Creating a true Value Proposition for new healthcare developments

by Oliver Dowson, CEO, International Corporate Creations Ltd

“The central goal in healthcare must be value for patients”.

It’s become gospel, and it’s certainly true when selling directly to consumers – aka patients. Almost everybody agrees their health is more important than money. The concept starts young, with almost all high school students having to write essays on the relative importance of health v. wealth. But, whilst consumers (sorry, patients) will therefore pay a disproportionately large part of their income for something that will make them better, they will of course choose the most cost-effective option.

Naturally, patients attach different values to different medical conditions, and so solutions can be priced accordingly. That’s the fundamental of value pricing – attach a price to the outcome, don’t base your pricing on “cost plus”. So, the inventor of a great cold cure that costs $5 a dose to produce may only be able to price it at $10 – because people won’t pay more, knowing that, untreated, the cold will go away in a few days. The fortunate inventor of a miracle cancer cure that also only costs $5 a dose to produce could no doubt sell it for $1000 or more per dose.

Start-up health businesses need to convince investors that the future product pricing they use for their Business Plan follows this mantra, is credible – neither too high nor too low – and well justified. Even though it’s hard to put a monetary value on a health outcome, entrepreneurs need to try.

Those devising health solutions that are not for sale directly to patients, but to national health systems, hospitals and commercial care providers, face a different issue. Here, however revolutionary the concept (unless it’s a cure for a previously untreatable condition, of course), the cost to the provider of delivering the outcome has to be cut by more than the cost of the solution. It’s just like every other new B2B product or service. If it doesn’t deliver savings, customers won’t buy.

Whilst this might seem obvious, most digital health start-ups that I’ve seen presented recently haven’t really addressed this. They assume that, just because their invention will improve patients’ outcomes, health service buyers will find it a compelling proposition. I’m sure all of them will provide economic benefits in some intangible way – but that doesn’t make them saleable products. By getting cured of illnesses, patients will enjoy happier, longer lives, and generate a greater economic benefit to the world in their lifetimes. But that’s not an effective sales pitch.

In countries such as the USA, where almost every aspect of health is blatantly commercial, the need for a monetised value proposition is obvious. However, in the UK, where I write this, the “market” is the National Health Service. I suppose it’s natural for new entrepreneurs to think that, as a state-funded service committed to the best patient outcomes, they will adopt any new technology proven to be beneficial.

But no, it’s the same. The government expects ach division of the NHS to run itself on a business footing, and there’s a desperate shortage of cash. Hardly any entity has enough money to pay for what it has already committed to, and, after years of austerity, its’s increasingly difficult to realise more efficiency savings.

So it’s essential to prove that the new product or service will save money. That could be through patients being discharged more quickly, procedures being performed by less qualified staff or needing fewer person-hours per outcome. Bottom line, though, is that the value proposition needs to be costed and proved.

At the outset, entrepreneurs may only have a gut feel for how such savings will be made. But to create a compelling case, they need to monetise their product, and convince investors that their figures are right.

Global Thinking for Digital Health and MedTech

I’m getting ever more excited by the new businesses that I’m seeing in the healthcare sector. Whilst the introduction of new drugs largely remains with established companies, there’s a proliferation of new technology and software, promoted by some really smart entrepreneurs, that will bring real benefits to all of us.

The most visible are physical devices, which have acquired a class label of MedTech. There’s already a vast number of patient-centric apps, covering everything from lifestyle improvement to self-management of medical care. And behind the scenes, there are new apps and software tools for professional use in hospitals and care homes – classed as “Digital Health” – destined to really improve patient outcomes and healthcare sector efficiency. Efficiency is really important, as ever-increasing demands on healthcare both push up costs and create issues of logistical availability.

We’re working on some great healthcare-related projects at ICC, one helping to expand international markets for a very smart UK business and another searching for the best global sector investment opportunities for a wealth fund, so I’m seeing a lot of these developments at first hand.

One thing that’s clear is how critical it is for MedTech and Digital Health app companies to plan for global dominance in their fields as early as possible. Healthcare and wellbeing are universal concerns, and these new products and service are needed in every country of the world.

Postponing or neglecting that is very risky. There’s the usual chance of finding that entrepreneurs in other markets have developed near-identical products – quite possibly having spotted the opportunity here first. Patents and copyrights aren’t enough, especially with software – the route to conquering international markets is getting there first and establishing one’s brand.

Additionally, there are often several different ways of achieving the same improvement in health outcome, and delay risks overseas markets adopting an alternative. And, if those foreign alternatives are more internationally agile, they may enter and start to dominate the domestic market. Even if the competition is not as good, that could easily destroy the local business. It’s therefore essential that entrepreneurs and investors ensure that their business plans aim for the earliest possible international expansion.

