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Business Plan

2019

PHYS VR JUSTIN FATH, CALEB TRUAX, SARAH ROBINSON, SHAWNTIS LEWIS NEW VENTURE PLANNING DR. BATES

PHYSVR | 236 West Reade Ave, Upland, Indiana 46989

BUSINESS PLAN PHYS VR

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Executive Summary Hook / Pain Are you looking to improve and stimulate your recovery? Like many people, I too

struggle with physical recovery. I find that when I get prescribed a set of exercises for

recovery, it is difficult to monitor if I am doing them correctly. With a fee tagged to every

visit, it becomes costly for me to seek consultation. Ultimately, leaving me feeling

unmotivated and helpless. I wish there was a way for me to save a trip to my local clinic

while receiving 10X the feedback I’d receive if I had traveled to the clinic in person.

PhysVR has a solution!

Solution

PhysVR is a forefront software development focused on bridging the gap between VR

with hospitals and physical therapy clinics. PhysVR would like to empower physical

therapists through powerful tools like virtual reality. A large aspect that plays a part in

recovery is motivation in order for patients to get well. We plan to achieve this task by

strategically partnering with hospitals & clinics, then provide them with a customized VR

software/hardware solution they can use with and for their patients. Through these

innovations, we plan to provide a tool that allows for same-day repairs and consultation.

This in effect will stimulate a bond between the physical therapist and patients with

increased in-depth feedback, while also improving recovery time.

Opportunity The VR Market is forecasted to be a $35 billion industry annually, with $5.1 billion being

spent in VR Healthcare by 2025. Physical therapist occupation is forecasted to grow

28% from 2016-2026. Additionally, 70% of office visits can be effectively covered by

telemedicine. Fortunately for PhysVR, with developments like virtual reality, we are at

the next stages of telemedicine. This is a tremendous opportunity to be an established

player in a new market that will be utilized.

Competitive Advantage


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How PhysVR distinguishes itself in this sector is we provide a tool that does not seek to

replace the knowledge and skill of physical therapists but allows them to utilize their

practice to its furthest potential. We are creating a combination of cutting edge software

complemented by hardware with customer service that has same day repairs that will

contribute to the rapid adoption of our software.

The mission of PhysVR is to create an environment that achieves the goals of patients

and Physical Therapists alike in a revolutionary way of virtual reality. PhysVR is

technologies finest meeting healthcare.

Business Model A large part of physical therapy is the motivation to get well. With PhysVR we want to

create an atmosphere that fosters this. PhysVR will provide software on a subscription

basis. Included in their subscription they give their customers a certain amount of

application uses per month, ‘tablet control ’and ‘data’ portal accesses. Our company

pricing model for subscription is 100 sessions for $100 a month, 250 sessions for $200

a month and unlimited sessions for $750 a month.

Team

We believe that our team, PhysVR, can carry out the unique qualities each of us have to

make this business concept happen; qualities such as determination, persistence, and

more importantly, communication skills. Our team has been committed to going the

extra mile to ensure the success of this project. Each team member was given the

opportunity to learn about all aspects of the company, with their special skills and

expertise. We have worked together on everything from our business planning and

working together which allows each of us to gain a better understanding of all aspects of

a venture. Having a great relationship allowed us to trust one another.

Promise

The investors can expect a return of their money, growing dividends, and a percentage

of market share. As we take the next step in launching our business, we promise to do


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anything and everything possible to profitably grow our business in a moral and ethical

way. We will treat our employees and customers correctly, to be transparent with any

and all stakeholders, and to do what I believe is best for the whole. Since we are

partnering with IU Health Services, we will give them a 50% discount on the unlimited

plan for the first three years we are partnered with them. At a discounted price of $375

per month in 18 locations, we expect to bring in $81,000 annually from IU Health

Services for the first three years.

Revenues

Year 1 Year 2 Year 3 Year 4 Year 5

Sales Revenue $122,666 $173,996 $239,005 $406,285 $511,862

Income before taxes $(181,530) $(123,016) $(67,475) $76,453 $164,341

Ask

Along with a website, and social media presence the software integration with VR ready

devices is paramount. Creation of software is the number one cost in the creation of

PhysVR. Having the best software plus customer support is crucial to success.

Industry Analysis Virtual Reality has been a growing industry for the past 10 years. Companies like

Facebook, Google and Microsoft continue to develop Virtual Reality products for

consumer use. Before 2016 less than $5 billion dollars was made in the industry. By

2018 it had grown to $14.1 billion. In the last year the Virtual Reality industry has

shipped 7 million headsets worldwide. Its projected that in the next year a total of 37

million will be shipped to customers (Reauters).

The health care industry is ever growing, with new opportunities continually presenting

themselves. Health care is a $3.65 trillion industry in the United States (Statista, C).

Also, in a study done by Grand View Research they found that the VR and Augmented


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Reality healthcare industry will $5.1 billion 2025 (Kite-Powell). This presents a

promising opportunity for PhysVR to become a part of as the health care industry looks

to technology to take it to new heights.

