New Business Venture

 New Business Venture

Introduction

            The Diapen 5.0 is one of the latest and most important devices in the dental industry. It is a cordless warm vertical compaction device as well as a backfill obturation device. So far, this device has offered an effective technique for the down-pack obturation system. Its action is rather fast and easy and therefore it delivers an effective yet reliable filling. It has a lightweight design which makes it easy to handle, clean and store when not in use. This device features a quick heating tip which attains high level of temperatures within a short period of a second. This saves the amount of time used for treatment. The temperature settings are distributed into three; High, medium and low. This device has pen tips which are colour coded and are available in labelled sizes so as to ease identification. The introduction of this device has had revolutionary effects on the dental industry since it has made a process which was once long and dreadful to be short and simple. More dentists are therefore more than willing to adopt this device so as improve their customer service and satisfaction in general. The sale of this device offers a great business opportunity since there is an available market. Whether people like it or not, they still find themselves needing these dental services. My business mission is to “Reduce Pain and Create More Smiles in the World”. The aim of my business is to reach many dental patients who know they need help, but would rather suffer with pain than go to the dentist. The distribution of this product will enable more and more patients to feel encouraged to seek help.

Feasibility Study on the Business Venture Featuring the Sale of Diapen 5.0

To help conduct the feasibility study on this new venture, it is essential that the summary for the business model be produced.

Business Model Summary

The dental industry is resilient and is expected to grow as a benefit associated with improving dental care and insurance coverage. This industry performed fairly during the economic recession, and today it is expected to perform even better as it continues to benefit from factors such as favourable demographic trends, technology improvements and also the mounting awareness of the importance of oral hygiene (Ou-Yang & Lin 2008, p.3750). In the United States, the geographic distribution of dentists and the economics of a location are closely related. The availability of dentists’ location in this country is influenced by population distribution, exposure to fluoridation, prices for dental care and also household income. For every 100,000 people, the number of dentists is higher especially in metropolitan areas. The top four regions with a high number of industry establishments include the West, Southeast, Mid-Atlantic and Great Lakes which have 21.4%, 21.2%, 17.1% and 14.7% respectively (‘BARNES Reports: Worldwide Offices of Dentists Industry (NAICS 62121’ 2013, p. 56).

For dentists all over the United States who need to attract more customers and grow their small businesses, our product the Diapen 5.0 is revolutionary dental equipment which will give patients a dental care experience which is comfortable and less time consuming. Since most dental products are usually expensive, especially for new dentists in the industry, our business is targeting the newly acquired dental offices or the just started dental organisations which are looking to attract more customers with the use of affordable yet effective equipment. The revenue of this business will be generated through the sale of the manufactured products which will feature the Diapen 5.0.

This business will be functioning on a specific value chain structure. First is the inbound logistics. This is the step of receiving, and warehousing of the raw materials. These materials will be kept in this safe and will only be distributed for manufacturing when required. Second, is the operations which will feature all the processes of transforming the raw materials into a finished product. Third is the outbound logistics which will feature the warehousing as well as the distribution of the finished products. Fourth is the marketing and sales. In this section the needs of the potential customers will be identified and sales will be generated. Fifth is the service which features the feedback from customers after they have purchased the product. The above chain of activities will be supported by many factors as well. One is the infrastructure of the firm which involves the organizational structure, control systems as well as the company culture and vision statements among many others. Two, the human resource management will also support since it will be responsible for recruitment of employees when required, hiring and training them and lastly compensating them. Three, technology developments will also be necessary so as to support value creating activities which will ensure customer satisfaction. Four, procurement will also be present as it will enable the purchase of inputs such as the raw materials, supplies and equipment.

Some of the competitors of the business are many others who are also producing dental equipment of high value and which are adapted to suit the needs of dental customers as well as those of the dentist. This business will partner with five other businesses. The first will be a dentist’s organisation. Second is a company which has the ability to supply us with raw materials throughout. Thirdly is another business which also produces dental equipment but of a different kind. Fourth is a business whose main point is to sell dental equipment to potential customers. Fifth will be a business which functions by transporting goods from one place to another.

A Convergence of Factors Affecting the Dental Industry

Since my business will mainly be focused on the product development and manufacturing sector based in the United States, it is clear that there are some specific market trends which will boost the sales of the business. There are three primary factors which will converge to finally shape the future of my business and that of the dentists industry as a whole. They include economics, demand and supply. The American Dental Service economy usually generates an approximate of $60 billion each year in patient fees and practice activity (‘2013 Market Research Report on Dental Equipment & Supplies Manufacturing’ 2013). This figure is not constant, instead, as a result of the effects of demographics, patient behaviour, technology, and also dental care access, it keeps increasing as each year goes by.

