Dr Chris Stout Evaluating Practice Opportunities

1. Dr Chris Stout Evaluating Practice Opportunities Framework For Evaluating NewPractice Opportunities Your Practice The Environment The Target Market The Competition The Bottom Line

2. Your PracticeTake stock of your current practice and professionalactivities: Are you interested in or passionate about this issue,service, or population? Is the new activity consistent with your professionalcompetencies and strengths? Does it fit your mission? Can you integrate the new service into yourbusiness plan or revise your plan to include the newventure?

3.  Do you have (or can you acquire) the necessary skills? Will the new venture require knowledge, skills orabilities in areas in which you are not particularlystrong? Are your practice finances sound enough to supportyour new direction?

4.  Will the new activity be profitable enough for you tojustify the time, energy and resources needed? Do you have the necessary resources (e.g., office space,materials, funding, administrative support) or can youafford the cost of acquiring them?

5.  How risky is the venture; how much risk canyou tolerate? How can you differentiate yourself in thisarea to create a competitive advantage? Can you create a clear strategy for developing,implementing and marketing the new service?

6. The EnvironmentConduct an External Analysis: Review of general environment trends Developments in your local community Characteristics of the market you are consideringentering.Be sure to consider both the current environment and likelyfuture developments

7.  What are the key environmental trends, opportunitiesand threats related to such factors as demographics, the economy, legislative and regulatory developments, technology, public opinion/attitudes, and the evolving healthcare marketplace? Is the new service a good fit with the environmentaltrends you identified?

8.  Is the service needed in the community? Do potential clients know they need the service andwhat will be the likely volume of demand? Is demand increasing or decreasing? How do youknow? Will the demand last or will it quickly disappear?

9.  What effect will the service have onindividuals, groups or the community, andwhat is the potential benefit? Who are the referral sources or gatekeepersand do you have access to them?

10.  Are there related services you can offer tocomplement the new venture and add value? How attractive is the market? Will othersfind it lucrative and start to offer the sameservices?Tip: The more attractive the market, the more importantit will be for you to establish a strong competitiveadvantage.

11.  If competitors enter the market, what is the likelihoodof supply outpacing demand? What are the barriers to entry (e.g., required education,credentials, special expertise, necessary resources,startup time) that make it challenging for others toenter the market, and how difficult are those barriers toovercome?How much control does the purchaser have over aspects ofyour business, such as:The way you provide servicesHow much you are paid, andadministrative requirements?This is particularly important when a large portion of yourbusiness will come from third-party payers or other contractingbodies.

12.  Are there substitute products or servicesavailable at lower cost?If so, why would clients choose your service overlower-cost alternatives?

13. The Target MarketImportant information to have when creatingyour marketing and advertising plan, should youdecide to pursue the new venture. Who would benefit from the service you areconsidering? Who would be likely to seek the new service?Describe their demographic characteristics, as wellas their problems, needs, and key issues.

14.  Is the potential client base growing or shrinking?Where do potential clients live, work, go toschool, shop, and use the type of service you areconsidering? Would users be able to easily access the service? Can purchasers afford to pay for the service and arethey willing to spend the money? Is the perceivedvalue or benefit worth the cost?

15.  When (under what circumstances and at what times)would your potential clients use the service, howfrequently would they need it, and for whatduration? Who would actually purchase or pay for the service?Is it the same as the user of the service?If no, what are the characteristics of thepurchaser and what is their relationship to theuser?

16.  Who would make decisions aboutpurchasing, accessing and utilizing theservice and how do they make theirdecision?What factors do they consider (e.g., cost, quality,value of the money, easy access, location,excellent customer service), and who influencestheir decisions?

17.  How and where do potential purchasers and usersget information about this type of service andappropriate provides: directory listings, recommendation from a friend, family member or co-worker, referral from another healthcare provider or otherprofessional, advertising or other promotional materials, affiliations with community groups and otherorganizations

18.  How will you reach potential clients and how muchwill it cost? Tip: Don’t underestimate the time, money, and effortthat will be required to market the new service.

19. The CompetitionGo beyond simply identifying the other psychologistsoffering the same service in the same area.Take a broader view of your competition by consideringnot only the psychologists, but also other professionals,such aspsychiatrists, social workers,counselors, marriage and family therapists,clergy, nurse practitioners,executive or life coaches, business consultants.

20. Additionally think about other substituteproducts or services:Self-help Books,Gym Memberships,Massage Therapists,General Practitioners,Pediatricians,that compete for your potential clients’ dollar.

21.  What competition already exists? Who would be your leading competitors? Are they already offering services? Who else will likely enter the market and beginoffering service? What strategies are your competitors using?What are their strengths and competitiveadvantages?

22.  How intense is the competition in the market you areconsidering? Could your competitors match or beat your price? What do your networking contacts, friends andcolleagues say about your competitors? What information can you gather by looking atprofessional association resources and materials,trade publications, promotional materials otherproviders are using, your local paper, consumerdirectories and community bulletin boards?

23.  What are the results of basic Internet searchesusing keywords related to the new service you areconsidering and your geographic area? Who is providing a similar service to that which youare considering? To whom are competitors providing services andwhat potential client segments still have unmetneeds? What markets or new niche areas are yourcompetitors expanding into?

24. The Bottom-lineIf your evaluation of a potential service raisesany significant concerns, proceed withcaution.A venture that is not a good-fit for you, yourpractice, the external environment, ortarget market is likely to face significantobstacles…

25. Be sure to consider all of the businessimplications we have reviewed, as someopportunities that sound interesting orseem like a good idea may not havestrong market potential.But, if a thorough evaluation of a new servicereveals that it has the potential to meetemerging needs and become a profitablebusiness opportunity, take steps to craft asolid business plan to advance the idea.