Using Virtual Reality in health care, and specifically physical therapy isn’t a new

concept. There are a few startups around the world that have started into the Virtual

Reality physical therapy industry. These companies, and fellow competitors are

XRHealth, NeuroVR, and KineQuantum are up and coming companies with funding and

adequate resources to make an impact on the future of physical therapy and the health

care industry. For example, according to their website, XRHealth secured $4 million in

fundraising in 2018 alone and has been recognized by Forbes, BBC and CNet.

Scope of Venture

The goal of PhysVR is to provide a link between virtual reality and health care. PhysVR

will empower Physical Therapists with virtual reality based technologies in order to

enhance the experience of a patience. Using virtual reality will be able to decrease

recovery times and increase the success of therapy for a patient. PhysVR plans to

partner initially with hospitals and provide them with customized solutions for their

patients. PhysVR won’t replace the knowledge and skill of Physical Therapists but

utilize it and enhance it.

Early on in the process PhysVR plans to partner with IU Health Services. IU Health

Services has 18 locations throughout Indiana that provide some of the best, most

consistent care for their patients. Partnering with IU Health Services will allow PhysVR

to spread it technology throughout the state and one of its largest healthcare providers.

Since IU Health Services are a part of Indiana University PhysVR will be able to help

obtain top college talent to work at the company.

As PhysVR gains traction in the virtual reality healthcare industry we will sell more

subscriptions to use in other hospitals, clinics, sports organizations and even directly to

patients who want to use our services at home.


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Target Market

PhysVR is focusing on selling our product to hospitals, physical therapy clinics, sports

organizations and direct consumers. Physical Therapy continues to be a growing field in

the United States with more need for it arising every year. According to the Bureau of

Labor Statistics from 2014 to 2024 the employment of physical therapists is expected to

grow by 36% (U.S.), one of the highest growing employment needs of all the jobs in the

United States.

According to Statista, 3 out of the top 15 occupations with the fastest project

employment growth from 2016 to 2026 all have to deal with physical therapy. In the

graph (Statista, C) we see the following:

- Physical Therapist Assistants employment growth is 30.8%

- Physical Therapist Aides employment growth is 29.1%

- Occupational Therapy Assistants employment growth is 28.9%

Besides for the job growth that we have seen in physical therapy, the industry itself has

also been growing. According to IBIS, we see that physical therapy revenues increased

to $37 billion and has had an annual growth rate of 3.3% from 2014-2019 (IBIS). In

2014 there was a reported 9 million adults who used physical therapy throughout the

year (Madden). With a large base of 9 million patients in the United States alone (which

has more than likely increased since Madden’s report), we see that there is substantial

base of people who could use our services.

Alongside the growth of physical therapy in the United States there has also been a

significant growth in the virtual reality industry. According to Statista (Statista, B), the

virtual reality industry revenues by 2025 will have grown 42 times the amount of

revenues reported in 2016. They project that total revenues of the Virtual Reality Market

will $9.3 billion.

Combined, the potential to use virtual reality in the healthcare industry has a very

favorable outlook. According to a Markets and Markets report, “the VR healthcare

market had grown to $976 million [by 2017] from $525 million in 2012. And according to


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Grand View Research, the VR and Augmented Reality healthcare industry will be $5.1

billion by 2025” (Kite-Powell).

PhysVR has considered all of these factors and sees two large markets that are rapidly

expanding that can mutually benefit each other. This industry is just beginning and has

unlimited potential to change the way we currently view physical therapy. By utilizing

virtual reality in physical therapy and in the entire healthcare industry there can be

improved efficiency in the way people recover from injury, getting them back to daily life

more quickly than before.

Competition

The main companies in the virtual reality physical therapy industry are only two to four

years old. This means that the industry is still a relatively young, so the market is not

oversaturated, giving PhysVR plenty of room enter and grow. Some of the larger

competitors in our market are XRHealth, Neuro Rehab VR and KineQuantum. These

companies have been around for about two to four years but have already received

praise in the United States and across the world for the work they have done. According

to their website, XRHealth and Neuro Rehab VR have both been recognized by Forbes

as new companies in a new industry that have a lot of potential. Also, in 2018 XRHealth

was able to raise four million additional dollars of capital (VRHealth, 2019). According to

their website they have already delivered 38,451 sessions to patients using their

applications. On their website, KineQuantum has been recognized in Europe as one of

the first virtual reality solution for evaluation and rehabilitation.

These competitors give inspiration and hope to PhysVR that this industry is a viable

industry to operate in. They show that it is possible to integrate virtual reality and

physical therapy together to create a better experience for patients across the world.

With the projected growth in the industry (talked about in the Target Market) we expect

to be able to compete freely and openly with these companies in the virtual reality

physical therapy industry.

Another competitor, although indirectly, for PhysVR is traditional physical therapy.