 

 

 

 

 

 

Although the changes in the past have been slow and predictable, a report suggests that in the near future these changes will be more drastic. According to Figure 1, there has been a constant increase in the sales since consumer logic, choice and rationale for seeking dental care services is also changing. This is because today, over 50% of all the economic value of dental care is obtained from procedures as well as treatments which were not available in the past (‘Dentist Report Summary’ 2013). Therefore, since the Diapen 5.0 is a new instrument in the dental industry, its sale may as well become profitable as new instruments are in demand.

Demand for dental care

            The demand curve for dental care is shaped by three key factors. One is the number of patients seeking dental care. Two is the number of procedures for individual patients. Three is the number of service alternatives. Over the past 30 years, a significant change in the incidence of hard tissue disease has changed. The rates of dental visits are edging upwards in that today, approximately 60-70 percent of all adult Americans are seeking dental services (‘Oral Hygiene Industry Profile: United States’ 2012, p.22). This rate is indeed holding stable which is why dental visits are said to be age and need related. Patient demographics are affecting the future of dentists industry. This is because the number of people aging between 60 and 79 is predicted to grow to over 68 million come the year 2025 (‘Oral Hygiene Industry Profile: United Kingdom’ 2012, p.15). In the year 2000, the number of people in this age group was 36.4 million (Hoo-Yeon, Youn-Hee, Hyoung Wook, & Sang Gyu 2012, p. 32). If the number is arrived at in 2025, the increase will be of 87%.

 

 

 

 

While the trends are showing an increase in the number of patients who are older, this would also suggest that children of today are somewhat growing up free from the hard tissue disease. Unfortunately, this is not the case since research shows that children aged 12 to 17 have some kind of dental issue (Valenciaet al. 2012,p.2354). Some have decayed tooth, missing tooth and other filled teeth. The factors affecting this include the socioeconomic status, ethnicity and also education (Research and, M 0007). There are certain problems which affect the access of preventive dental care.

The Strengths of the New Business Venture

Judging from the data above, it is very clear that the dental industry is constantly improving. Therefore the industry is one of the best to venture in since over a number of years, the sales associated with it have been increasing (‘Patterson Companies, Inc. SWOT Analysis’ 2013, p.5). The production and distribution of Diapen 5.0 may be successful because there is an available market. The price trends of dental equipment and supplies manufacturing is usually affected by seasonal demand as well as by the market trends (‘Dental Equipment: market research reports’ 2013) . However, the pricing is always increasing.

Weaknesses of the New Business Venture

            The new business venture has a few weaknesses. First of all, it has no collaborations which are very essential for any business to prosper to the maximum in a highly competitive market. The production of the equipment is also very expensive which results to an expensive product as well.

Legal Structure for the Business Activity

            The legal structure of a business affects the amount of tax paid, the amount of paperwork required for the business and the personal liability faced (Gainet 2010, p. 201). The legal structure of this new venture will feature a partnership between six businesses. Depending on the contributions of the other businesses, the profits will be shared accordingly. This type of structure is essential in that there will not be a tax burden. However it also has a limitation since each partner is liable for all the financial obligations of this business.

Start Up Budget and Cash Flow for the First Three Years of this New Business Venture

	Cash needed to start	% of total	Actual Cash Spent	% of total	Variance	% of total
Monthly costs
Salary of owner-manager	$ 6,000	13.7	$6,500	13.9	($500)	15.8
All other Salaries and Wages	7,000	16.0	7,100	15.1	(100)	3.2
Rent	1,000	2.3	900	1.9	100	-3.2
Advertising	2,000	4.6	2,000	4.3	0
Delivery Expense	400	0.9	1,000	2.1	(600)	19.0
Supplies	500	1.1	1,500	3.2	(1,000)	31.6
Telephone	500	1.1	500	1.1	0
Other utilities	500	1.1	760	1.6	(260)	8.2
Insurance	600	1.4	600	1.3	0
Taxes, including social security	1,000	2.3	1,000	2.1	0
Interest	500	1.1	500	1.1	0
Maintenance	300	0.7	300	0.6	0
Legal and other Professional fees	3,000	6.9	3,300	7.0	(300)	9.5
Miscellaneous	500	1.1	500	1.1	0
Subtotal	$23, 800	54.4%	$26,460	56.4%	($2,660)	84.2%
One time costs
Fixtures and Equipment	$10,000	22.9	$11,000	23.4	($1,000)	31.6
Decorating and remodelling	1,000	2.3	1,200	2.6	(200)	6.3
Installation charges	500	1.1	600	1.3	(100)	3.2
Starting inventory	5000	11.4	4,000	8.5	1,000	-31.6
Deposits with public utilities	1,000	2.3	1,200	2.6	(200)	6.3
Legal and other professional fees	500	1.1	500	1.1	0
Licences and permits	500	1.1	500	1.1	0
Advertising and promotion for opening	500	1.1	500	1.1	0
Cash	750	1.7	750	1.6	0
Other	200	0.5	200	0.4	0
Subtotals	$19,950	45.6%	$20,450	43.6%	($500)	15.8%
Totals	$43, 750	100%	$46,910	100%	($3,160)	100%

