to change, understanding that there is no “one size fits all” approach.
To be a true innovating physician entrepreneur means you must be in a constant state of awareness. No one can survive without focusing in their own way on what matters and drives their medical practice.
Therefore, you must relentlessly focus that ownership on what drives your practice, create a culture that reflects who you are and stay grounded as you make things happen. Too often we focus on what matters to survive now because those are the highest-value targets.
As you push to evolve your practice, remember that nothing is ever going to be perfect, so don’t be embarrassed about the mistakes you make or the actions you take. Losses may hurt but they won’t kill the practice. You can recover as long as you have a plan.
Failing to stay connected and see things from all angles though, is a clear sign that you are losing perspective.
Other Content by this Author:
What is YOUR Strategy for Long-term Success?
Seven Strategies to Consider Before a Practice Merger
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Nick Hernandez, MBA, FACHE
Nick Hernandez, MBA, FACHE is the CEO and founder of ABISA, a consultancy specializing in strategic healthcare initiatives.
Since founding ABISA in 2007, his emphasis has been on developing and maintaining a strong relationship with physicians and identifying areas for business opportunity and support. The company’s client list includes physician groups, hospital systems, healthcare IT organizations, venture capitalists, private equity firms, and hedge fund managers.
Nick is a graduate of the United States Naval Academy and a former Captain in the U.S. Marine Corps. He holds MBA degrees in both Operations Management and Information Technology & E-Business Management from Wake Forest University. He is Board Certified in Healthcare Management and has been named a Fellow of the American College of Healthcare Executives.
He is a frequent guest lecturer and is often quoted in the national media. He has consulted with clients in multiple countries and has over 20 years of leadership and operations experience. Nick is a Subject Matter Expert in business strategy, practice management, telemedicine, health IT, and oncology.