Physical therapy has been around for a long time and has proven it can help strengthen


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and heal people from all sorts of different injuries. Because of this some people may be

hesitant to add virtual reality into things that have worked in the past. If cost-benefits are

not clearly stated and shown, then our product could be easily put to the wayside in

favor of proven, traditional tactics.

Key Competencies

Quality: The healthcare industry has high expectations for the technology they utilize.

Applications must be able to provide therapy for patients while also providing physicians

with accurate data to measure the patients progress. If the applications that are created

do not run smoothly and consistently then a company within this industry will not survive

for long.

Versatility: A company must be able to provide a good range of applications that are

specific to different injuries. If a company can only provide a shoulder therapy

application, then they will not be able to garner enough support for their technologies.

Adaptability: A company in this industry must listen to patients and therapists needs in

their technology. If they can’t do this then their products will not create value for the

patient or the therapist.

Progressiveness: Since this is a new industry a company must be able to continue to

improve and work to provide more and more value for their customers. To do this a

company must work tirelessly in order to improve applications and put out more

applications so that they can remain relevant in both the virtual reality and physical

therapy industries.

Market Niche

As VR allows medical practitioners the ability to free themselves of geographic and cost

constraints, VRPhysio will be able to have a huge impact on the Health Care sector.

According to the Bureau of Labor Statistics, Physical Therapist occupation is projected

to grow 28% from 2016-2026 (U.S., 2019). This increase in demand will come from the

aging baby boomers, who are not only staying active later in life, but are more

susceptible to health conditions, like strokes, that may require physical therapy.


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According to Goldman Sachs in a recent Statista article, they predict the VR industry will

be an $80 billion a year industry by 2025 (Statista, D). Statista offers a modest

prediction of $35 billion annually between the consumer and enterprise / public sectors.

The Consumer sector with $18.9 billion annually, and the Enterprise and public sector

bringing in $16.1 billion annually. The healthcare sector is predicted to generate $5.1

billion in market size (Statista, D).

After partnering with IU Health Services, some initial markets we could focus on are Los

Angeles, CA; Austin, TX; Jacksonville, FL; and Salt Lake City, UT as these cities have a

high demand for physical therapist (Wheeler, 2018). Focusing on partnership with local

hospitals, we will find that a progressive approach (in VR) will be seen as an early

opportunity for adoption, with future success in mind. The VR/AR market is relatively

new, with few to no competitors focusing on VR within physical therapy.


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VR is the perfect solution for patients whose health conditions prevent them from

moving around much in the real physical world. The American Medical Association has

gone on record stating that 70% of office visits can be effectively covered by a

telemedicine platform (MHealthIntelligence, 2018). As for medical physicians, VR

becomes a tremendous tool in training young physicians. Along with bringing patients

real-time images of the body and how its functioning. This will allow for on-the-spot

consultation from an expert located half a world away.

Marketing Plan Company Description and Business Mission PhysVR is in the formation phase of a startup. The power of VR can be used to

enhance physical therapy to new levels. A large part of physical therapy is motivation to

get well. With PhysVR we want to create an atmosphere that fosters this. The

combination of software plus hardware with customer service that has same day repairs

will contribute to the rapid adoption of our software.

The mission of PhysVR is to create an environment that achieves the goals of patients

and physical therapists alike in a revolutionary way of virtual reality.

Situation Analysis (Strengths, Weakness, Opportunities, Threats) ● Internal Strengths

○ PhysVR has freedom when it comes to starting up. Pivoting if need be in

crucial times to support augmented reality is also a possibility.

○ PhysVR is passionate about physical therapy and virtual reality

combination.

○ PhysVR is loyal to the customers and the dream of creating a working

software and hardware combination for clients.

○ PhysVR has athletes and nonathletes on the team to balance ideas and

core concepts of applications.

○ PhysVR core team has strengths in software development, VR, finance,

marketing and communication.


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● Internal Weaknesses ○ PhysVR needs the accreditation and certifications to be able to work with

physical therapists and hospitals. The Federal Drug Administration

oversees some VR applications, especially ones that have to do with

health. Receiving a registration with them shows in the public eyes we are

approved.

○ The PhysVR team is all students right now going full time. The team right

now doesn’t have the capacity to stop school in order to pursue this.

○ The resources are limited in terms of funding. Even to achieve a MVP of

an application would require multiple developers and equipment like

computers and VR headsets and cameras.

● External Opportunities ○ The current economy is growing, which helps both businesses, hospitals

and consumers spend more money.

■ According to Statista, from 2010 to 2018 the Real GDP growth rate

has grown on average by 2.163% in the United States.

■ Hospital revenue in the United States, has grown from $802.7B in

2010 to $1.2T in 2022. (Statista, B, 2019) Which may allow them to

invest in Virtual Reality healthcare systems.

○ The growing market of virtual reality healthcare industry is becoming more

popular

■ In 2017 the VR healthcare market had grown to $976 million up

from $525 million in 2012 (Kite-Powell, 2018)

● External Threats ○ The VR space is so new that most people understand how it works in

practice but not how it developed.

