The High Cost Of Not Planning

Chances are you’re familiar with the quote: “If you fail to plan, you are planning to fail”?

I know, it’s so cliché! But I also know that there’s a lot of truth to it!

Yet so many people don’t plan much of anything. Unfortunately, some clinicians appear to be afflicted by the same condition… not wanting to plan.

I cannot tell you how often I get asked: ““Do I really need a business plan?” As a matter of fact, if I’d have a dollar for every time I get asked that question I’d be a rich woman.

Well, ok…at the very least my piggy bank would have burst into a thousand small pieces by now!

So why is it that so many clinicians ask this question? After all, clinicians are highly educated individuals that had to do a lot of planning to get where they are.

Well, it’s not entirely their fault.

A Common Misconception

You see, our society thinks of business as something “that just happens, you just do”. You have an idea for a business, next you rent space, you hire employees, hang out your shingle, and out comes the money.

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How hard can that be?

This is closely followed by the belief that if you’re good at what you do you’ll succeed in business. This belief is true especially with small service businesses.

But here’s the thing… it doesn’t work like that.

Being a competent Nurse Practitioner, Attorney, Dentist, or Chef doesn’t mean you’re automatically competent in running a business.

Just take a look around you. Everyday businesses come and go. Some are here to stay, but many are gone before you ever have a chance to see what there all about.

While not true in every case, many business failures are the result of poor market research, inadequate financing, and poor planning. What’s sad is that most of these problems could have been anticipated and possibly avoided altogether with planning.

Nobody in their right mind would step in front of a freight train if they’d see it coming? But this is what happens in the world of business every single day!

Somebody stepped out because they didn’t see that train barreling down the tracks! And they got run over… not a pretty picture!

Here is where the business plan enters the picture. It’s a planning tool to put to use. And if used correctly, chances are you can avoid getting run over. ( by the proverbial “train”.)

Do you have to have a business plan? No, of coursec you don’t.

There is nothing that says you must have a business plan before you can start your business.  However, I suggest that it’s in your best interest to have one.

Why start your business wearing a blind fold if you don’t have to?

Benefits of Creating a Plan

When you take the time and effort to put a business plan together, it forces you to think through your business idea.

Working through the planning process will tell you a number of things about yourself, your new business, and if you want to proceed with your idea.

No guess work here!

The following list contains a number of key benefits you gain from creating your business plan and going through the planning process.

  • Evaluate your business idea and the associated opportunity. Do you have a sound idea? Is there a real opportunity for your idea to work?
  • Gain clarity about your reasons for wanting to start a practice or a business. Do you know why you want to start a business? Are your reasons strong enough to get you through the hard spots?
  • Define your business and revenue model. What is the specific business model for your practice or business? How are you going to generate the revenue for your business? What is your revenue model?
  • Evaluate the cost associated with starting your own business. How much is it going to cost you to get started in your business? What funding sources are available to you?
  • Evaluate the potential income for the business. How much income can you expect to generate with your practice? Are the projected numbers adequate? If not, what can you change to make the equation work for you?
  • Measure the opportunity cost of starting your own practice. Even though frequently overlooked, this is important. What is the cost of the things you’re giving up to start your business? When comparing what you’ll give up and what you’ll gain… is starting a business still the right choice for you? Only you can decide.

I hope by now you see that planning for your practice or business is not just idle activity.  Business planning is a tool to help you hit the ground running.

It helps you focus on what’s important and avoid blatant mistakes. So why wouldn’t anyone take the time to plan for their business and their future?

A Tough Decision…

If you’ve been thinking about starting your own practice but feel stuck in making the decision, here is something you can do to help you move forward.

Start by looking deep inside. Set aside quiet time to think about the following:

  • Why do you want to start your own practice?
  • What are your concerns about having your own practice?
  • How will owning your practice/business benefit you on a professional and personal level?
  • What type of practice do you want to create?
  • What will this practice look like (where is it located, size of office, etc.)?
  • What will an ideal day in your new office look like for you? See it, feel it, live it.
  • Gain clarity about your reasons for wanting to start a practice or a business.

Do you know why you want to start a business? Are your reasons strong enough to get you through the rough spots?

Moving Forward?

Still think you want to move forward with starting a practice? Great.

Now it’s time to collect the information and data that will form the foundation for your business plan.

Do not skip this step. There is just too much at stake to leave your business and your future to chance.

 

 

By Johanna Hofmann, MBA, author of “Smart Business Planning for Clinicians” and regular contributor to the NPBusiness blog.

Comments 2

  1. I am a psych np
    I’ve had a part time practice for approximately 15 years
    I’ve always worked to supplement the income since it was and is part time . Presently I do work in a clinic 21 hrs and my employment income does surpass my practice income.
    About 4 months ago I stopped taking new insurance or Medicare patients due to poor reimbursement – I have not seen any reduction in my visit numbers as a result of this.

    I am not sure how or if you can assist me with practice growth as I would like to reduce need for my outside employment .
    I big factor is my financial health- I have patients who cancel or no- show and although I have a no show policy collecting on cancelled or failed visits are difficult if not impossible- Keep in mind this is a psych / mental health practice – thus duplicate scheduling is not doable.
    I do not have any secretarial or support staff – thus all functions fall on my shoulders
    With exception of any remaining insurance billing – which is minimal – I have billing agent do that.
    The idea of hiring someone to assist with clerical and organization an appointment scheduling is attractive but the costs are concerning .
    I don’t know if there is something you can do
    What that would look like.

  2. Iris,

    There are plenty of things you can do short of hiring staff. So much is being done virtually, so that’s a place to start. Technology can be your friend here.

    In terms of how you grow your business, first, make sure you have your systems in place so you’ll be able to handle the additional patients and growth.

    You’ll want to create a marketing plan to help educate (that’s what marketing is afterall) patients why they want to see you and other providers so they know why they should refer to your practice.

    The first steps are to identify WHO are the patients/clients you want to serve and then learn as much as you can about them. All your marketing messages will need to be focused on them. You’ll likely have at least two ideal clients – the patients and those referring to your practice.

    Hopefully, that should get you started.

    If I can be of further assistance, please see Work with Barbara for various support options.

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