It’s sad for me to find young, gifted and enthusiastic entrepreneurs with great health care startups who aren’t thinking that way. The usual reasons are cited – it’s distracting and diversionary, we need to get established first, we don’t have the funding – but those can all be overcome.

Admittedly, initial trials and test marketing can take much longer than with other business propositions, perhaps especially where those require getting buy-in from the UK NHS. But maybe it’s quicker elsewhere.

Products and software might need adapting to other markets – but, until you study them, you won’t know, and there’s therefore the risk that, whilst what’s needed could have been achieved easily at an early stage in development, doing it later becomes difficult and costly.

So, whilst it’s easy to say that it can’t be afforded, the question is whether startups – especially those in the healthcare sectors – can afford not to start planning their international expansion from Day One. And it needn’t be either costly or disruptive. International Corporate Creations can help!

Whilst in some areas of politics, globalisation may be becoming a dirty word, in the world of MedTech and Digital Health it’s essential thinking.

Turbulent times require an international solution

Global Access of Service and Technology Solutions System
Nationalism is resurgent. Brexit continues to be the known unknown, but is looming. The pound has fallen and shows no sign of recovering much. Inflation has started to rise. So have business insolvencies. We’re heading into the unknown of Brexit. We’re in the throes of an election that is at best diversionary.
All the indicators are scary, but despite them, much of British Business is doing what it does best. Keeping calm and carrying on. Waiting for “clarity” before taking any new action or making any investments or changes. Which is, of course, courting disaster.
As you’d expect me to say, the current uncertainties make internationalisation a top priority for businesses, especially those in the services sector. However, I’m coming from a different angle here.
The Brexit priority seems to be cutting immigration. Potential European immigrants, however, aren’t waiting for a change of policy – they’re already going somewhere else – and many who are already in the UK are looking for opportunities to leave. This is a problem for almost all businesses, even those that don’t currently employ any (and it’s not just the health service that’s dependent on foreign labour).
Fewer immigrants means it will be more difficult to hire. Some politicians seem to think that there is a vast pool of domestic labour that is being neglected by employers who would rather hire foreigners. Any business person could tell them that there is no prejudice against nationals in any company here – the vast majority of that pool of unemployed Britons either can’t work, won’t work or are unemployable. To solve the problem, we welcome and hire young, talented and hard working people from Europe and the wider world.
Following basic economic rules, a reduction in the supply of such people will increase the cost of all labour, as employers are forced to offer higher salaries to attract the staff they need from a scarcer offering. Deliberate cuts to profitability are limited, so, coupled with the higher prices now seeping through from exchange rate changes in 2016, we are bound to see an accelerating inflationary spiral.
One solution is to hire abroad, in countries where the skills you need are more plentiful and costs are lower. I’m not advising outsourcing – that takes away your control and generally increases costs – but setting up a subsidiary operation.
Entrepreneurs in the services sectors tend to shy away from this idea, or limit their interest to offshoring back office jobs. But why? The businesses that they serve, especially the younger and more dynamic ones, don’t expect local friendly face-to-face chats with their solicitor or accountant. In the modern world, everyone’s used to online access and video conference calls, and is happy if it means the service costs less or has other advantages such as 24/7 service.
Moving a lot of the work offshore to your very own subsidiary, retaining the core skills and entrepreneurship here, can ensure sustainability for the business and increase profitability.
Making new sales to an international market from that base can also guard against currency fluctuations. Companies already exporting services can, by moving the centre of delivery away from their home country, avoid any new trade barriers and guard against negative and nationalistic sentiments that may arise in their existing markets (think “America First”). Similar benefits can be had by manufacturers moving final assembly abroad.
Done the right way, creating a new overseas subsidiary can be quick and cheap to set up. In most cases, it could be trading within 6 months and be self-financing in the first year. Come on, small UK businesses, what are you waiting for?

What’s the first step to start your business?

Well the very first step is to have a great business idea!

Then you have all the bureaucratic and legal steps such as choosing the right business structure, the business name, logos, accountants, office and facilities, marketing strategy, etc. But how do you turn the idea into a profitable business? Here are some thoughts.

1 – Start by analysing your own problems

The easiest and most direct way of achieving that a-ha! moment is to come up with a product or service that you want to use yourself. Think about something that you need and cannot find the solution anywhere else. What is your need? And how do you fulfil it? The advantage of creating something for yourself is that you might find out there is a huge market for it as other people are looking for the same solution. You’re passionate about what you do because you’re solving your own difficulties and it works as a simple way of testing the quality of the idea!

2 – Execute your idea

How many times have you heard people saying – I’ve got this idea – but never tried it – they could have been millionaires by now – who knows? More important than having the idea is executing it. You have a problem, find of a solution, test it and see how much it is worth. It might not be successful the first time around, but do it!