○ The VR space has many other players, four more to be exact. Although

this is a small number it is still large because of how new the technology

is. XR Health, a main competitor just raised a little over $4M to continue

practicing in the VR health space.


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Market Objectives Launch a commercial virtual reality company that focuses on provided state of the art

software and hardware for physical therapists to enhance therapy on patients. It will

provide quality and support products at competitive prices with a transformational team

to educate and change how physical therapy is achieved.

PhysVR is targeted to the hospitals and physical therapy clinics market. More

specifically, it aims to reach 34,251 physical therapy establishments in the United States

(Statista, A, 2019). The initial target market for the first 3 years will include physical

therapy clinics in the Upper Midwest area as well as any affiliated clinics within the

organizations.

PhysVR is positioned as the conduit for high quality virtual reality systems. This is

achieved by having the best software plus customer support system that users can rely

on.

Target Market Description

For our business, our target is to potentially partner with hospitals, physical therapists,

sports organizations and rehabilitation centers. We believe that this would be one of the

best ways for our company to have a great start for many opportunities, and for many

partnerships as the years go by. Gaining new customers is only one of many reasons

for forming partnerships. Partnerships are important because it would open doors for

new products, research, competitiveness, and to improve customer loyalty. Sports

organizations would probably be one of our main goals because statistics reveal that

90% of student athletes report some sort of sports-related injury. 54% of student

athletes report they have played while injured (Safer).

In most sports, it takes many years to physically prepare the body to reach an elite level

by optimally developing qualities such as muscular endurance, cardiorespiratory fitness,

neuromuscular coordination, as well as strength and power. With PhysVR, the common

goal is to optimally enhance healing and promote strength of the injured tissues to the

extent possible, to help with minimizing the pain, and to restore normal movement and


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neuromuscular function to a level above the pre-injury level, in order to also prevent

recurrence.

According to Statista, the number of physical therapists in the United States increased

between the years of 2001 to 2016. In 2001, there were 126,450 physical therapists

employed in the United States. In 2016, there were 216,920 physical therapists

employed (Statista, C)

● A physical therapy visit ranges anywhere from $75 to $350 per session,

depending on the type of physical therapy you need, and the length of the

session. Standard out-of-pocket rates average $150 per session nationwide

(Thumbtack). The cost of treatment can also vary depending on the length of the

treatment plan.

● The technology that would be used for PhysVR would be the use of 3D goggles

and robotic gloves while playing virtual reality games not only added to the fun of

therapy, but also seemed to speed up the healing process of muscles affected by

stroke. Scientists say that the usual modest results in physical therapy can be

vastly improved by virtual reality because virtual reality stimulates the patient's

creativity and thus involves the brain in the process of healing.

● Physical therapists are known for being experts in movement, which is why we've

implemented Video Motion Analysis software in our business. Whether they are

an athlete, non- athlete, or a senior citizen, this software helps our therapists not

only to help a patient's movement patterns and catch things not apparent to the

naked eye, but to give the patient immediate feedback to help coach and re-train

to movements that place less stress on joints and soft-tissue structures.

● To speed the recovery process and prevent re-injury, physical therapists always

provide therapeutic exercise programs and self-care strategies that patients

perform at home. Rather than sending a patient home with vague instructions or

hard-to-read printouts, we utilize a video-based home exercise platform where

patients can watch videos explaining their assigned exercises.


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According to the United States Department of Labor and Bureau of Labor Statistics,

there were approximately 210,900 physical therapists employed in the United States in

2014, with 34% growth in employment projected by the year 2024. The Bureau of Labor

Statistics also reported that there were approximately 128,700 Physical Therapist

Assistants employed in the United States in 2014, earning an average $42,980

annually, with a 40% growth in employment projected by the year 2024. To meet their

needs, many healthcare and physical therapy facilities hire "travel physical therapists",

who work temporary assignments between 8 and 26 weeks for much higher wages;

which is about $113,500 a year. The American Physical Therapy Association reports

vacancy rates for physical therapists as 11.2% in outpatient private practice, 10% in

acute care settings, and 12.1% in skilled nursing facilities. The APTA also reports

turnover rates for physical therapists as 10.7% in outpatient private practice, 11.9% in

acute care settings, 27.6% in skilled nursing facilities (U.S., 2019).

Market Segmentation PhysVR market segmentation can be split into multiple demographics: elderly, athletes,

and pregnancy rehabilitation. According to the U.S. Centers for Disease Control and

Prevention; one in four Americans aged 65+ falls each year (NCOA, 2019). Falls are the

leading cause of fatal injury and the most common cause of nonfatal trauma-related

hospital admissions among older adults. In 2015, total cost for fall injuries was $50

billion with an expected increase to 67.7 billion by 2020 (NCOA, 2019).

