What is a Business Plan & Why Do You Need One?

The Dental Business Guide Podcast Episode | 29th January 2021
Arun Mehra & George Bellamy

George Bellamy: Welcome back to the podcast. I’m George and I’m today again talking with Arun Mehra, who is our founder or our commander in chief, if you will, of Samera.

Arun Mehra: I’ve never been called that before George.

George Bellamy: I know it sounds a little bit official, doesn’t it? Anyway, so last time we were talking about business plans. We were talking about how to grow a business and how to start your practice from nothing, and one thing you said to me was that business plans are really important. So can you explain a bit more, what do you need to include in your business plan and will you just specify it for specific dentistry, or can it be just general business?

Arun Mehra: Great question. Now, a lot of people have an idea but they never actually put it down on paper. The business plan is ultimately you articulating what you think you should be doing or what you want to do for your business. 

So it’s a communication tool primarily for yourself, but then for other stakeholders. The people who want to invest, lenders, banks, all those types of people. So you can make it one page or you can make it 100 pages, but you’ve got to just think and your ideas across into it so it makes sense. The way I would approach writing a business plan is to get some type of template, and you can get one of those from us if you want it, and then start populating it. 

What that means is to start putting information in there that seems relevant to what you want to achieve. Whether you’re doing a dental clinic, a vet clinic, or any other type of business, a business plan is really, really helpful, not essential, but really, really helpful. And that’s why it’s always worthwhile planning and taking some time to consider all your thoughts.

George Bellamy: So, I’ve done my best, but I don’t know much about business plans at all. To me it sounds just like a CV, is it like that? 

Arun Mehra: No, it’s not really a CV, it’s kind of a summary of what you’re planning to do. Let me break it down George, I know you’re a young lad so you might not have so much experience in writing business plans and stuff like that. I have written many in my life, too many perhaps.

But what it carries across is, what are your objectives? What are you trying to achieve in the business? What you’re trying to do? Then, for instance if you are doing a dental clinic, what type of services are you going to offer? Are you going to offer orthodontics, implants, or are you going to offer general dentistry or offer emergency dentistry? What type of thing? 

It might then really explain who is the target customer or target patient? Is it people who are just above the NHS in terms of what you’re trying to offer or people who have got a larger budget who want a higher-end experience at your clinic? You have got to look at the competition. Let’s say you’re opening up in a particular area; who are the other clinics in the area? Are they competition or they deemed to be irrelevant, they’re not really competing with what you’re trying to do. 

And then also at the same time, you need to put how much it’s going to cost. So you put the figures in there, do some research, find out what their costs are for example, of a chair, the materials or the building work. 

Then, one really important part is how you’re going to run it. Who’s going to be there? What type of team members do you need? Do you need a receptionist or a nurse, do you need a practice manager? What type of dentists are there? So there’s all these things that need to go into this business plan, but at the same time, you then got to add the financial forecast and competent, good qualified experienced accountant should be able to put some forecasts together to say, this is what we think the business is going to do and this is how it’s going to achieve it. 

Ultimately, you’ve got the qualitative aspect of the business; the written stuff, which we’ve just talked about, but then the quantitative aspects, which particularly a bank might be interested in looking at. If you combine the two together, if they like the plan, they’ll hopefully lend you the money.

George Bellamy: Okay, so more or less, it’s just your whole entire vision of your practice just written down in one document.

Arun Mehra: Absolutely. I think one of the things that’s really important is that you might start with this great business plan and you might start the business but then it doesn’t really go to plan or it takes a different path.

If you can look at it even maybe once a year and update it and change it. So this year, that didn’t work well, I’m going to update and go down this path. It’s just a useful tool to have and to review and go back to and see.

George Bellamy: So it’s not just the thing for when you’re starting the business it’s a thing that you need all the time.

Arun Mehra: Absolutely, you might do it in different ways. You might have a formal business planning process once a year and you spend half a day or a day just reviewing your business plan, which is great. You might on a regular basis, look at new ideas and add to them and change them. So it’s an evolving document for the business and for you.

