Reference no: EM133307218

Michael, the owner of a one-person entrepreneurial start-up business called Mobitrix, had established his business plan in September 2010. Nine months later, however, the current business situation looked completely different. Michael wondered how best to proceed with his entrepreneurial idea and with his plan!

Before starting his own business, Michael had been working for more than 10 years with different software companies in the medical sector. As a product manager, he was primarily responsible for the interface between the needs of the company's clients and the development of appropriate technical software solutions to meet those needs. This meant that both he and the software entrepreneurs frequently had to be imaginative to work around the distinctive challenges that each job would bring. In addition to this role, Michael also monitored the implementation of the different projects in the hospital setting. It was during the time that he spent on these projects in medical labs that Michael spotted several opportunities for product development.

One of these opportunities arose from concerns for patient safety and well-being. Medical caretakers are responsible for providing the correct medication to the patients (specifically with regards to blood transfusion), but many stories exist of errors that could have been prevented if the carer had access to correct and up-to-date information through the right software solution. Because Michael was very "Apple-minded," and generally a first-mover in terms of Apple's newest creations, he had been considering how the iPhone, iPod and iPad could add value in creating mobile solutions for the health care business. He pitched his idea to his bosses, but they did not see how these opportunities could fit in with their current portfolio of software products. Michael became increasingly frustrated with the lack of innovativeness in the companies' activities and plans, until eventually he woke up one night with many different possibilities and ideas rushing through his mind, and he started writing the first pages of a plan to start his own business.

Michael is educated as a medical laboratory technologist with a Masters in Biomedical Technology, Michael soon realised that his business experience was very limited. As he had close contacts with entrepreneurship teachers at the School of Business and Economics at Maastricht University, he evaluated the possibility of collaborating with students on the development of a business plan. Bart, a medical engineering graduate taking a Masters in International Business in Entrepreneurship and Small Business Management, welcomed the opportunity to combine his medical and business expertise, and so began supporting Michael in researching and writing a business plan. For Michael, the development of a business plan helped him to put fine detail to his ideas and to evaluate the viability of the many possible market entry options that lay before him. He first had to decide on a business model: would he deliver his products to medical equipment companies, medical software companies or to the hospitals themselves? He felt that the programming of the software would need to be outsourced, so selection criteria for suppliers had to be established. Michael and Bart discussed financial projections extensively, made an initial projection of the break-even point and decided that no external investment was needed at that time as the money required for the software development could be covered from Michael's own funds. Finally, they decided on a first important goal - they aimed at presenting Mobitrix's first product concept at the Medica Exhibition (the world's largest medical technology exhibition) which was to be held in Dusseldorf in November 2010.

During those first months of activities, many unexpected issues arose that required Michael's immediate attention. For example, while planning the first software developments, Michael accidentally discovered a scanning accessory that was developed for iPhone and iPod Touch, and which would perfectly fit the hardware requirements needed for the development of an application (app) that could solve the patient safety problems. Michael believed that putting barcodes on blood bags, medicines and on each patient's hospital wristband, and then scanning those barcodes with the mobile device, would almost certainly decrease the number of medical errors currently occurring. After carefully writing the software specifications and the functional design, Michael outsourced this first software development project to a company in Sri Lanka. Although the cooperation went smoothly, the development time was much longer than was planned.

Eventually, Michael and Bart managed to have their first app completed before the Medical Exhibition. While the final users for this app would be hospital personnel, Michael and Bart decided that the best strategy was to target their product for sale to medical equipment manufacturers and software companies. Initial reactions at the exhibition were very good, both from their targeted client segment and from end users. Mobitrix received visitors from very diverse and sometimes very large companies (including Philips Healthcare, GE Healthcare, Tieto, Panasonic, etc.), and Michael and Bart were usually asked highly focused questions. A later analysis of their interactions at the Exhibition showed that the leads generated consisted of 43 per cent of C- level functions (CEO, CTO, CFO), of which 70 per cent indicated an interest in having apps developed for them. Michael collected more than 100 business cards from people that showed significant interest and secured at least five serious leads from medical and software companies that needed to be followed up. Moreover, shortly afterwards, the first app that they had produced was accepted by Apple's app store. Although the selling price of this app was just 3.99 Euros, for the owner it was a pilot project to test if he could manage the whole process. Meanwhile, a new software app for bedside registration was also in development in India, and this project would use the first app that they had produced.

In the months following the Medica Exhibition, Michael contacted all of the people that had shown interest at the exhibition, and he completed several interesting meetings. For example, one contact was with an Italian technology company that produces smart blood refrigerators. As their product covered the whole process from lab to nurse, but lacked the additional bedside registration, Mobitrix's software seemed to be a perfect fit. A second promising contact was with a Swedish company that produces haematology cell imaging solutions. Yet another contact was with a hospital ICT manager who saw the demo app and was surprised by the quality and speed of the barcode recognition. These people were interested in getting access to the improved barcode recognition functionality in their apps. Despite these meetings, no cooperation agreements could be developed. Several companies indicated a preference to postpone their investments in mobile solutions until the summer of 2011. For the software companies the major problem related to the integration of the proposed apps with existing systems.

Although Michael realised that starting up a venture is a bumpy ride with many highs and lows, the existing lack of follow-up projects really made him doubt the viability of his general business idea. However, as he was positive that the opportunity was recognised by the medical personnel, he persisted in pitching his idea. But instead of targeting his products at medical equipment or software companies, he started making appointments with doctors in hospitals to demonstrate his mobile solutions. These visits persuaded him yet again about the potential of the product, as doctors were very enthusiastic about the viability of his idea, and even offered suggestions for other apps that needed to be developed. Michael then convinced a team of doctors in a Belgian hospital of the added value of his product, and they decided to start a pilot project with him. Michael realised that this was an important breakthrough, as it created a reference project that would also increase his credibility with other clients. Unfortunately, the implementation of the project could not begin until he convinced the IT personnel and the management team of the value he could add to the processes in their hospital. Therefore, he needed to carefully prepare a presentation for this group, as they would probably use different decision-making criteria from the doctors.

But there are other issues that cause Michael to reflect on the actions that he has taken in recent months. The medical team in the pilot hospital has indicated that they are unable to do business with a one-person company, as service must be guaranteed even when an entrepreneur becomes sick or has an accident. For reasons such as this, Michael has been contemplating the benefits of partnering with a larger company. Should he then update his business plan in order to prospect for these partners? In his initial version of the plan, the first sales were estimated to be realised in December 2010, while five months later, the venture really was still in the pre-sales state. Besides, in the plan, much more software development had been planned, but this was postponed, given the longer development time of the first two projects. As he expected to start with the first pilot project, it could also be the ideal moment to find some external financing. He definitely needed a change to his business plan for such a purpose. However, he wondered how he could write a business plan which on the one hand was sharp, goal-oriented and convincing to potential partners and, on the other hand, sufficiently flexible to absorb surprises and take advantage of new opportunities.

1. Discuss the extent to which Michael's business plan has contributed to both the development and assessment of his entrepreneurial idea and opportunity, as well as enabling the "start-up" of his business.

2. Discuss the strengths and weaknesses of Michael's business plan. Do you think that there is anything missing from Michael's initial business plan?

3. What advice would you give to Michael in terms of improving his business plan and making it "convincing" to potential partners? In terms of content, what do you think should be the most important element?