According to the NCAA there are close to 8 million high school athletes who participate

in athletics, and about 480,000 individuals becoming collegiate student athletes. In a

statistical reveal, statistics showed that 90% of student athletes have suffered from an

injury; while 54% report they have competed while injured (NATA, 2019). This small

sample size of athletes stated is just a small portion of the people who compete in

athletics around the world who need physical therapy.

Responsible for a great change in posture, pregnancy can cause back pain and

discomfort. In an article taken from American Pregnancy, they stated that between 50 to


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70 percent women suffer from back pain during pregnancy (CDC, 2019). A report taken

from the Center for Disease Control and Prevention, in 2017 194,377 babies were born

to women between the ages of 15-19 (CDC, 2019). Mothers who experience back pain

may use physical therapy to relieve their pain and strengthen back and core muscles.

Unique Selling Proposition PhysVR has a very unique selling point as we are one of two VR physical therapists

seeking FDA certification. We plan to enhance the experience of recovery by offering

24-hour consultation to better assist our patients in recovery. Unlike our closest

competitor who is also FDA certified, we plan to work with all different kinds of people,

from the elderly, to the pregnant, to athletes. This is unique to the market because

companies like XRHealth out of Boston, are choosing to focus more on athletes in

particular. By catering to a large spectrum of people PhysVR has a great advantage at

capitalizing on market share and establishing itself as a major player in the virtual reality

physical therapy industry.

Marketing Mix

Product

PhysVR will provide physical therapists and clinics with software that is designed to aid

the recovery process. PhysVR’s programmers will be working with therapists to make

programs that create an immersive experience for those going through therapy. Our

software programs will be built mostly around using games as a way to engage those

going through physical therapy in a new, fun and exciting way. Using games in physical

therapy may sound childish, but the idea behind it is that patients will be distracted by

the virtual reality interface which will minimize the amount of pain they feel, allowing

them to push themselves further than they could by traditional physical therapy. Initially

the software will be compatible with virtual Oculus Rift and Oculus Go headsets, which

will be required to be bought separately from our software product. These headsets are

two the most reliable and recognizable in the virtual reality landscape. As we continue to

work, we will make our software compatible across more virtual reality headset

platforms. Initially we will focus our software products specifically towards neck and


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shoulder therapy. As PhysVR grows we will continue to work with physical therapists to

develop more programs for different types of injuries.

Neck focused therapy will allow for patients who have suffered neck injuries a way to

rehabilitate their neck with the assistance of virtual reality. The games in our software

will require a patient to use their neck to maneuver about a maze or obstacle in a

certain about of time. They will be able to maneuver themselves in the game by turning

their neck to a side, or up or down depending on whatever obstacle may be in front of

them. The game will be tailored to the needs of a patient and their ability to move their

neck. If a patient is only able to turn their neck slightly then the game will only require a

slight turn to maneuver. But if the patient can turn their neck more, then the game will

require more movement from the patient. As the patient progresses in their therapy the

expectation for neck movement should be increased so the patient can get back full

range of motion and strength in their neck.

Shoulder focused therapy will be based mostly in range of motion exercises, much like

that of the neck. The games will require patients to use their arms in such a way that it

forces them stretch or strain their muscles to promote flexibility and strength. Games

that will be played will involve internal and external arm rotation, cross body reaches,

overhead stretches and straight-arm arm raising. Some of these can be accompanied

by the use of a band along with the headset remote. The games will involve sorting

items, catching balls in tough to stretch to places, or playing a carnival game that would

be similar to ‘whack-a-mole’. These games would work on recognition response and

range of motion ability within patients. As a patient progresses the speed of the game

will increase and the range of motion that the patient will be responsible to cover will be

greater. Over time these increases will lead to an increase in strength and mobility of

the shoulders of the patient.

Within these programs, as well as with any other program PhysVR will provide in the

future, there will be analytics on a patient’s ability to move whatever extremity is being

worked on. The software will track the patient’s movement and will be able to measure


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their range of motion. Measuring the range of motion will work similarly to a goniometer

(used in traditional therapy to measure range of motion), giving the therapist an

accurate idea of the progress that a patient has made in their recovery process. Once

collected, this data will be stored and conveyed in a useful way for a therapist to access

and read via computer or another smart-device.

Pricing

PhysVR will provide software on a subscription basis. PhysVR will offer subscription

plans that are tailored to fit the size of a clinic and the amount of use that they plan to do

for their customers with virtual reality. XRHealth, one of the leading companies in Virtual

Reality Physical Therapy, utilizes a subscription service to sell their products. Included

in their subscription they give their customers a certain amount of application uses per

month, ‘tablet control’ and ‘data portal access’ (VRHealth, 2019). Our subscription

service will provide a similar experience for customers as XRHealth’s does. XRHealth’s

pricing model for subscription is 100 sessions for $99 a month, 500 sessions for $399 a

month and unlimited sessions for $999 a month (VRHealth, 2019). Based off of their

pricing model, we will price our subscriptions on a monthly basis in the following way:

Price Session Uses

$100 100

$200 250

$750 Unlimited Uses

Our subscription fees are competitive to those of XRHealth. We believe that you should

not have to subscribe to us to have access to the data provided by our software. Once

the data is collected during a session the data is yours and the patients to keep.

