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Medquip, Inc.

Strategy and Implementation Summary

Medquip, Inc. will pursue specific, definable, market segments with a multi-tiered, multi-channel approach. We will leverage our technologies with a licensing agreement in one key area and a direct sales and distribution strategy in the other using established distributors.

We will look to foreign markets first with established distributors for initial revenue. Domestic revenue will follow. Large groups and plans will be targeted first.

Marketing Strategy

Marketing will follow from industry and trade and physician awareness campaigns to specific executions directed at specific customer segments. The top tier of 20 to 30 customers in each segment will be attacked first. Only a few sales hits in these top tiers will enable achievement of targeted forecasts. Medquip will achieve its initial sales goals from direct and distributed sales of the Visi-Band. This product is targeted first since it is an existing, well-defined market and 510k approval is anticipated. Worldwide sales through distributors will provide needed cash flow.

Promotion Strategy

Public relations, industry media, will help in over-all industry awareness plans. Feature articles and product reviews will help launch awareness. Direct mail to buying groups and ads in trade publications will help with buyer impressions. Finally, all will be integrated with physician materials and training video tapes once approval has been obtained to increase point-of-surgery usage.

Medquip has already worked closely with physicians to design its products. The importance of working with physicians is well known. As an outgrowth of our Physician Advisory Board, Medquip will actively recruit allied physicians with sponsored events and seminars. Every major market area will be targeted. An annual event will also be sponsored.

Pricing Strategy

Pricing for the Visi-Band is $250 per unit. Terms are 2% 10 days, net 30. All collections in this plan for cash flow purposes are based on an average 45 day collection span. Our 80% gross margin allows for factoring receivables if that should become viable or necessary.

A 30% discount will be offered to distributors. Quantity discounts are not included but remain possible in negotiations with major buying groups.

The Visi-Gator is priced in two components:

  1. The motorized unit at $1,000.
  2. The cutting/irrigation/suction component at $200 (disposable).

Note: These are suggested retail prices. They represent ten times our estimated cost of manufacture. However, the strategy is to license these products for a 10% royalty. Pricing would be negotiated with the licensee.

Sales Strategy

Medquip’s sales strategy is to open foreign markets on a limited basis at the end of ’98. To fully exploit them in ’99 along with initial penetration of the US market with the Visi-Band (assuming 510k approval). Then to grow both markets in 2000 up to a 10% penetration.

Additionally, the strategy is to license the Visi-Gator to a major company such as J&J due to its increased regulatory requirements and initial marketing costs due to the fact that it is a new segment entry. The objective for the license is a $500,000 fee, $500,000 in advance royalties and a 10% royalty level per unit. Royalty projections are included in ’99 and ’00 sales forecasts.

Sales Forecast

This sales forecast includes small unit sales into the international market. The product is the Visi-Band. Unit sales are at $250 US. Product cost of direct sales is 20% while product cost through distributors is 50%.

It is important to note that $500k license fee and $500k advance royalties are the target figures for a license on the Visi-Gator. If these figures are not attainable or turn out to be a lesser number (but still acceptable to the Medquip board) then they should not be considered for cash flow purposes.

Investment money sought for Medquip will still be based on a sales forecast that does not include a successful license sale.

Medical equipment developer business plan, strategy and implementation summary chart image

Medical equipment developer business plan, strategy and implementation summary chart image

Sales Forecast
Year 1 Year 2 Year 3
Visi-Band (direct) $61,750 $1,300,000 $5,200,000
Visi-Band (distributor) $136,500 $3,600,000 $16,250,000
Other $0 $0 $0
Total Sales $198,250 $4,900,000 $21,450,000
Direct Cost of Sales Year 1 Year 2 Year 3
Visi-Band (direct) $12,350 $260,000 $1,040,000
Visi-Band (distributor) $50,505 $1,332,000 $6,012,500
Other $0 $0 $0
Subtotal Direct Cost of Sales $62,855 $1,592,000 $7,052,500

Sales Programs

Sales programs include direct wholesale sales to international distributors. Sales materials, video training tapes, and support materials will be produced. Physician materials will be included.

Direct sales will be by personal contact, direct mail, public relations, and media directed at key industry segments.

In addition electronic marketing will be deployed whenever it fits with the buying patterns of a key group.

A website and electronic commerce site will be utilized to cultivate direct sales to key industry groups.


The following are the key milestones for the first year of operations.

  1. All patents will be applied for by the May 1st date. The total legal fees are expected to be less than the $50k allocated.
  2. Start-up capital was successfully raised.
  3. The business plan has been completed.
  4. The government of Puerto Rico has been presented on April 8, 1998.
  5. All other first year milestones are currently on target time wise and budget wise.
Medical equipment developer business plan, strategy and implementation summary chart image

Milestone Start Date End Date Budget Manager Department
Patent Applications Complete 1/1/1998 5/1/1998 $50,000 Smith R&D
Start-up Investment 1/1/1998 1/30/1998 $0 Jones Finance
Business Plan 1/7/1998 2/7/1998 $3,000 Jones Finance
Private Placement 1/1/1998 6/1/1998 $0 Jones Finance
Puerto Rico Funding 2/1/1998 6/1/1998 $0 Jones Finance
Corporate Identity 4/1/1998 4/30/1998 $975 Jones Finance
CEO hire 3/1/1998 6/1/1998 $50,000 Jones G&A
Engineering Personnel 2/1/1998 6/1/1998 $0 Smith R&D
Puerto Rico Operation 6/1/1998 12/31/1998 $1,000,000 Smith R&D
Initial Sales 6/1/1998 10/1/1998 $0 CEO Marketing
Totals $1,103,975