George Bellamy: Okay, you mentioned financial forecasts. So with that, being dishonest here, could you lie and say your practice is going to earn more than you actually are going to? Could  the bank see that? I don’t really know what I’m trying to say, but more or less it’s, could you be deceiving in the way you’re forecasting? 

Arun Mehra: I don’t like the way you’re thinking, George be careful. But I know what you mean. I think what your job is to embellish the truth, to try and paint a rosy picture. But remember, the bank’s job is to tear it apart. They say “that’s absolutely bull, you’re never gonna be able to earn that type of money.” 

Okay, Remember banks, they see hundreds of thousands of business plans, they know what’s realistic, they also know what’s cock and bull. So your job is to not over embellish. If you over embellish it, they’ll just stare out the window. So it’s then getting people like ourselves to advise  you and say, “well, this is kind of realistic, this type of bank will probably go with this type of thing if you do it this way”. So the forecasts are an important aspect, but you don’t want to over do it.

George Bellamy: Okay. So you can’t be deceivers, because the banks would, as you said, they go through it with a fine tooth comb and they know what they’re looking for.

Arun Mehra: Yeah. If you’re overdoing it, they’ll just say, you know what, this guy hasn’t got a clue, he hasn’t really done his research at all, and therefore, he’s not a credible, worthy person to lend money to.

George Bellamy: Okay. So, how would you then calculate all the costs? If you’re buying an existing practice, how would you calculate all the costs needed to do that? Would that be a thing your accountant does or is that I think you do yourself?

Arun Mehra: I think it’s a combination of your accountant and you looking at the numbers. So if you’re buying a practice or you’re setting up a practice, you’ve got to look at how much it is going to cost you. So again, a good accountant should be able to quantify all this in some workings and some analysis and some type of valuation techniques. So if you’re setting up a clinic, and you’re putting a business plan together, you want to work out how much is it going to cost you to build? What kit do I need? And then also, how much money have I got of my own to put into it and how much could a bank potentially lend me? 

If you’re buying a clinic, you need to look at, okay, they’re selling it to me for x? Is it actually worth x? And therefore, your job and your advisors or accountants should be looking at, you know, what, I don’t think it’s worth x, I think it’s worth x less 20% or whatever it may be. 

So it’s just, get good advice! I cannot stress how important is, not just good accountancy advice, get good legal advice, get some good marketing advice, and ultimately, get people who you get on with as well. Because these could be long term relationships that are there to help you over the long term in your business.

George Bellamy: Right. Okay so that’s really quite interesting to know actually. What I just want to know is, how would I go about writing a business plan? You know, you mentioned briefly that you provide a business plan, can you just get a generic business plan online or is there something specific?

Arun Mehra: You can type business plan templates into Google, and you’ll find something. It’s a good starting point, and you can start putting something together, absolutely. If you want something a little bit more tailored, a bit more sophisticated, then you could probably engage with us or other people out there in the marketplace who can help you write a business plan. 

I personally think a good business plan is written by the business owner and then you have someone like ourselves review it, and kind of sense check it and say; we like that, give us a bit more information on this, the banks won’t like that, and as many people who can read it, whether it’s your parents, whether it’s a friend, whether it’s your partner, or someone else you know, in business that maybe they can review it all.

George Bellamy: Okay, more or less you just want the more people that read it, the more likely the banks are going to accept it.

Arun Mehra: It’s not just that, but also they can say, well, you know, that’s rubbish as well or that’s not going to work. But you’ve also got to remember there are also people who will read your business plan, and there will always be negative so remember that as well. So be careful who you show it to as well. You want people who are going to support you, encourage you but also give you critical but constructive advice, not just critical and pathetic advice.

George Bellamy: Yeah. Amazing. Well, thank you so much Arun for taking the time to talk to us about business plans. I’m sure I’ve learned a lot because I’m a complete novice with everything as I’m sure you know by now, I’m only 24. 

Arun Mehra: 24. God, you’ve been with us for years now.

George Bellamy: Mental. Yeah. All right. Thank you so much for listening, and we’ll catch you on the next one.

Arun Mehra: All right. Thanks, George.

George Bellamy: Thank you. Bye.

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