Because of this, first time subscribers must pay a $75 fee to have access to the

software that stores and shares the data in an easy to read way for the patients and

caregivers. As clients continue to work with us the subscription fees increase and

change as we continue to improve upon our technology. Prices changes will vary

depending on size and significance of updates to the software and offering of new

applications. According to Kite-Powell (2018), “The company [XRHealth] has its VR


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platform in 30 locations across the United States from hospitals to rehab centers and

outpatient centers…” As we see XRHealth’s rapidly expand into the virtual reality

physical therapy industry there should be ample opportunity for PhysVR to obtain

interested customers who want to use our technology but may not want to commit to the

more expensive technology put out by other companies like XRHealth. Beyond any

partnership opportunities we may have, based on what XRHealth has done we expect

to sell at least 12 subscriptions to organizations in the first year. We will assume that

these organizations will be generally be interested in the $250 a month plan, but we

also expect to sell our $100 a month plan. Selling ten subscriptions at $250 per month

to other organizations we can expect to bring in $30,000 a year. Selling two

subscriptions at $100 per month we can expect to bring another $2,400 a year. We

believe that there is a possibility that at least one unlimited subscription will be sold in

the first year providing $9,000 annually.

Our potential partnership with IU Health Services presents with a unique opportunity to

sell to a large client base who would be interested in our unlimited plan. IU Health

Services has 18 locations throughout Indiana, we would charge each location, not the

entire organization for our services. Since we are partnering with IU Health Services, we

will give them a 50% discount on the unlimited plan for the first three years we are

partnered with them. At a discounted price of $375 per month in 18 locations we expect

to bring in $81,000 annually from IU Health Services for the first three years.

Place

We believe that partnership is going to be a large key to expand and grow PhysVR.

With this in mind, PhysVR will be headquartered in Bloomington, Indiana. From here the

company will look to create partnerships with Indiana University and IU Health Services.

Creating these connections will allow PhysVR to gain a foothold in the health service

industry in Indiana, as well as access to computer programming majors and physical

therapy majors at Indiana University. Indiana Health Services have 18 locations all

throughout the state, all of which, offer therapy to customers (Health, 2019). This

potential partnership would be beneficial to the company in an attempt to obtain traction

in the Health Services industry and provide a large customer base to generate revenue.


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Partnering with students from the University can also give PhysVR access to intelligent

minds who are looking for real world experience in their respective fields. This not only

provides opportunity for the students to gain valuable hands on experience but can give

fresh ideas and newness to PhysVR.

Promotion

An incredibly important aspect to build PhysVR as a respectable company in the health

services industry is through the company’s promotion tactics. Fortunately for PhysVR,

there are currently less than ten companies in the world that have a business model

similar to ours. This means that the company does not have to attack a crowded

market. Differentiating the company will not be too difficult since the market is wide

open. This allows opportunities for the company to create an easily recognizable brand.

The main way that PhysVR will do this in the relatively young market of Virtual Reality

Physical Therapy will be through social media.

Social media provides a cheap platform to promote PhysVR. According to Statista,

there are currently 2.62 billion social media users around the world (Statista, B, 2017).

Also, according to Statista 77% of the population in the United States uses social

media, which equates to about 250.8 million people (Statista, A, 2017). Statista projects

that social media will grow worldwide to 3.02 billion users, a 14% increase (Statista, B,

2017). Using social media provides a viable opportunity for PhysVR to create

recognition and differentiate itself from competitors. Since Virtual Reality Physical

Therapy is a new field, using social media will help potential users to understand and

learn more about this new kind of treatment. Social media also provides a unique

platform for the company to interact with customers and receive direct feedback on what

the company is currently doing. This allows PhysVR to better understand the wants and

needs of the end users. Understanding what the end users want and applying that to

the needs of a physical therapist can create a mutually satisfying exchange for all

parties involved.

Being headquartered in Bloomington and partnering with IU Health Services and

Indiana University will create opportunities for promotion as well. With IU Health


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Services PhysVR will be able to advertise the products directly to physical therapists, as

well as patients. This will automatically get the word out about the company and the

health service products that it is offering. Once the company’s products begin to catch

on the goal is to receive positive recognition for our products. Ideally, this positive

recognition will be written about by a reputable business, technology and/or health

journal. Receiving national recognition for our products will expand PhysVR’s reach into

the rest of the health service and technology throughout the United States.

Sales Forecast Based on the assumptions we have made, we are starting IU Health as the starting

partner organization at a $375 reduced price, they will have 18 units. The base tier will

have two subscriptions to start at $100 per month. The growth rate on this is 7%, this is

very conservative because the industry is expected to be at a 20% growth rate for

the next 8 years. The mid-tier subscription is $200 a month, the growth rate is also at

7%. The unlimited plan has 5% growth rate starting at one customer.

