iCare Solutions Company Business Plan

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Executive Summary

iCare Solutions is a new software development firm that offers customer-focused solutions in the long-term care market. Its strategy is to differentiate itself through low pricing, product quality, and customer focus. This business plan details iCare’s marketing strategy, products/services, and objectives. It also gives a detailed analysis of the projected financial performance of the firm in the industry.

General Company Description

Vision

Our vision is to become a market leader in the development and sale of cost-effective external reporting solutions to long-term care (LTC) providers.

Mission

iCare Solutions is a start-up company that specialises in the development and sale of superior, easy-to-use, and inexpensive reporting software to help LTC operators manage every aspect of their business.

Objective

To provide inexpensive and customer-centric reporting solutions to LTC providers to grow our customer base by 5,000 clients annually.

Values

Quality – provide high-quality and innovative software to clients.
Customer-centric – develop customised business solutions.
Integrity – cultivate an organisational culture of honesty.

Products/Services/Solutions Offering by the Company

iCare will offer a range of integrated computing software solutions to small LTC providers. It will provide scalable applications for accounting, secure data storage, reimbursement, quality improvement, prescription and medication records, and client medical data management. The firm will also maintain the program infrastructure and provide technical training to clients.

Team

The management team will consist of the president who will also be the Chief Operating Officer of the company. It will also include LTC professionals/consultants and software developers. The other members will include the Chief Financial Officer, the R&D director, and the Marketing director.

Market/Industry Analysis

The elderly population in the developed world is projected to grow, pushing the demand for long-term care upwards. Currently, private and public LTC providers handle large volumes of data to facilitate government reimbursement, medication usage, inventory management, accounting, and care transition. Over 18,000 providers paid through the Medicare and Medicaid programmes are in operation in the US.

The LTC software market has three segments, namely, users of high-quality software, users of the software with limited functionality, and nonusers. Many programs are available for collecting, analysing, and reporting the data. However, quality programs are costly in terms of licensing fees and maintenance costs. On average, licenses cost about $15,000 while maintenance costs can reach $1,500 monthly. The demand for cost-effective and scalable software solutions to manage data is high.

Marketing Strategy and Implementation

iCare Solutions will develop software for the three market segments with a key focus on software features of ease of use, scalability, and cost-effectiveness. A content marketing strategy will be used to create brand awareness and differentiate iCare products from those of its competitors. The company’s focus will be on quality, user-friendliness, and customer needs. This will generate referrals that will boost sales. The implementation of this strategy will involve multiple promotional tools, including “internet marketing, direct selling, public relations, strategic alliances, advertising, and personal selling”. iCare will adopt a competitive remuneration policy to attract and retain skilled labour to support its efforts to develop quality software for its market.

Research and Development Plan

iCare Solutions will invest in advanced hardware and software to target the LTC market. Most of the current software in the market runs on Windows operating systems. iCare will seek to develop software that runs on both Windows and Macintosh systems to create a universal appeal for the program. Another area iCare will invest in is cloud computing. Cloud-based solutions will enable clients to access data and virtual programs through internet-connected devices at any time or place.

The LTC market will need advanced software for data management as more people opt for home-based care instead of residential care. Thus, reporting practices to Medicaid and Medicare programs are likely to change. iCare will seek to develop an easy-to-use software to support the new reporting requirements.

Operational Plan

An operational plan details the “day-to-day tasks and activities required to run the organisation” in line with its strategic objectives. iCare will need to secure computers and a strategic workplace location before launching its operations. iCare’s operational plan for the 2014/2015 period is given in table below.

Strategies	Timeframe	Individual Responsible	Budget	Other Resources
Develop universal software solutions for small LTC providers	July 2015 – January 2016	R&D director and staff	– Salary $15,000 – Operating costs $20,000	– Rent an office space – Purchase computers/hardware
Market the products through different media, including print and professional magazines	Place ads on popular media (January through March 2016)	Marketing director and coordinator	– Advertising costs of $6,000	–
Initiate a staff training program	The program will run for three months (July through September 2015)	R&D director and LTC consultants	Training costs of $10,000	Strategic alliances with LTC providers
Launch a newsletter	The newsletter will be released on a quarterly basis	Marketing director	Mailing costs of $2,000	Printing machine
Advertising through healthcare sites	July to December 2015	Chief operating officer	Advertising costs of $10,000	Alliances with sites that have a lot of traffic

Financial Analysis

Start-up Costs

iCare requires $140,000 start-up capital to finance its software development, purchase an office space, pay staff, and fund its marketing activities. The firm will recoup this initial investment within two years of operation. This investment will enable iCare to expand its customer base in the LTC provider market.

Funds Breakdown

The development of software that runs on both Windows and Macintosh is projected to cost $20,000. Upgrade and maintenance costs will amount to $15,000 per year. The maintenance costs will amount to $30,000 in two years. Projected advertising expenses will amount to $20,000 while staff training will cost $10,000. The remaining initial funds ($45,000) will be used to pay staff and fund the operational expenses.

Working Capital Requirements

Frase and Ormiston define working capital requirements as the amount of money needed to run a start-up firm until it becomes self-sufficient. Since software licenses will involve a monthly subscription model, iCare is unlikely to experience enough cash flow within the first 30 days. Taking into account the fixed costs (rent, utilities, and salaries), sales expenses, and 15% miscellaneous costs, iCare will require a working capital of $161,000 for the next year.

Sales Forecast

iCare sales will come from software/product licensing and maintenance/consulting fees. The revenue will ensure sufficient cash flow to the business until it breaks even. The sales are projected to increase by 30% for the maintenance business and 10% for software licensing. The sales forecast for years one, two, and three are indicated in table.

