How to Write a Business Plan for a Startup Clinic and for Growth
Stay on the right path with this important guide.
By Jeff Ostrowski, PT
Simply stated, you need a business plan.
A primary function of a business plan is to provide potential lenders or investors with an overview of your business idea, the owner’s background, the business strategy, and financial projections. A second, equally important function of a business plan is to provide you, the owner, with a road map for the future. You may not need a lender or investor if you are independently financing your business, but you absolutely need a road map to hold yourself accountable. If you do not know where you are going, you will not reach your goals and potential.
Process and Design Guidelines
Start with an outline of your business plan. Once you are satisfied with the outline, then begin to fill in content. This approach will help you stay on task and organized throughout the process. If your intent is to use the business plan to raise or borrow funds, or attract investors, you will need to include the following items:
- Executive Summary
- Business Description
- Market Analysis
- Organization and Management
- Marketing Strategy
- Financial Projections
If you are a more mature business, then Financial Projections alone should suffice.
The executive summary gives potential investors an overview of your business concept and entices their interest in learning more. The executive summary appears at the beginning of your business plan, but it is actually written last because it summarizes the content of your business plan.
Explain the current phase of your business: startup, transitional, or mature. Describe the nature of your business and list the market needs that you are trying to satisfy. Outline the services you will provide. Explain the competitive advantages that will make your business a success such as your location, personnel, systems, technology, and services provided. Define methods of payment. For example, if your business is going to be the traditional physical therapy practice setting, discuss whether it will be cash-based practice or insurance based.
A hallmark of successful businesses is that they succeeded by fulfilling an unmet need identified in the market. The unmet need could range from convenience, target customer, price point, quality, outcomes, and aesthetics to many others. The first question you must answer is “Is there a realistic chance for success based on the needs and opportunities in the market?”
Immerse yourself in the rehabilitation industry so you can thoroughly articulate the fundamental industry trends. Define the demographics of your market with as much detail as possible. Data on geography, population, age, household income, and health care spending are especially useful. Describe the prototypical client you intend to serve.
A traditional physical therapy outpatient practice typically requires a referral base; that is, physician referrals or referrals from some other entity. If that is the case, you will need to conduct an in-depth study of potential referral sources.
A significant part of a market analysis is an analysis of the competition. Again, you will need to dig in and do some research in this area by connecting with people both in and outside the industry. Talk to neighbors, physical therapy colleagues, business owners, health care executives, physicians, and all types of health care providers. Identify all the potential competitors in your market. Make a chart that notes competitor locations, their business model, strengths and weaknesses. A map is often helpful to show competitive locations and how your business will fit into the market.
ORGANIZATION AND MANAGEMENT
This section should include information about your company’s organizational structure, details about the ownership of your company, and profiles of your management/ownership team.
The next step in developing your business plan is marketing strategy and patient acquisition. When developing a marketing strategy, you first need to identify from where your new clients are going to come. For the traditional outpatient practice, this is typically through referrals. There are other methods to gain new clients with the evolution of direct access, and these must be considered as well. Finally, discuss the use of technology, advertising strategies, and collateral materials in your marketing program.
This section is the most important. Both new and mature businesses should prepare annual financial projections, budgets, or forecasts. You are forecasting future performance and will necessarily include assumptions about your earnings and expenses. Expenses can often be determined by looking at historical records and projecting future changes such as rent increases, salary increases, and equipment needs. Revenue is established through “drivers,” which are items such as charge per visit, write-off percent, payment rates per visit, number of visits per each new patient, number of new patients referred, and number of visits/units per time period per physical therapist. Base your forecasts on realistic, if not conservative, assumptions.
An effective, realistic business plan can help you attract investors. More importantly, the plan will help chart the course of your business, whether it is a startup clinic or a mature business. Compare your actual performance to your plan on at least a monthly basis. Identify where you are “off plan” and focus your efforts on those areas.
Jeff Ostrowski, PT, is a PPS member and managing partner of Excel Physical Therapy in King of Prussia, Pennsylvania. He can be reached at firstname.lastname@example.org.