“What is the first step when starting a business?” It’s a question we’ve been asked time and again over the years.
So, what needs to happen first when you’re getting started?
Is it purchasing furnishings and equipment, looking for office space, getting credentialed with insurance companies, or hiring employees?
No, none of it!
The one thing that must happen before anything else is planning, adequate planning!
But unfortunately, it’s the one thing that doesn’t always happen, causing some to rush into signing contracts or making purchases only to get burned.
Leasing space before knowing how many patients must be seen every week to pay the lease. Or quitting a job before knowing how much revenue must be generated to carry the business. Or losing savings on a business idea that was doomed to flop from the start.
Yet knowing the amount of revenue and the number of patients it takes to create success, are some of the “must-know-numbers” before launching any practice or business.
And that’s where planning comes into the picture, and that’s why planning is so important!
While it’s tempting to busy yourself with doing “stuff,” it’s the thinking and planning that must happen first.
Just think about it…
We don’t jump in the car, turn the key, and start driving when ready to take a vacation.
No! We plan where to go, where to stay, and what to do. The majority of people vacation from some type of itinerary!
And ideally, the same happens when starting a practice or any business. Planning is the first step because once you have a blueprint, everything else can fall into place.
Here are key areas to include when planning for your business… before you do anything else.
Question your “Big Why?”
- What are your reasons for wanting to start a practice/business?
- Do you have entrepreneurial traits waiting to jump out?
- Do you want to get away from a job you dislike?
- Or are you determined to create assets for yourself and your family by taking your destiny into your own hands?
Your “big why” is essential; after all, you want to start your business for the right reasons.
What kind of business do you want to you start?
- What are the specifics of the practice: your vision and mission, services, products, target market, location, etc.?
- How much space will you need to get started? Will you rent an office from another provider or lease a separate suite?
What business structure will you choose?
- Partnership, LLC, Corporation…?
- What are the reasons you would choose one structure over another: taxes, to limit personal liability, or other considerations?
How much office space will you need?
- How many providers?
- How many exam rooms, etc.?
- How many employees?
What furnishings, equipment, and technology will be needed, at what cost?
- Will you buy used or new?
- Items required at opening vs. things you can add later?
How will you finance the business?
- Using personal funds from current income or savings, or do you plan to apply for a loan?
- How much money will you need to get started?
What is the composition of your target market?
- Who is your ideal patient or client?
- Where are they located?
What is your competitive advantage?
- What sets you apart from other practices?
- What makes your service or product unique?
- Why should someone see you over the clinic down the street?
Competition and market demand for your service/product.
- How many businesses offer services similar to yours?
- Who are the customers they serve?
- Who are your competitors?
What are your core services/products and their price points?
- A mix of services and products…
What licenses, permits, registrations will you need?
- Licenses and permits for state and local to operate the business?
- Professional licenses needed for providers and staff?
- Registration with taxing authorities: federal, state, and local?
Types of insurance policies
- Professional malpractice
- Business liability
- Property coverage
What level of revenue constitutes break-even?
- Services: how many patients do you need to see?
- Products: how many units must be sold?
- What are your projections for revenue & expenses?
What level of revenue will constitute a profit/loss for the business?
How do you plan to market your new practice?
- Online: via your website, social media, publishing articles, email, videos, running ads…?
- Offline: via direct mail, newspaper ads, community involvement…?
What’s your exit strategy?
- What are your plans for the business down the road…?
- Sell the asset you’ve created or close the doors?
While there are no guarantees when starting a business, the more clarity you have about your goals, the greater your chances of success.
Ideally, you’ll take time to create a formal plan for your new venture, aka, a business plan. If you use the information in this article, you’ll have a head start.
And even though many businesses start without a plan, creating one allows you to explore different what-if-scenarios and projections.
The net-effect… you’ll start your business with your eyes wide open and prepared for what’s ahead; which beats finding your way through the “startup-maze” with a blindfold over your eyes!
We want to hear from you… join the conversation by leaving a comment or question below!
By Johanna Hofmann, MBA, LAc; regular contributor to the NPBusiness blog and author of “Smart Business Planning for Clinicians.“