Milestone Plan

Partnership

In the next month PhysVR needs to reach out to IU Health Services to see in what

capacity the company can partner with their therapy services. If IU Health Services

declines to partner with the company, then PhysVR needs to reevaluate different

potential partnerships. Once a partnership is confirmed, then we will need to research

the area for office space that will best suit PhysVR. Since partnership is such a large

key to growing the company, securing a health service provider to work with needs to

be one of the most important early objectives for PhysVR.

Social Media and Internet Presence

PhysVR must create a website that is easy to use and provides potential customers with

plenty of information about products and the science behind them. Doing this will create

trust and understanding between the company and potential customers as to what the

technology can provide for patients. The website should also include information about

how to contact the company and the opportunity to purchase the software. The website


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should be up and running in the next 6 months in order to begin to grow the brand of the

company.

Along with a website, PhysVR needs to create a social media presence on Facebook,

Instagram and YouTube. Using these platforms will allow potential customers to

understand what the company is about and what kind of products it will provide for their

customers. Specifically using these platforms will reach a large audience of people

across the United States. According to Statista there are about 214 million people who

have Facebook accounts in the United States and another 104 million people in the

United States with Instagram accounts. YouTube also presents a massive opportunity

as almost 5 billion hours of video is watched per day on the platform (Aslam, 2019).

These platforms present a great opportunity to reach a significant number of people, at

a low cost. Within the next 6 months PhysVR should have profiles and content for each

of these platforms.

Continued Product Innovation

PhysVR must continue to create new software programs that address more areas of

physical therapy. This will allow the company to expand its pool of applications which

provides customers with more options to use on their patients. Doing this can create

new subscription plans and increased prices that will bring in more revenue for the

company. The more programs that PhysVR can create the more potential to create

positive cash flow.

Organization Plan Form of Ownership PhysVR has chosen to form under a limited liability corporation. This will protect us in a

basic legal form but also let us scale while growing to a larger corporation.

Identification of Leadership The structure of the company will be as follows to what the roles are.

Caleb Truax III – CEO, Leading development on software and hardware systems. Caleb

brings a wealth of knowledge in technology. From a young age Caleb has developed

systems and businesses.


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Justin Fath – COO, Leading all operations and looking after the financials while we

start. Justin is a financial guru and leader in the field. Thinking outside the box for

solutions and attention to detail make Justin an extremely valuable team member.

Shauntis Lewis – CMO, Leading all marketing and promotions along with updating and

maintaining partnerships. Shauntis has a deep understanding of marketing in the 21st

century. From online to print advertising Shauntis uses his knowledge of how to sell in

order to make the best advertising.

Sarah Robinson – President of Customer Success, Leading all the sales and

promotions along with customer service. Sarah cares about the end user more anyone

else. Sarah brings the customer service side along with sales knowledge to the table.

Roles and Responsibilities of Outside Consultants Legal, accounting, and all else will be outsourced for at least the first two years of

operations. Sales will be made by the team itself and not a sales team, thereby saving

the company a significant amount of money on commissions.

Location of Operations The majority of transactions will take place electronically or over the phone. Site visits

will be made to setup and support individual customers. After expanding the amount of

sales volume, PhysVR headquarters located in Bloomington, IN, will be the warehouse

and software support center. Bloomington is also a good site because of its location to

nearby cities, some of which are over a million people and large hospitals. In addition

our first partner IU Health Systems is located in Bloomington, making support efficient.

Operations Plan Operational Priorities PhysVR’s goal is to market and distribute professional software tied with virtual reality

headsets to physical therapists. It aims to excel at customer service while still scaling

the businesses to hundreds of clinics and organizations around the United States.

After Year 2, PhysVR will start to have a large customer case with many tiers of

subscribers. Having a unified location in Bloomington with all the software and support


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teams will be crucial. Also being located right by Indianapolis International Airport it will

be easy to fly around the United States for consulting and support.

Facilities and Equipment PhysVR will maintain both the software and hardware for the customer, this will include

updates and maintenance that needs to be done on the computers and headsets.

Personnel equipment used will include:

• Laptop computer with MS-Office and color printer

• Broadband connections to the internet

• Telephone with headset and conference capabilities

• Software for marketing such as Adobe Creative Cloud

• Oculus VR headsets for viewing software

• Unreal Engine for programming VR simulators

Financial Plan Sales Forecasts PhysVR is set to start in July of 2019, meaning that all of our yearly projections will start

and end in July. Since PhysVR is operating on a subscription basis, we will assume that

initial customers will be subscribing in the month of July. Our subscriptions will be sold

on a monthly basis. Each subscription will auto-renew each month until a customer

decides they are no longer in need of our products. We are willing to give subscribers

the option to cancel any time because we are confident that our technology will enhance

the therapy experience so significantly that they will not want to unsubscribe.

