For most, writing a business plan is as much fun as going to the dentist! But without a doubt, both activities are necessary and yield a significant return on investment.
But still, the majority of future business owners are not keen on business planning.
And I get it…
Developing a business plan is not the most exciting thing on anybody’s to-do list. And that’s why some turn to outside sources.
There are several companies in the market place, providing business planning as a service. They will do the necessary research, put your financials together, and after a week or two, hand you the complete business plan.
All you have to do is fill out a questionnaire and swipe your card. Done!
While it may be tempting to turn the planning over to someone else, I believe it may not be in your best interest. Understand that the very act of researching and writing your own plan puts you firmly in the driver’s seat.
Here’s what you stand to gain from doing your own business planning.
# 1 Greater Clarity
Why do you want to start a practice or a business? What are your motives?
Do you want to start your practice because you’re unhappy with your current job? Or do you want to go out on your own because you have a vision and a desire to do your own thing? In other words, are you moving away from or going towards…?
And while there’s no one right reason for starting a practice, it’s essential to be aware of the underlying currents. Because when you’re moving toward, when you have a “big reason,” you may be able to draw on greater resilience and commitment for when the going gets tough down the road.
So put your reasons for wanting to start a business under the microscope! Are you committed to seeing it through, or will you drop out at first sign of trouble?
Going through the business planning process will shine a spotlight on your reasons for wanting to start your practice and what it is you want to create.
Understand that it’s you who knows best what you want, why you want it, and what you want to create.
# 2 Fully Invested
Business planning is akin to creating a roadmap. You get to decide which route to take, the resources you are prepared to commit, and the amount of time it will take you to get there.
Think about the last time you planned a road trip.
Armed with a paper map or Google maps, you planned your route. And after considering any stops you would want to make along the way, estimated travel times, and the road conditions along the different routes, you chose one over another.
You planned your road trip by making assumptions. And once complete, you knew where you needed to go and how long it would take to get there.
And that’s what business planning is all about: designing the journey for your business. And just as it’s difficult for someone else to create the perfect road trip for you, so it is with planning your business. You alone know what it is you want and how you want to get there.
But beyond that, when you take the reins and design your own route, you’ll be more committed to the journey. Ultimately, you’ll be more invested in what you’re creating and will do what it takes to see it through. Designing your own path means you have more “skin in the game” then when someone else does it for you.
# 3 Solid Grasp On Finances
Business plans, like many things in life, are based on assumptions. Planning for the future is made possible by making assumptions about how your practice is likely to unfold, including the levels of revenue and expenses you can anticipate.
Understanding the projected financial landscape of your practice, based on a set of assumptions, is priceless.
If the numbers don’t work, you are free to change your assumptions and replace them with new ones. And once done, rerun your numbers and see if they will work. Unfortunately, that’s not so easy to do once you’re in practice.
But let me give you an example…
Let’s say you’re planning for your practice. Based on your assumptions, you realize your revenues barely exceed your expenses for the first year. While you may not like the result, you now have choices…
- Do nothing, ignore the numbers, and hope for the best. Not recommended.
- Accept the numbers and plan to dip into your savings to make up for the first-year deficit. Why would you do this?
- Go back to the drawing board and change your assumptions. Recommended! You could decide to change any or all the following:
- increase the number of patients to see
- increase your rates
- add additional services, revenue streams to your practice
- look for less costly office space
- lower your other expenses.
In other words, when you change your assumptions, you change your results.
Working through the financial section of your business plan benefits you in a big way. It gives you a level of understanding you just won’t get when someone else does it for you. When you turn your business plan over to a third party, you could miss a big part of the puzzle.
Unfortunately, some Nurse Practitioners start their practice without a clear picture of how much money they can expect to generate and how much it will cost to run the practice.
That’s a recipe for disaster! Don’t let that happen to you.
# 4 Opportunity Cost
Everything we do has an opportunity cost. It’s the cost of what we give up pursuing one opportunity over another.
Before you commit to starting a practice, you want to have a clear understanding of what you’re giving up and what you stand to gain. In other words, what is the opportunity cost of starting a practice?
Opportunity cost comes in two distinct flavors. There are tangible and intangible costs. Let’s look at an example.
Let’s assume your current job is paying $125K/year and comes with a generous benefits package. Of course, when starting your practice (full time), you would be giving up your job along with the benefits.
Your opportunity costs would be as follows:
Tangible opportunity costs:
- Your salary
- Your benefits (retirement, malpractice, paid vacation, etc.)
Intangible opportunity costs:
- Seniority you would lose
- Your status as a member of the organization
- Support and friendship from co-workers
Before you decide if practice ownership is right for you, take time to calculate your tangible and intangible opportunity costs.
Assessing opportunity costs is difficult to calculate by a third party. While tangible opportunity costs are straightforward, putting a price tag on intangible costs is something only you can do.
# 5 Thorough Understanding
Your business plan helps you see your business as a part of the landscape of healthcare. But unless you hire someone familiar with healthcare and the unique challenges that come with it, the plan may not include considerations like privacy, safety, and other requirements.
Writing your own business plan forces you to think about all aspects of your business in detail. As a result, you come away with a comprehensive understanding of your market, your customer, and your motivations for wanting to go into business; it’s a level of understanding you likely not get from a plan prepared for you.
And once your plan is complete, you will have confidence in the feasibility of your business, and that the numbers will work. Going through the planning process equips you with the knowledge you need to make well-informed decisions.
But in case you decide that owning a practice is not for you or it’s not the right time, that’s alright. It will still have been time well spent because you’ll be better off in the long run. You will save yourself time, money, and a big headache. And, you won’t find yourself stuck in a business you don’t want to be in.
Writing a business plan does not need to be complicated, particularly for a small practice or business.
Reframe the way you think. Think of it as writing a report, something you’ve done successfully throughout your academic career.
And now that I’ve listed the benefits of writing your business plan, let me say this.
Business plan writers indeed can help with researching your market, assessing demand for your products and services, and putting the financials together. And depending on who does the planning, you could fill out a brief questionnaire or find yourself setting aside time for a series of interviews.
But regardless, I’m convinced that you stand to benefit immensely when going through the planning process yourself. Because ultimately, it allows you to be a more effective practitioner and practice owner. And isn’t that what it’s all about?
PS: If you’d like to learn how to write a business plan, “Smart Business Planning for Clinicians” may be for you.
We want to hear from you… share your thoughts about planning for your business. Just leave your comment below.
By Johanna Hofmann, MBA, LAc; regular contributor to the NPBusiness blog and author of “Smart Business Planning for Clinicians.”