Revenue

3. Is there a revenue stream? (How much will people pay for this thing?)

If you are like the average public health manager, you haven't thought much about revenue or taken a class that featured that word on a test. Let's be clear about what revenue is in the context of a business plan.

Government agencies have general funds from taxpayers that support some of their work. Public health agencies typically bring in grants from various sources for specific activities. That's not the kind of revenue I mean.

Revenue, for the purposes of a business plan, is money that comes in to your agency directly in exchange for products or services. Your health department probably collects money for septic inspections, for instance. It probably bills Medicaid for services it provides. In both cases there is a party involved who looks like a customer.

In the non-profit world, the situation is similar. Non-profits usually take in grant money, and many have development offices that ask for contributions. Neither source would count as revenue in the business plan sense. Many non-profits do provide goods or services that are paid for either by users or by a third party—that counts as revenue. For example, the YMCA charges for memberships.

So to fit for a business plan, your idea ought to be a new idea that looks like a product or service, and that generates revenue (i.e., customers that pay or pay via a third party). If you aren't interested in generating revenue, don't choose business planning as your planning tool. Business planning is specifically geared for programs that are trying to generate revenue to cover costs.

The Dare County Health Department used a fee-for-service system to cover its operating costs. Although their biggest payer was Medicaid, the state health care program and user sliding fees also generated revenue. They also counted on partners helping out for free—the school system, for instance, was a key partner to insure that the dental program had efficient access to the children.