Sales	Year 1	Year 2	Year 3
Product licensing fees	$110,000	$125,000	$149,750
Consulting fees	$2,400	$3,120	$4,368
Client training charges	$2,500	$3,000	$4,000
Total	$114,900	$131,120	$158,118

Marketing Budget

iCare will market its products/services using different promotional tools. The aim is to penetrate the medium and small software market segments of the LTC industry. The marketing budget will fund advertising through print and electronic media, product placement, personal selling, public relations, and internet advertising. A breakdown of the 2015/2016 budget is included.

Promotional tool	Timeline	Cost
Print media – placing ads on newspaper	July and September	$500
Product placement on Radio & TV	August and December	$2,000
Personal selling	July to October	$2,000
Public relations	July through December	$4,000
Internet advertising (LTC websites)	Beginning July	$5,000
Newsletter (communication with clients)	Beginning July	$2,000
Total		$15,500

Income Statement

iCare will generate its revenues from licensing and maintenance charges. The major expenses will include the cost of sales, software development costs, salaries, utilities, rent, and income taxes. iCare’s income statement for the first year is included.

	1^stquarter	2^ndquarter	3^rdquarter	4^thquarter
Licensing fee	15,000	15,000	67,500	55,000
Maintenance	28,485	39,625	90,000	112,000
Sales	43,485	54,625	157,500	167,000
Cost of sales	1500	1500	6,000	5,000
Gross profit	41,985	53,125	151,500	162,000
Software development	10,000	10,000	10,000	10,000
Salaries	20,000	20,000	20,000	20,000
Office expenses	10,000	10,000	10,000	10,000
Other	3,000	3,000	3,000	3,000
Total	43,000	43,000	43,000	43,000
Operating profit	-1,015	10,125	108,500	119,000
Income taxes	–	3,543	37,975	41,650
Net Income	–	3,125	70,525	77,350

Breakeven Analysis

The operational costs are projected to be about $14,350 monthly. These include expenditure on rent, salaries, utilities, staff training, R&D, and marketing. The income will come from licensing fees and maintenance charges obtained from clients who are expected to reach 100 by the end of the first quarter. The breakeven point will be the end of the first month of the second quarter. At this point, iCare will earn revenue of $14,350, as shown in the chart below.

Cash Flow Projections

iCare’s cash flow projections for the next three years indicate an upward trajectory. The cash flow will come from its operating profit, working capital, and investments. The details of a three-year cash flow projection are included.

	Year 1	Year 2	Year 3
Operating profit	$236,000	$254,000	$285,000
Income taxes (35%)	82,600	88,900	99,750
Amount from operations after tax	153,400	165,100	185,250
Working capital investment	15,000	18,000	12,000
Cash flow from operations	168,400	183,100	197,250
Investors	40,000	–	–
Net Cashflow	208,000	183,100	197,250

Performa Profit and Loss Statement

The Performa profit and loss statement projects a firm’s “future revenue, expenses, and income”. iCare’s sales revenue is projected to increase over the next three years to reach $156,000. The cost of sales will remain constant while operating expenses will rise as the firm invests in new software. The profit and loss statement is included.

	Year 1	Year 2	Year 3
Sales	342,000	353,000	421,000
Cost of sales	50,000	50,000	50,000
Gross margin	11,000	13,000	15,000
Expenses	2000	1000	1000
Salaries	20,000	20,000	20000
Utilities	5000	5000	5000
Marketing costs	6000	2000	2000
Rent	8000	8,000	8000
Taxes	4000	4000	4000
Total operating expenses	106,000	99,000	136,000
Taxes incurred	82,600	88,900	99,750
Net profit	$236,000	$254,000	$285,000

Performa Balance Sheet

The balance sheet projections indicate that iCare’s current assets will increase from $512,000 to $695,000 in three years. Long-term assets will remain unchanged while current liabilities will decline.

Year 2015/2016

Assets
Current assets

Cash
Account receivables
Other

Total
Long-term assets
Total

46,000
232,000141,000
419,000
240,000
659,000

Liabilities and Capital
Current liabilities

Accounts payable
Current borrowing
Other

Capital

340,000
100,00079,000
140,000

Financial Ratios

The firm will use debt, current, and quick ratios to determine the returns on the net worth of the business. Other financial ratios will include activity ratios such as accounts payable turnover and collection days.

The Ask and Returns

The shareholder equity in iCare is $140,000. The owner will give away 25% of the company to investors. Its net worth in a year’s time when the firm breaks even are projected to be $752,000. The returns from this investment are indicated in the ratios below.

ROI = Net profit/Total assets = 236,000/752,000 = 0.31
ROE = Net Income/Shareholder’s equity = 236,000/140,000 = 1.7

Risks and Contingencies Plan

iCare intends to monitor the sales data to respond to market trends appropriately. This will inform marketing decisions to focus more on particular services/software to attract more clients. The firm will also avoid direct competition with established software firms. Another contingency plan is to introduce a range of products within its market niche to appeal to diverse client characteristics.

Timeline

Action area	Commencement date (2015)
Acquisition of office space and infrastructure	July
Staff training	July
Software development	October
Marketing strategy and campaigns	July
Strategic alliances with LTC providers	November
Newsletter	November

Five-year Plan

Develop cost-effective software that runs on all existing operating systems by 2017.
Increase customer base by 35% by the end of 2019 through aggressive marketing campaigns to acquire over 5,000 new LTC providers annually.
Introduce cloud-based solutions to clients by the year 2020.

Conclusion

iCare Solutions’ success in the LTC software industry will rely on the aggressiveness of its marketing campaigns, the quality and pricing of its products, and staff productivity. The start-up will use multiple marketing tools to penetrate the market and compete effectively. Its five-year plan underscores the intention to acquire 5,000 new LTC providers annually.

Bibliography

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