This is part two in The Independent Clinician's series about creating business plans for your private practice. Click here to get access to part 1.
If you're ready to dive in and create your own business plan, check out The Private Practice Planner Pack, which includes templates to write your own business plan (in a surprisingly easy way!)
I am not qualified to give advice for those in that situation.
If you’re an independent therapist who is working by themselves, treating patients in their homes or community settings and not needing to write a business plan for a bank or loan officer, read on.
This is written for you.
If you search “business plan” there are about a million websites that teach you how to write business plans and most of them have sections in different orders. My list of components in a business plan is largely taken from the Small Business Association website. So if you Google it or look in a book and the sections are different, that’s why.
Oh and One More Thing…
Try not to let the business terms scare you. I tried to explain everything in therapist-speak :-)
The Sections of a Business Plan
Remember making cover sheets for book reports and term papers? You’re basically making that same cover sheet, but with your business information. At a minimum, you need to have the following information on your cover sheet: the name of your company, your contact information, the type of business, a brief, 1-2 sentence description of the service you’ll be performing.
Executive Summary (the most important part!)
The executive summary is the most important section of the speech, physical or occupational therapy business plan. This section provides a concise overview of the entire business along with your background. You’ll want to describe what your vision for your business is and why you’re able to make it happen.
You’ll want to think about developing a mission statement, describing the types of services you’ll offer, expectations about growth and sustainability and what you’ll practice will “look like” when it’s fully established.
Table of Contents
This is the easiest thing you’ll do. The table of contents will outline what information is to come. You’ll want to have the headings, sub-headings and page numbers listed for quick access.
Description of the Business
Much like the executive summary, you’ll want to describe the overall business in a brief summary. Think of this like the “elevator pitch” and give the facts about your practice as if you were talking to a stranger who might not know much about clinical services.
In looking at the market you’ll want to analyze the “3 C’s” your company (strengths and weaknesses), the competition (what other practitioners in your area might draw your clients) and the customer (who are your potential private patients and what do they need).
How are you going to let your customers know that you exist and are ready to help them make progress? Will you have a website? Use a direct mail campaign? Set up appointments to meet with pediatricians? How much money will you have to spend to acquire new patients? (The cost of marketing will be covered more in-depth in the financial section).
Here’s where you need to outline the basics of how your business will operate. What will your practice look like on a daily basis? Will you be the only one treating or will you be working with other professionals? How many hours do you plan on treating and also doing non-clinical work like marketing and billing?
More than likely the management team is just you, but if you do have any advisors (like an accountant, lawyer, colleague) you can list them here. This is especially important if you’re asking for a loan.
Businesses run with money coming in and money going out. In general, you’ll need to start off with some expenses in order to grow your business before you start making money. Most Independent Clinicians don’t have a tremendous amount of start up costs- but that is what this section will cover.
In thinking about the start-up expenses for the business, you’ll be thinking about things you need to operate your business efficiently. These may be things like formal evaluations or therapy materials, a laptop or iPad, office supplies, marketing materials/stamps, billing software like Freshbooks, a website, etc. It’s extremely important to save your receipts for each of these items as they are tax deductible.
In addition to materials for treatment and marketing, you’ll need to consider other expenses like professional liability insurance.
If you are treating patients in YOUR home or in a clinic space, you’ll need to purchase business insurance and general liability insurance to make sure you’re fully covered in case anything happens on your property.
Compared to almost any business you can open, treating private patients has relatively few expenses.
Given this example, let’s say that your start-up expenses are around $3,000 (especially since decided to buy the iPad.) You don’t have to buy everything all at once. You could start with your essentials: the marketing materials and website, office supplies and evaluation/therapy materials. In the mean time, take advantage of the free trial for Freshbooks. You can then reward yourself with the iPad after you’ve been working for 6-12 months and can afford to buy it with your private patient earnings.
How much money will you be making each month- realistically. If you ideally want to see say 2 patients, twice weekly at $125 per session, that would be $2,000 month. You’re going to have to account for two things: cancellations/no shows and taxes. To be on the safe side, let’s take out 30% for taxes, which leaves us with $1,400. Then you’ll need to think about a cancellation/no show rate of say, that perhaps two of the sessions in a given month won’t happen, that leaves us with $1,150- almost half of what we ideally would be making. Now let’s multiply $1,150 by 12 months to get $13,800 per year. (That may sound like a low figure- but it’s not a bad outcome of working two hours per week!)
It’s better to be realistic and slightly under estimate your income than over estimate it- especially if you have large expenses such as office space.
If you do this calculation and don’t like the number you see- you’ll have to figure out how to:
Break Even Analysis
Let’s use the above two examples above of expenses and earnings to see when the practice will break even. Let’s use the figure of $3,000 for total expenses. If you’re making $1,150 you’ll be able to pay off the debt in two and a half months. If you spread the debt across a longer span of time, it may take you longer to pay off, but you’ll have extra cash to spend in the mean time.
Assumptions on Projections
Remember, you’ll have some recurring expenses such as fees for billing software (if you use it), marketing expenses, buying new materials, etc. But just keep in mind that while you need to “spend money to make money” you don’t want to spend too much money and not have anything left over.
Think about the future and what sorts of projections you see. Let’s say you’re a school therapist and you’re planning to treat two kids per week after school during the year- but during the summer you’re planning to see ten kids per week. Don’t forget to take your own vacations and cancellations into account. You’ll want to figure things like that into your expenses.
Summary & Conclusions
Similar to the executive summary, you’ll want to do through and re-hash everything you’ve written and provide a conclusion.
Phew.Congrats if you made it to the end!
I hope that you didn’t find this article too overwhelming. Every small business owner needs to at least go through the exercise of writing a business plan for your private therapy business so to have a greater concept of what your business is and how it needs to grow.
Sit down and write one using my suggestions above. It doesn’t need to be pretty. Chances are you’re not showing it to anyone but yourself. But I promise you: if you write a business plan, you’ll be more focused and have a much greater chance of succeeding than if you skip this valuable step!
Need More Help?
1. Free Small Business Counseling from SCORE
If you’re looking for additional resources for starting your practice (more complicated or specified than I can give on this site!) I highly recommend that you meet with a SCORE (Service Corps of Retired Executives) advisor.
In developing my practice (and this website!) I’ve met with several SCORE advisors. Some were better than others at understanding the therapy world. Remember- they meet with everyone from deli owners to tire companies, so you may need to educate them. In general though, I’ve found that they give great advice on specific topics like accounting, marketing, etc.
Find a SCORE chapter near you. http://www.score.org
2. Get the Private Practice Planner Pack
Starting a business isn't easy - especially for "helping people people!"
Whether you're looking to write a business plan for yourself OR to secure a loan, the 1 Page Business Plan for Private Practitioners will help you get organized and commit your private practice goals to paper.
The Private Practice Planner Pack also includes the Private Practice Planner / Journal and Annual Income Calculator, which can further cement your vision and help you develop your short and long-term goals.
To learn more, click here.
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Jena H. Casbon, MS CCC-SLP is a private practice consultant who helps SLPs, OTs and PTs start their own private practices. She is the author of two books: The Guide to Private Patients and The Guide to Creating a Web Presence For Your Private Practice and an online course, Grow Your Private Practice.