If you’ve been thinking about starting a business, there are three fundamental things to consider before making any decisions.
These three considerations apply regardless if you want to start a clinical or non-clinical business. And… they hold true no matter if your new venture is full-time or part-time.
Starting a business doesn’t come with any guarantees; nothing in life does.
But the idea is to reduce the likeliness of your new venture failing because you missed a red flag or two.
By looking at these three concepts, you’ll be putting the odds on your side. After all, you want to start a business with an above average chance of success.
So here are the three things to investigate…
#1 What’s the Trend?
Are you planning to start a business in a growing industry? A business set for growth, ready to lift off like a rocket?
Or will you start a business in a declining industry, sentenced to die a slow death?
Of course, you don’t want to get stuck in a soon-to-be obsolete industry, slated to be replaced with “something” brand-new.
If at all possible, you want to ride the trend. It’s far easier to paddle downstream, instead of fighting against the current, going upstream.
That’s why once you have an idea for your business you need to do your research. You want to know as much as you can about the industry you’re about to enter.
Because you don’t want any surprises!
Investigate the following:
- State of the industry
- Industry trends
- Industry growth projections
Here’s an example…
Let’s say your new business is set to work with baby boomers, people born between 1946 and 1964. The products and services you’ll offer to this market relate to travel.
Your industry is the travel industry. A quick Google search tells the industry is growing, particularly online.
But what about your market, the Boomers? Do they like to travel?
You bet! The demand for travel services in this demographic is strong.
And the baby boomer market is still growing and will continue to grow over the next twenty plus years.
It’s estimated baby boomers account for $230 billion in sales of consumer goods. It’s projected they will inherit $13 trillion over the next 20 years, increasing their ability to purchase and spend more.
Even though this is a “quick and dirty” assessment, you can see that this industry and market is stable and growing.
If you were to enter this market, you’d be riding the trend, paddling downstream!
# 2 Is it the Right Market?
Working with the right market may well be the most fundamental consideration of them all. Unfortunately, it also seems to be the most overlooked of them all.
So, let me just share this story with you…
Years ago, a famous marketer stomped his audience with this simple question…
“If you and I both owned a hamburger stand and we were in a contest to see who could sell the most hamburgers, what advantages would you most like to have on your side to help you win?”
Of course, the answers varied.
- Some said they would like to have superior meat for the burgers.
- Some said they would want the best location.
- Others said they would want to offer the lowest price for their burgers.
But that’s not what our famous marketer, Gary Halbert, was talking about. The single advantage he would want to win the contest: “A starving crowd!”
In other words, if he had a group of people not just hungry, but starving for burgers, he would win the contest… every day and every time.
You see, having a starving crowd, “hungry for your product” is more important than a great location, great tasting burgers, and even lower prices.
The big lesson here is this…
Offer your products and services to people who want them! This concept is so simple, yet is neglected over and over again.
Frequently, businesses owners want to sell products and services they like, or they think others should like. No!
Sell to your market what your market wants!
So how do you know what your market wants?
You guessed it, research!
First, you must know who you’re going to market to. Second, you must research to find out what the people in your market really want.
Here are just a few things you want to find out:
- Basic demographics: age, gender, income.
- Location: where do they congregate: online, offline?
- What problems are they’re looking to solve?
- What are their pain points?
Let’s get back to our baby boomers, shall we?
- What problems might they have?
- Aches and pains
- Not ready to retire or not prepared for retirement
- Vanity: they don’t want to look or feel “old.”
- What solutions might they be looking for?
- Get rid of aches and pains
- Look younger
- Optimize health
- Continue to work in a rewarding career
- Catch up financially to be able to retire
Now, chances are you’re questioning if this concept also applies to the medical arena? It most certainly does, even though it may not be as obvious in the basic primary care setting.
While most people are not starving for another colonoscopy or well woman exam, they are “hungry” for being healthy and feeling good.
Granted, there are limitations on what you can offer to your patients. However, the basic principles still apply.
People have problems, and they’re looking to solve them.
# 3 What’s the Opportunity Cost?
The third point to take under consideration is the opportunity cost of starting a business.
In case you’re not familiar with the concept, it is simply:
The cost or value of what you give up to pursue one opportunity over another. Opportunity cost can and should be measured in tangibles and intangibles.
Here’s an example.
Let assume you currently have a job that pays you $100K/year, with a generous benefits package.
If you start a business (full time), you will give up your job to work in the business. Hence, your tangible opportunity cost would be the value of your salary, benefits… and even seniority and savings.
However, you should also measure the intangible opportunity costs of starting a business. They may be a bit more difficult to quantify and include considerations like:
- More time away from home until the business is established
- Working evening and weekends
- Working longer hours
- Spending less time with family and friends
- Having less time for yourself
- Not taking a vacation in the first year
Once you look at your true opportunity cost of starting a business, you should be in a better position to determine if you want to move forward with your business.
And should conclude that the opportunity cost of getting starting is too high, so be it!
Too many people starting a business neglect taking their true opportunity cost into consideration. Unfortunately, once they discover the true cost, it’s often too late to back out.
So making this determination before you jump into business is far better than doing it not at all or too late. Establishing your true cost beforehand is far less costly in time, money, and energy.
So here you have it…
Now you know the top three things to consider BEFORE starting any business. I hope you’ll benefit from these concepts and put them to use.
What are your thoughts?
Do you have any questions? If you do, just tell us by leaving a comment below. We’d love to hear from you!
By Johanna Hofmann, MBA; regular contributor to the NPBusiness blog and author of “Smart Business Planning for Clinicians.”
I am an NP living in New Hampshire. I have owned my own practice now for six years. It’s going very well. How do I go about adding another NP. I only have two other employees my secretary and an MA. The fit has to be perfect. Do I contract somebody or should I just hire them out right? What’s should the starting salary be? I’d like to retire in about five years. In the long run I would like someone to take the practice over.
Carol, congrats on your practice and for thinking ahead. These are great questions.
Hiring the right NP, especially one which may be able to purchase/take over your practice is something not to undertake lightly. With any new employee (hire), always build in an out if needed (probation period, reasons for separation from employment, etc). You could consider a contract NP (assuming it falls under the IRS guidelines of using an independent contractor), a temporary employee, for a trial period (much like a probationary period, but under a different structure. You could also utilize a recruiter, but be prepared to pay for those services. On the other hand, a good recruiter will forward to you individuals who meet your qualifications and not just any NP.
In terms of salary…that depends on many things…your location being one of them. You’ll need to do local research for similar positions.
Best wishes and let us know how you fare.