You Can't Get Where You're Going Without a Plan
A business plan is an essential formal document and should outline every aspect of an existing or new physical therapy private practice. And while it contains vital information about your finances, management, market, and funding requests—it doesn’t have to be complicated. Excellent business plans provide structure for an organization for the first five years of operation. They’re also a fantastic device for goal-setting in all major areas, including sales, expenses, hiring, and financing.So what’s included in a business plan? And how can you write one for your physical therapy private practice? In this article, we’ll break down each section of the business plan and give you the tools you’ll need to write your very own.
Business Plans Are Not Just for Start-Ups
While business plans are most associated with new practices looking to get open, the reality is that having a business plan can serve all practices. Start-ups absolutely need a business plan to guide and aid them in getting loans or additional funding. Even if you're not planning to seek external funding, having a business plan is crucial to success; the plan will act as a roadmap and as a roadmap. For established practices, the exercise of writing a business plan or updating an existing plan can help provide an opportunity to think about what's working and what's not and to then plot a way forward. This could include new markets, new referral sources, new markets or just fine-tuning existing strategies.
Writing the executive summary is perhaps the most integral part of creating a business plan for your private physical therapy practice. Not only does it provide a clear and concise overview for readers, but it promotes other benefits such as attracting potential investors and determining if your practice will be profitable in the long-run. Writing the executive summary for private practices requires market research. You should begin with the essentials:
- Description of your practice
- Services your PTs will provide
- Mission statement and overlying purpose for creating the clinic
- Opportunity statement to investors or lenders explaining the marketplace for physical therapy and how your clinic will contribute
- Detailed analysis of the rehabilitation marketplace pinpointing your clientele, marketplace growth, and competitor data.
Furthermore, you’ll write a summary of your management expertise and projected financials to hook your audience.
A practice description should tell the reader everything they need to know about who you are, where you’re at, and what you do. People want to get a good sense of who they’re conducting business with. Great practice descriptions include information about why you’re getting into business, what therapy your practice excels at providing, and why your clinic is equipped to provide those services. People want solutions—what shortcomings is the business solving right out of the gate in your respective market? How is your business leveraging the chosen location to secure clientele? Answer these questions, and do the research required to build your business plan on a solid foundation.
After showcasing your expertise, providing solutions to problems, and building a buzz around the qualified individuals who are running the practice—what does the market look like?Market analysis needs to dive deep and provide answers for any form of skepticism. Every private practice has a different clientele, competition, and operational challenges to combat, but there are some universal questions business owners should ask themselves while writing a market analysis:
- Who are our successful competitors?
- What are they doing correctly to make them successful?
- How can our private practice do it better?
- What would I want as a patient receiving therapy at our clinic?
- What does the past, present, and future look like in our target market?
There are thousands of questions you can ask yourself, but getting a good grip on the competition, landscape, and projected need for the physical therapy you provide is essential.
Organization and Management
Simply put, this is the hierarchy of your practice and will explain how tasks are completed. Each position is plotted on an organizational chart detailing who’s responsible for what. This section of a business plan provides an excellent opportunity to highlight exceptional skills, talents, and achievements. It can also be used to show how you can delegate tasks and reduce costs by implementing physical therapy software. The organization and management section is also used to discuss the legal structure of your practice. While most private practices are sole proprietorships, it’s important to disclose any legal agreements.
Now the fun part, selling your business to the public and other clinics. Building a powerful marketing strategy instills brand confidence, which generates more patients. You should explore how to write a compelling ad for your physical therapy practice and cater advertisements to selected marketing platforms. Use the market analysis and competitor research you’ve compiled to make strategic decisions. Remember, there’s no one way to approach a marketing campaign. The best policy is to do your research, take a shot, analyze the campaign data, and adjust future campaigns for enhanced results.
Not all business plans will require a funding request, but for those that do, you’ll want to outline the request in detail. Funding requests should begin with a summary of how much funding you’ll need for the first five years of operation. It will be a step-by-step analysis covering any required start-up and future expenses including everything from rent to individual PT salaries. Business owners want to specify whether you want debt or equity, terms and conditions, and the time the funding request will cover. Finally, there needs to be an element of future-sight included in the request. You’ll need to let investors know plans of paying off debts, selling the business, or opening up multiple clinics in the long-term.
Selling the unknown takes a lot of charisma and data. This stage of your business plan will encompass your entire financial projections for the first five years of business. The financials should include, but are not limited to:
Sales forecast – By using the market and competitor data, you’ll want to project the monthly sales data for your practice. The forecast should include a pricing structure for each treatment rendered and how many patients you expect to see per month. You should be meticulous by doing a month-by-month analysis within the first two years of business. Afterward, you can defer to quarterly sales projections.
Expenses budget – In detail, explain the overhead and varied costs in any given month. Investors will want to see a profit yield on physical therapy provided to clients.
Cash Flow Statement –The cash flow statement will depict how much money is coming into your practice versus how much is going out. Unfortunately, starting a private practice from scratch offers little perspective on the real cash flow analysis. However, you can use sales forecasting, industry knowledge, and the expense budget to hit projections accurately. Revenue will often lag in cases where patients pay off their physical therapy debts on payment plans. Be mindful of carried balances when pinpointing the cash flow so your business can project accurate revenue on hand.
Profit and Loss Statement – A culmination of your sales projections, expense budget, and cash flow analysis used to provide insight on what the clinic will—or won't take home in the next five years. Most new businesses will add a break-even projection goal to educate on when the clinic will start turning a profit.
Balance Sheet – A detailed list of all assets and liabilities, providing you with a bottom-line value of the clinic.
Supporting Documents Required
Finally, you’ll want to provide some supporting documents relevant to your situation. These could include but are not limited to blueprints of the clinic, marketing mock-ups, quotes and estimates from contractors, legal documents about your physical therapy practice, and accolades such as industry awards or customer letters.
Be Flexible and Keep Your Plan Updated
Once you get your plan completed and begin implementing it, keep it handy for reference and update it often as you learn what's working and what isn't. The plan should be a guide giving you a path to success with the understanding that market realities may cause you to need to tweak or change your path - in some cases considerably. It's OK to grow and change, that should be part of the plan too but with a plan in hand you'll be able to be very clear on what you're changing and why. It will also help you give clarity to your team and potential investors or bank, as needed.
The Bottom Line
Sit back with an umbrella and a bendy straw and enjoy your new business plan. Creating an outline is the first big step towards owning a private practice. And while starting is difficult, hopefully, each section of the business plan equips practice owners with a strategy. If you’re looking to simplify your scheduling, EMR, billing, organization, and other aspects of your new physical therapy practice experience our free live demo that’s guaranteed to streamline opening a clinic.
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