Background

CyberHealthData was a startup with ambitions to be a major player in the managed security services arena. Their business plan was filled with beautiful pictures of their adaptive reuse of a facility that now housed thirty monitoring workstations as the cornerstone of their Security Operations Center.

They had put their first year revenue at $10,000,000, increasing to $20,000,000 over five years. Their projections were based on the assumption that they would be effectively competing with such high-profile players as Palo Alto Networks and Fortinet. The business plan had been written to obtain funding for the money already spent on the adaptive reuse project and to obtain working capital for the next phase, which was marketing, client acquisition and hiring.

While it is true that the plan lacked any specific, detailed information about the current market, their target market, how the SOC would run, how it would be staffed, how they would find clients, that is not why the business plan was rejected by several lenders. It was quite simple: Every lender felt that the most serous omission was why they thought they were going to be able to compete with companies like Palo Alto and Fortinet.

What they needed was a business plan that was reasonable enough and solid enough that they could obtain funding–a way to make their vision viable.

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The Solution

The nine building blocks of the building model canvas are: Customer Segments, Customer Relationships, Channels, Revenue Streams, Key Activities, Key Resources, Key Partners, Cost Structure, and Value Proposition. This framework was used prior to creating the business plan so that the Company could evaluate their proposed operation holistically, to see how all of the parts fit together. Their vision was set aside for this activity, as the focus was only on the business model framework and not the operations that supported it.

While not part of the original Business Model Canvas concept, the blocks were prioritized according to their importance to the solution.  There were some issues more critical than others that had to be resolved.

Key Activities     

Before anything else, key activities had to be identified.  The only way that the feasibility of the venture could be assessed was to identify what the Company wanted to offer. 

Customer Segments

Customer segmentation was next to create a realistic profile of the customers they could expect for their services.

Revenue Streams

The anticipated revenue streams were identified:  All of them were related to the operation of the SOC.

Value Proposition

Based on what was in the rest of their business model canvas, the Company created their value proposition.

CyberHealthData had identified their key operations as those relating to a fully-functioning security operations center (SOC); and to the use of the facility for training.  Their customer profile was that of small to medium size healthcare operations in their state, expanding to those in the region.  A separate item in this section, however, was their intent to obtain large accounts such as local universities and hospitals.  Their revenue streams involved two distinct sources:  First were the clients served by the SOC.  Another source identified was education and training of high school students.  The state in which they are located offers a $7500 stipend for cybersecurity training when the facility is qualified.  Their facility qualified. That said, their financial projections did not include the student training because they considered it to be an insignificant part of their revenue. Their value proposition centered on the fact that the facility had been constructed and that they had hired cybersecurity specialists as management personnel.  

The solution resulted from a realistic assessment of their business model canvas and the use of market data that would better enable them to make a decision.  A critical consideration was their competition.  A random survey was done of small and medium size healthcare facilities in the state to determine what cybersecurity measures they had in place.  Over 75% of them used online managed service providers.  Larger organizations such as university health centers had their cybersecurity programs developed by firms such as Palo Alto Networks and Fortinet.

At this point, the Company had to reevaluate the model they had created so that they could present a viable proposal to lenders.  The model was then completely restructured.  The decision was made to come up with a model that did not include providing managed SOC services.  

There are 1.12 million high school students enrolled in the state in 2024.  Each of those students potentially has a chance to receive one of the $6500 stipend ($5000 of which would accrue to CyberHealthData).  In operating year one, if the program captured only .04% of those student as trainees, annual revenue would be $2,500,000.  While this was a quarter of what they had originally projected, it was based on a solid business model that had the potential to grow as reinvestment into the Company was made.  The facility currently houses 10 security monitoring stations.  The new plan was to operate this as a training center for 50 weeks a year with 500 students completing the hands-on training and some remote study.  

The value proposition then increased dramatically.  In addition to a stable operation, the facility would provide job training for the many cybersecurity incident response analyst positions that remained unfilled.  It would also provide an incentive to keep students in school since the high school population was rapidly decreasing.  

The Result

Actionable Business Plan

The most important thing that resulted from this process was an actionable business plan that got the Company the funding they needed–even if it was not what they originally wanted.

Depending on their size, our business plans may include many sections that are not routinely found in other plans.  But we believe they are what makes our plans so successful:

• Reasonable business model that is viable
• Area-specific target market analysis–whether the market is for an Internet based business or a local business
• Market analysis using current information
• 2024 demographic information
• Risk assessment and scenario planning
• A mini-economic analysis to show the impact of an operation on the market and population in which it operates.

Business Plans

       Problems Solved

• Business Model:  A sustainable business model evolved that would ensure a profitable, stable operation that could weather economic variances.
• Target Market:  An entirely new target market was identified but it was one that already existed as an available market and one for which the Company was already guaranteed a share.
• Competition:  The new model eliminated any concerns about how the Company would compete in an already-crowded arena with many high-profile players.  With only one other vendor in the state offering similar training programs, they could establish a much higher profile in this arena.
• Revenue streams:  This source of revenue was one that could be more easily validated contracts, letters of authorization, etc.
• Physical Facility:  Even with the reduced level of revenue, it was reasonable enough that lenders would believe that payments could be made from projected revenue.
• Vision:  They could now create a vision and goals that were attainable.

Strategic Plans

This was a traditional, comprehensive plan but the Business Model Canvas is often used as the basis for a lean startup one-page plan, which we also create.  The names and locations were changed.