Based off of our partnership with Indiana Health Services we will sell at least 12

unlimited subscriptions per month at a discounted rate for three years. The 12

subscriptions will be for each campus throughout the state of Indiana. Along with this

partnership we also project to sell a number of our other subscription options. Potential

subscribers include curious health organizations and situations where our technology

could directly benefit a specific person, like a child, who may find it difficult to focus on

doing traditional physical therapy.


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Market and Markets reported that in 2017 the VR healthcare market had grown to $976

million from $525 million in 2012. They also projected that by 2025 the VR healthcare

market will grow to $5.1 billion (Kite-Powell, 2018). We are counting on this massive

amount of growth in the VR healthcare market to be the perfect opportunity to capitalize

on. As shown in our pro-forma Income Statement (found in Appendix X), we expect to

see large amounts of growth in our revenues as we approach the year 2025. By 2022

our income before taxes will be in the green, signaling the growth in the VR Healthcare

market and PhysVR’s establishment as a tech company who is at the forefront of the VR

Healthcare world.

5 Year Income Projections

Year Year 1 Year 2 Year 3 Year 4 Year 5

Gross Profit $ 76,160 $ 122,087 $ 180,253 $306,221 $400,685

Expenses $ 291,710 $ 279,123 $ 281,748 $288,089 $294,664

Income Before Taxes $(215,550) $(157,036) $ (101,495) $ 18,132 $106,021

Sales Forecast Graph


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Breakeven Analysis

Since PhysVR is a new technology startup in a new realm of the Healthcare Industry,

we expect losses for the first three years as our product strengthens and becomes more

common within the Healthcare Industry. Compared to revenues, our initial expenses will

by high, but revenues are projected to exceed expenses by year 4 of the business. Net

profit will not be positive until year 7 or 8 based on the fact that the VR Healthcare

Industry is projected to expand greatly.

Capital Financing

In order for PhysVR to begin, we must be able to raise sufficient capital to fund the

beginning of the business. We will be relying on different sources of investing. We will

first look for friends and family members who are willing to invest in our business. We

will then present our concept to angel investors who will collectively invest different

values. Our goal is to raise at least $500,000 to cover the expenses of the first couple

years of the business and to cover any unforeseen costs.

More details about PhysVR’s expense needs can be found in our Pro Forma Income

Statement in Appendix A/B and our Cash Flow Statement in Appendix E.


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Sources of Capital

Equity Capital Investments Amount Month Year

Private Investment $150,000 Jul 2019

Investor #1 $125,000 Jul 2019

Investor #2 $100,000 Jul 2019

Investor #3 $90,000 Jul 2019

Investor #4 $75,000 Jul 2019

Total Capital Investments $540,000

Exit Strategies

The primary goal of PhysVR is to build a self-sustaining business that is able to provide

the market with superior software and customer service in the VR Healthcare Industry.

Year 4 will begin to show signs of positive cash flow from operations and a promising

future in the VR Healthcare Industry. With a promising outlook on the future of the VR

Healthcare Industry given by the Market and Market Reports in the Sales Forecast

section above, there will be many opportunities by the end of year 5 for the company.

Some following potentials:

• As the market for VR Healthcare begins to take off the company may be able to

be bought out by a larger technology or healthcare company in the United States.

Since we are only planning on being a 3-4 person team, partnered with IU Health

Services, another company may like what we do and buy us out. This would give


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control and responsibility over to the new company and an opportunity for our

technology to be improved upon by a business with more resources. This would

allow for us as current owners the option to step away from the business or stay

on with the new company for a more defined position.

• A tech or healthcare venture capitalist likes the work we are doing and invests

large amounts of money into PhysVR. This will allow PhysVR to increase its

operational capacity which will create more products and services in the VR

Healthcare Industry, increasing revenues and taking the company to new heights

in the VR Healthcare Industry.

Risk Assessment

Factor Issue Mitigation Customer Acceptance It is always a

challenge to get people to start buying into something that is new and not proven, especially in the medical world.

We can slowly start introducing them with small parts of software and VR to test the waters and ease them into a full system.

Competition from other VR companies

Currently there are four major competitors. Each of them is bringing their own take on how VR should look for health.

Innovate new ideas and exceptional customer service to keep the customers with us.

Change in health standards The government could rule VR health not acceptable.

Pivot the idea to augmented reality, which can be deployed to people’s phones.

Customer Service Not having the exact need answered or if needed to be onsite

Being located next to an airport and having 24/7 support teams available.

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Appendices

Appendix A

– Year 1 Pro Forma Incom

e Statement

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Appendix B

– 5 Year Pro Forma Incom

e Statement

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Appendix C

– 1 Year Sales Projections

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Appendix D

– 5 Year Sales Projections

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A

ppendix E – Pro Forma Statem

ent of Cash Flow

s

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Appendix F – K

ey Ratios

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Appendix G

– Pro Forma B

alance Sheet Quarter 4 2019

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Appendix H

– Pro Forma B

alance Sheet Year 5

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