Last time, I shared how starting a professional practice has a number important steps such as doing your homework, writing a business plan, and securing financing.
In this edition, I will continue down the list to the remaining 5 steps that will allow you to clearly continue to build the foundation of your practice.
- Stay on Budget
We have seen new practice start-up total costs range from $200,000 to $500,000 with an average cost of just under $300,000. The total amount includes your landlord allowance (some landlords provide an allowance towards the build out); your construction costs (for a leased space); your equipment needs, including professional equipment and office hardware and software; furnishings and office supplies; and working capital of typically $75,000 to support your expenses while you see new clients and await any insurance reimbursements. Once a lender approves you and your project begins, it is crucial to finish your project within budget. It may be helpful to apply for a little more than you may be forecasting to allow for any unforeseen overruns that may occur while your office is being built. Lenders may accept a slight overage, but an overrun of 10% or higher of your original amount may create concern from the lender, so try to stay on track. Working with your account to create a budget including expense planning can help provide a structured map of how to predictably manage the start up cost of your practice.
- Maintain Manageable Debt
Chat with colleagues or visit the next professional trade show your association puts on and you’ll hear buzz about the latest technology in your industry. You may hear from the equipment companies about how this technology will generate revenue in your practice and why you can’t live without it. Be careful not to acquire equipment before you can justify the cost. New technology can be very expensive – and a burden on your cash flow if you’re not ready to optimize its use for immediate revenue or expense savings.
- Develop Your Business Acumen
Many graduates mention what they feel is a lack of business curriculum in their professional schooling experience. From the moment, you graduate and become licensed, it is wise to make a commitment to learning the business side of your profession. Speak to experienced practitioners who run successful practices. Explore what type of business model and practice philosophy you would like to incorporate in your practice. Understand the value of marketing and patient experiences. You may be surprised by a colleague or school alum who once had the same anxiety you have about starting a practice and are now willing to share advice. These contacts already live the dream of practice ownership and can help you save time and money as you begin your journey. Other suggestions include attending practice management seminars in your area or joining interactive healthcare communities online, as an excellent way to learn from others and provides peer-to-peer guidance.
- Learn Vital Business Skills
Developing skills such for marketing and sales will help you set the goals for your practice. You can have great goals for growth but if you don’t understand what steps will boost your actions to reaching your goals, then they are ineffective. Behind the numbers of your business are the people you will serve who help create the financial goals you seek. Will you specialize in dealing with children, young singles, families or the elderly? What makes your practice and service unique and different to your ideal customer base? Knowing who you’ll target from the start will make sure you’re set up properly from day one. A good marketing strategy can help grow and maintain your patient numbers. It should focus on improving customer experience, and include ways for attracting new patients (like word of mouth referrals) while retaining existing ones (such as loyalty programs). Reoccurring patients can only provide so much revenue. New clients are the lifeblood of your practice. Be disciplined and consistent with your learning of marketing and sales, as only you are responsible for the overall performance of your business.
- Build a Network of Trusted Advisors
Starting on the day you decide to start a practice, you’ll meet many people. As you filter through all the advice and various relationships you’ll establish, it is important to team yourself with industry-specific advisers who will help you with the many crucial decisions you’ll make. A good accountant, legal adviser and a finance specialist with industry expertise of your profession can help take the stress out of setting up a practice that’s more likely to succeed. If you don’t already have a team of trusted advisers, ask a colleague for recommendations. A practice management consultant or business consultant within your industry can also be an excellent source in your practice-planning stage for insights on establishing internal control systems and making personnel decisions. Find an established practice owner willing to mentor you. There will be administrative tasks that you might not be familiar with that a current practice owner can walk you through –especially how to manage expenses when you first started a practice.
Understandably, these steps are just the beginning of your new practice journey. Pacific Chartered Advisors LLP is skilled in helping professional practices start smart for practice sustainable growth.