3 – Make the time

“I don’t have the time” – make no excuses. Manage your time efficiently, define the priorities for that day and replace those 2 hours on the sofa in front of a TV to work on your project. As soon as you start, you’ll be sure whether this is something serious enough for a business or just something you could do as a hobby. If, after a while, you see it doesn’t work you haven’t lost anything at all – just a few hours of your life.

4 – Define your limitations

If your product is not for everyone that’s ok, as long as it works for some. Your “customer” (even if this is a friend whom your showing your business idea to) may feel insulted because you do not want to add another service or feature to your product/service – and that is ok if you truly believe in your project. Your limitations are set by answering the question: “Why you are doing this?”

5 -Mission possible

Plan your business in a way that you only commit to what you can do, working within your limitations. This doesn’t mean you’re just being safe, you’re being honest about it. You can promise you’ll provide your product/service to the best of your abilities but don’t fall into the trap of promising the best service they’ll ever get. Set the expectations into a realistic level.

6 –What do you REALLY need

If all the bureaucracy seems a lot to take in and is already scaring you, take a second thought: do you need all of that in the first stage? Maybe you can start in a shared space instead of a river view office with ridiculous service charges? Can you reply to your own emails and handle and all the workload for the first 3 months? Can you start straight away instead of in 6-months’ time? At a later stage, you might need a more complex plan but outline what is imperative to have.

 The best time to plant a tree was 20 years ago. The second best time is now.” – Chinese proverb

 

by Joana Miranda, Manager Admin at ICC – International Corporate Creations

My 3 enduring fundamentals of successful entrepreneurship

Technology changes, but the Art of Business doesn’t.   Methodologies come into and out of fashion, and get expressed in different ways, but the fundamentals of success are always the same.  My “Top Three” were instilled in me by one of my first employers when I was in my early twenties – and since then, I’ve validated them by reverse observation – the entrepreneurs behind every small business failure that I’ve personally witnessed since then have failed on at least two of these points.

Total commitment

This doesn’t necessarily mean working 7 days every week, but it does mean at least thinking work every day.  It’s essential to always be available – pick up every call, and answer every email, whether it’s day, night or weekend.  The best opportunities are often unexpected and come up at crazy times. Unfortunately, there are very few entrepreneurs who are both successful and lucky enough to be able to maintain that aspirational work-life balance.

Time management

Plan every day in advance to make at least a little time for everything.   If it’s quick, do it now.  Never ever let a day pass without doing at least one constructive thing to generate new sales.   Insist on quality but don’t aim for perfection – assign sufficient time to do each task well, but don’t keep polishing.  Don’t end up skimping on the next task – it could be the one that makes your fortune.

Humility

If you’re an entrepreneur, you’ll spend a lot of your time selling.   Potential customers don’t like hard sells and they particularly hate exaggerated claims.  You’re human and your product or service isn’t perfect – admit it.  Just aim to be the best person you can, managing the best company you can establish, selling the best product your company can make – and remember to ask everyone, especially every customer, how you could improve.

 

by Oliver Dowson, CEO at ICC – International Corporate Creations

Australia

After 25 years growth, what next?

Although it’s one of the most attractive international investment destinations for UK companies and investors, Australia is always a difficult market to read.  It’s not just the distance and time zone.  Perhaps the conflict comes from the fact that it feels so “British” in so many ways, but is economically so different.  The heavy dependence on mining and a services sector focused on Asia-Pacific tends to mean that economic cycles are almost the inverse of those in the UK and USA.

So back in 2008-2011, when doom and gloom hit the West, Australia powered ahead, with rapidly improving GDP and strengthening exchange rates – almost solely built on Chinese demand for raw materials.  Over the past two years, however, the economy has retracted as mining has suffered.

That’s not to say that the economy has not been resilient.  Despite negative factors, the end of the financial year last Thursday (June 30) brought with it official confirmation of 25 years of uninterrupted growth.   In the last year, though, whilst GDP grew by 3.1%, net disposable incomes actually fell by 1.3%.  So the country is producing more but earning less.  Average salaries have fallen as high-paying manufacturing and mining jobs have been replaced by low-paying service sector jobs, many of which are part time.

Now economists are worrying about what will happen in this new financial year, with uncertainties around Brexit (despite the distance!), the Chinese economy and many other international factors which have significant effects on Australia.  A new government and new budget may mean increased taxes.

As a result, Australians are spending less, and companies have drastically cut back on investment.

So is this a crazy time to consider trading with Australia?  Not at all, if the focus is right.

The Australian dollar continues to trade at around 20% less than in 2013-14 and is around 30% less than its peak in 2012, when its value made it basically impossible for any business to sell anything in to or out of the country.  The costs for visitors, whether on business or tourists, were painful.   Now costs seem more reasonable and the country is once again viable for visitors and investors.

