Business Plan Highlights

A preliminary pro-forma has been developed by the institute’s finance committee, which includes representatives of the University of Louisville and Jewish Hospital. This pro-forma will be used to provide the board of directors with a sound basis for making decisions as the institute is developed and after it is operational. One of the goals of the business plan is to help the institute become self-supporting after five years of operation. Here are the highlights of the initial business plan:

The anticipated expenses of the institute for the two start-up years and the first five years of operation total approximately $30 million. The two largest components are salaries and recruitment expenses for faculty and technical staff (approximately $13 million) and operating expenses for research and surgery ($9 million).

The anticipated revenues for the same period total $23 million. Federal research grants are expected to be $9 million and corporate research grants to be $3 million. Other revenue will come from the existing endowment from the Kentucky Research Challenge Trust Fund (“Bucks for Brains”) and from current support for other on-going research activities at Jewish Hospital and the University of Louisville that will be incorporated into the institute.

The gap of $7 million between anticipated revenues and expenses over this period will be covered by local and national fundraising efforts undertaken by the University of Louisville and Jewish Hospital. This funding is analogous to the funds that venture capital firms provide to other start-up organizations.

The tentative goal for the fundraising effort is between $20 million and $30 million. This will cover the gap described above, and the remainder will be used to pay expenses until the institute can become self-supporting and build an endowment to fund future operations. A firm goal will be established after more market research has been completed.

Based on the preliminary projections, the institute should become self-supporting in the second five years of its operations. This means that revenues from federal grants and corporate grants together with funds previously raised should be sufficient to pay for the anticipated level of expenses. The plan does not assume any revenue from royalties on technology developed by the institute in the first five years of operation, but this could become significant after the institute is up and running.

The business plan will be updated annually. It will provide a factual basis for evaluating performance, assessing new opportunities and ensuring management accountability. In particular, it will incorporate the projects in the research plan developed by Gray, the scientific director and their colleagues at the University of Louisville.