Starting your own practice is an exciting proposition for many. This can also be an incredibly challenging undertaking full of tasks you were never taught while in medical school or residency training. As someone who recently started his own practice, I quickly became aware of all my new responsibilities as a small business owner. One of the first tasks that I needed to accomplish was applying for a small business loan. This involves much more than just asking the bank for a loan for a certain amount. Remember, the bank wants to know that you thought this through and created a business plan that demonstrates a working knowledge of your potential as a revenue generator.
The basics include a detailed business plan that projects three to five years ahead and outlines how you intend to grow and establish a stable source of revenue. Below is a general outline of items that should be incorporated into the plan to make it as strong as possible.
A great starting point to discover all the items that go into a business plan can be located at www.sba.gov. I found this to be a great resource to outline all the necessary items that should be included in the business plan. It takes you through a step by step process and details what they recommend should be included. The website goes in depth into each aspect to explain the structure of each:
1) Executive Summary
This provides a general overview of your plan, explaining the purpose of the venture and how much support you are looking for. Briefly explain what the practice will be composed of (physicians, physician extenders, other staff).
2) Company description
Explain the nature of the business and the type of services that you plan on providing. Provide detail of the surgical and/or nonsurgical services that you provide and intend to offer. Describe the demographic of patients that you see, as well as the services that you think will be incorporating in the future.
3) Market Analysis
Remember, as valuable as you believe your specialty to be, the bank doesn’t necessarily have a good grasp on how profitable it can be. Take the time to explain what types of procedures are performed and how this can generate a revenue for the practice. Also, list the top procedures that are sought out from your specialty, providing statistics from your national organization (ASPS, AAFPRS, AAD,etc) on how many of these are performed yearly.
4) Organization and Management
This is your opportunity to describe the team that you have setup to develop the business. This can include your realtor, attorney for your business, your medical supply distributor, office staff, etc. It’s ok if you don’t have a full staff. All the bank is concerned with is your ability to show that you have a plan to develop a qualified staff and have the right people to grow your practice.
5) Marketing and Sales
If you plan on having a business in an industry that is cosmetically based, you need to have a marketing plan. Prior to creating my business plan, I had already hired a company to develop my website and handle my search engine optimization. If you don’t have a website, it’s not the end of the world, although you should certainly start thinking about one.
Also begin to develop your branding for other social media outlets like Twitter, Instagram, and Facebook. While you don’t need to be the leader on all these outlets, you should start developing a presence. Let’s face it: social media is only going to become more prominent in our lives and professional careers.
I think it’s always important to show the lender that you have evaluated your competition and deemed yourself a competitive force in the region you want to build a practice. Discuss the other physicians that are considered your “competitors” that are within your scope of practice and speak to how this competition may or may not affect you.
If you were in a previous practice, this is an opportunity to speak of the revenue that you were generating. Be specific and discuss your productivity, giving dollar amounts to validate your potential as a revenue generator. If you are starting off without previous experience or coming from another practice, be sure to mention this and provide a projection of what you think is realistic for your first through your third year. If you are staying in the same region, mentioning that some of your patients may follow you will be a bonus.
I think this is one of the most important aspects of the business plan. This provides the lender with a dollars and “sense” snapshot of your thought process with how you plan to use the cash that they are lending you. This should include cash flow projections and how you plan to use the cash. Practice expenses can be pages long when you really break it down. However, keep it simple and start with wages, rent, supplies to start the office, utilities, and legal and professional fees. I personally sought out a quote from a medical supplier to give me a general estimate on how much it would cost to outfit the office I was looking at. I included this in the business plan report.
A couple other tips for your overall business development:
Make Your Business Plan Stand Out
The most important step in business planning is determining your target market and explaining why consumers want to buy from you. You will need to explain what makes you special from other similar businesses in the area. This is especially true if you are in a big city that tends to be saturated with many physicians that offer the same services you offer. If this isn’t clear to you, step back and reassess your motivations and how you intend to build a niche for yourself in your desired market. Determine how you are going to sell and market your services. Why would someone go to you for a laser treatment, surgery, or injectable over someone else? Is it your level of expertise? Or perhaps you can offer a higher level of customer service with the setup in your office and your staff.
Be Clear About What You Have to Offer
Ask yourself: Beyond basic products or services, what are you really selling? At the end of the day, the service is a combination of the product, its value, and the brand experience for the clients. Think about each of these individually and determine how they all come together to make you a qualified and unique practitioner that also happens to be a small business owner!
Discover Your Niche and Focus on That
A jack of all trades and a master of none can have a negative impact on your business growth. Often speaking with your own patients can provide the best insight into untapped needs within your market. Think about which areas your competitors are already well established in. This does not mean that you can’t do the same thing or provide a better service within that need, but looking at areas that are being ignored by your competitors will give you an edge, especially when starting out.
Michael Somenek, MD, is a Washington, DC facial plastic surgeon whose practice offers specialized cosmetic and reconstructive services. Dr. Somenek is certified by the American Board of Otolaryngology and is also a member of the American Academy of Facial Plastic and Reconstructive Surgery. As an author of multiple peer-reviewed journal articles, textbook chapters, and presentations at national meetings, he has contributed extensively in his field.