Key reasons for foreign direct investment into Australia are the high skill levels, geographical positioning to act as a base for the whole APAC region and, of course, the ease of doing business and easy cultural fit.  Although salaries are still relatively high compared to most other developed countries, Australia is definitely viable as a base for R&D and other skilled activity in sectors such as Healthcare and IT.  Tourism also presents good guarantees of investment return.

Since the exchange rate is only likely to reverse in the future – albeit it’s unlikely that will happen very soon – it could be a wise moment to make long term investments in Australian companies.  The ones that dominate their part of the world stage, and demonstrate great long term potential, are property investment companies such as Macquarie, AMP, LendLease and Westfield.  Their well-diversified portfolios mean that A$ growth should be reliable, and future exchange rate changes are likely only to improve the valuation.

From the exporter’s perspective, the opportunities for selling goods seem poor.  On the other hand, it could be a better time to be selling services, especially those that can be delivered into Australia from lower cost economies.   For example, “in time zone” outsourcing to Philippines has been undersold in the past, but must now be increasingly attractive as businesses seek to control costs.  More cost-effectively, Australian companies could be encouraged to invest in setting up their own offshore Shared Service Centres for even greater economic benefit.

 

by Oliver Dowson, CEO at ICC – International Corporate Creations

Starting up in the UK

The ultimate step by step guide

 

Probably one of the most asked questions during the 65, 619 new company incorporations in the UK (according to the latest statistics for April 2016) was “how much?”. Well not a lot to register it… but quite a bit to set up and  maintain it.

There are definitely some factors to take into account that, if overlooked, can be deadly for your business, even before you start trading.

Yes, the idea motivates you, and your will is stronger than ever, but how solid are your finances and how long can your business survive without profit? It is vital that you think  through all the potential costs properly, and include a contingency plan. There are always unexpected expenses. Those, along with poor budgeting are the most common reasons for start-up failure.

Once the money is sorted and your idea is finally turning into reality, you should be able to answer these basic questions and include them in your business plan along with all projected costs.

  • What is your market?
  • Who are your competitors?
  • How useful is your product and how will you position it?
  • What is your Unique Selling Point?
  • Are you going solo or setting up a limited liability company?

Now, all you’ve got to do  is make sure you include all these costs before you get started:

  • Business premises: after staff salaries, probably the biggest operating cost. Whether you use serviced offices or retail business premises, bear in mind that normally these come with agency fees and service charges. You may also have to pay a big sum upfront on your lease, as some landlords and agencies operate on a quarterly rather than monthly basis.
  • Professional advice: Include these services in your budget. The planning stage is one of the most important. It’s OK if you are not an expert, but find some legal and financial advisors to help you with your plan. Keep these contacts for future occasions – when you employ staff or have questions or on projected costs and profits, taxes… Then you’ll definitely need an accountant, payroll agent, lawyer or solicitor.
  • Business travel: when starting a new business, you’ll probably have to attend meetings outside the office. Have some budget allocated to travel, either by public transport or using your own vehicle.
  • Stock, tools and equipment: if you’re not operating a service this can also mean a significant upfront cost. You need to make sure that you’ve got all the material needed to carry out your work smoothly from the start.
  • Insurance: this should be done straight away. It’s important that you protect yourself and keep your company from any type of liability. Insurance is not that expensive but it is important to get the right type of cover. The most common (and essential) is Employer’s Liability Insurance. The certificate should be displayed in your office along with the Certificate of Incorporation or Business Name Registration. Don’t make your business vulnerable.
  • Marketing: as you’re starting a new business, you need to make people aware of its existence! Include events and networking on your budget as part of your awareness strategy. You can opt by traditional methods such as direct mail or spend a small amount in ensuring your website is well placed in search engine results. Invest some time and money in creating your brand: leaflets, logo, corporate brand sheet, business cards, etc. Create an identity that makes your company unforgettable!
  • Staffing and employment: refer to your professional advisers to have guidance on recruiting new employees, wages, tax, National Insurance or any other payroll or HR matters – again, no need to be an expert, just seek some help to save time and effort and ensure you “do it right”. Companies nowadays tend to outsource these services, and there are various packages sold depending on the size of the company.
  • Other expenses normally overlooked:
    • IT and other equipment- computers, printers, toners
    • Office furniture
    • Business stationery and office supplies
    • Website development
    • Postage
    • Utilities – electricity, water
    • Phone and internet charges

Go ahead!

  • Choose your business structure
  • Find a location
  • Register your company with Companies House
  • Register for tax and national insurance
  • License your business (if applicable)
  • Get a website
  • Good luck!

Any questions? We’d be happy to help – get in touch with me or any of my colleagues at ICC -International Corporate Creations.

 

by Joana Miranda, Admin and Finance at ICC – International Corporate Creations