 

Marketing Strategy Outline

The marketing of this company will be done a budget. At first, to create awareness about the product, the business will employ a few sales persons who will move from shop to shop showcasing the product. The business will create posters and flyers which will be distributed within the city. A workshop for all dentists will be sponsored by the business so as to attract more dentists and if possible investors into the business. Technology will also be used. The company will develop a website whereby sales may be carried out online. Advertisements will also be made through the internet, television and also newspapers.

Conclusion

The idea to venture into the production of Diapen 5.0 indeed has a business opportunity. The dental industry is growing faster each year and it also yields high revenue. The industry has few people participating in it. This factor will reduce the rates of competition and therefore the business will easily rise.

 References

2013 Market Research Report on Dental Equipment & Supplies Manufacturing’ 2013, viewed 12 December 2013 <http://www.anythingresearch.com/industry/Dental-Equipment-Supplies-Manufacturing.html>

Dental Equipment: market research reports’ 2013, Viewed 12 December 2013 <http://www.marketresearch.com/Life-Sciences-c1594/Medical-Devices-c1126/Dental-Equipment-c1495/>

Dentist Report Summary’ 2013, Viewed 12 December 2013, <http://www.hoovers.com/industry-facts.dentists.1851.html>

BARNES Reports: Worldwide Offices of Dentists Industry (NAICS 62121)’ 2013, Worldwide Offices Of Dentists Industry Report, pp. 1-106, Business Source Complete, EBSCOhost, viewed 12 December 2013.

Gainet, C 2010, ‘Exploring the Impact of Legal Systems and Financial Structure on Corporate Responsibility’, Journal Of Business Ethics, 95, pp. 195-222, Business Source Complete, EBSCOhost, viewed 12 December 2013.

Hoo-Yeon, L, Youn-Hee, C, Hyoung Wook, P, & Sang Gyu, L 2012, ‘Changing patterns in the association between regional socio-economic context and dental caries experience according to gender and age: A multilevel study in Korean adults’, International Journal Of Health Geographics, 11, 1, pp. 30-39, Academic Search Premier, EBSCOhost, viewed 12 December 2013.

‘Oral Hygiene Industry Profile: United Kingdom’ 2012, Oral Hygiene Industry Profile: United Kingdom, pp. 1-38, Business Source Complete, EBSCOhost, viewed 12 December 2013.

‘Oral Hygiene Industry Profile: United States’ 2012, Oral Hygiene Industry Profile: United States, pp. 1-38, Business Source Complete, EBSCOhost, viewed 12 December 2013.

Ou-Yang, C, & Lin, Y 2008, ‘BPMN-based business process model feasibility analysis: a petri net approach’, International Journal Of Production Research, 46, 14, pp. 3763-3781, Business Source Complete, EBSCOhost, viewed 12 December 2013.

‘Patterson Companies, Inc. SWOT Analysis’ 2013, Patterson Dental Company SWOT Analysis, pp. 1-8, Business Source Complete, EBSCOhost, viewed 12 December 2013.

Research and, M 0007, ‘Research and Markets: The Chinese Dental Industry – Chinese Market to See Rapid Growth Due to Increasing Awareness of Dental Health’, Business Wire (English), 7, Regional Business News, EBSCOhost, viewed 12 December 2013.

Valencia, A, Damiano, P, Fang, Q, Warren, J, Weber-Gasparoni, K, & Jones, M 2012, ‘Racial and Ethnic Disparities in Utilization of Dental Services Among Children in Iowa: The Latino Experience’, American Journal Of Public Health, 102, 12, pp. 2352-2359, Academic Search Premier, EBSCOhost, viewed 12 December 2013.

 

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