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If you’re starting your own business, one of the very first steps you should take is to create a business plan. When done well, a good business plan gives you a framework and structure for daily operations and can help keep you on track as you work toward larger goals. On top of that, if you’re hoping to secure funding for your enterprise in the form of loans or investments, most banks and investors will ask to see some kind of business plan when they review your application or proposal.
In this article, we’ll dig into what business plans are and how to use them effectively. We’ll also share the insights of Karen Litzy, PT, DPT, owner of Karen Litzy Physical Therapy, a concierge PT practice based in New York City.
A business plan is the foundation of your business. It should map out every stage of your business’ development. This important plan contains documented steps to a successful business endeavor.
It’s a formal document that lays out and defines every aspect of your venture, from your mission statement and marketing strategies to your financials and even the floor plan of your practice. Everything about your business will be accounted for in your business plan. As a PT, you’ll also want to include information about the general market, as well as specifics about how you plan to operate, fund, and protect your business.
In theory, every prospective business owner should consider having a plan for their business. In reality, a formal, written business plan is only required if you’re seeking funding from lenders or pitching investors. These professionals need to see a detailed business plan before they make up their minds whether to give you money. However, business plans are a critical component for any aspiring business owner, including PTs, because they force them to think through all the logistics of owning and running a practice before things have a chance to go wrong.
There isn’t any one “right” way to draft a business plan. Every business has its quirks. However, all good business plans usually contain (or at least touch on) the following:
The above list is the foundation of everything you’ll build as a business owner. We’ll go into more detail below to help give you a head start.
This section provides your reader with a birds-eye-view of the company. Here, you’re giving a busy investor an overview of the basics: what your business is, what your target market is, why the target demographic will respond to it, who is running it, and how you plan to fund it all. Is this a bare-bones operation, or will you provide multidisciplinary care, concierge services, and other amenities? Will you partner with a gym to cut down on commercial retail costs?
The goal here is to compel a reader to turn the page. This section will also give you, as the owner, the opportunity to think through the scope of your operation and weigh its viability against the target market.
This section can include your company’s mission and vision statement. The latter can provide the reader with more details about the specific business goals you’re hoping to accomplish within the next five years. (This is sometimes referred to as a “five-year projection.”)
A mission statement will be a concise summary of what you hope to accomplish in your business. For example, “To help clients aged 65 and older achieve the highest level of mobility.” Your mission statement can also address financial- and growth-related objectives.
A five-year projection would define what success will mean for you over time. For example, “To become the most trusted source for referrals in the area.” Your five-year projection would also include any goals centered around the impact your business has on the greater community.
Ideally, your business description would identify the specific location(s) you’ve chosen for your company, as well as the reasoning behind that choice. For example, if you’re hoping to run a practice that caters specifically to geriatric clients, you may want to consider locating your business closer to a retirement home. Or if you’re hoping to run a clinic that specializes in sports medicine, you may want to set up shop in a town with a high density of schools or sporting venues.
Effective marketing plans start with knowing the industry inside and out. Once you’ve laid out the state of the economic sector and the trends that drive it, a SWOT analysis can be a useful tool to narrow down your strategy. Here, you’ll list the individual strengths, weaknesses, opportunities, and threats of your business.
You can also consider a competitive analysis here, which will compare what you offer to that of your direct competitors. Many businesses will market based on a unique selling point, or a singular way to distinguish your business in the market (e.g., lower prices, specialized staff, etc.).
After you’ve determined your target demographic, you can decide how best to market to them. Consider how people from different backgrounds will respond to your marketing strategies. For example, an 80-year-old hip surgery patient may not be able to use the smartphone app you’ve created for them.
Will your business be an LLC, partnership, or corporation? What kinds of zoning laws does your business have to follow and how will you protect your patients’ physical safety and privacy? What will be the protocol for renewing your licenses or city permits? Your business plan should cover how you plan to insure the business, process confidential documents, and trademark your name and/or logo.
Litzy recommends that every PT business owner hire a lawyer and have them look over their insurance plan. You’ll also need liability insurance for yourself and your practice. Finally, in the wake of the pandemic, you’ll want to make sure your policy covers any telehealth services you may have to perform.
In this section, you’ll lay out the relevant financial aspects of your business. A personal financial statement will list what you own, what you owe, and your total net worth. From there, you can start laying your expenses and fund allocation. You’ll need to know how much you’re investing and/or borrowing, how long will it take to pay off your business loans (amortization), and whether variable rates impact your bottom line.
If you’re relying on reimbursement rates, what can you expect from partner insurance carriers? If you’re working on a cash-based model, what portion of the community can afford to pay out-of-pocket?
It can be difficult to perform profit projections, but it can be done. Consider the size of your target market, the prices you plan to charge, the range of reimbursement rates, and the workload that you can accommodate. You should be able to make (and justify) a reasonable guess from there.
Finally, you’ll need to budget for the costs of salary, benefits, and any other expenses you may need for your staff on a per-employee basis.
This one might not seem necessary, but you’d be surprised at just how easy it is to purchase too much equipment for the space you have. When you create the diagram, consider the flow of motion for both patients and staff. From the minute they enter the business, will they be able to move without disrupting other people? Will those in wheelchairs or walkers have enough room to comfortably maneuver themselves? Doing this can significantly cut down on accidents, which is a huge plus for investors to see.
Who do you plan to employ, and what responsibilities will they be given? What’s the minimum amount of experience you need them to have (e.g., three years, five years, etc.). While roles can always be redefined later, this section is about anticipating how you’ll delegate the work and measure productivity.
You’ll also need a way to ensure consistency among your staff members once you’ve hired them. A performance evaluation rubric can be a great way to do this. With a rubric, you can “grade” your staff on anything from customer satisfaction to data entry speed.
According to Litzy, if you’re hiring an independent contractor, be sure they have professional liability insurance to cover the work they do while they’re your employee.
Finally, consider including a quality improvement plan in your business plan, which will tell staff how quality will be managed, executed, and measured. Ideally, this plan will define how you want staff to treat each other, as well as the customers.
The following is a readily available business plan template that has been adjusted for a PT practice, courtesy of Litzy. You’ll see plenty of overlap between this and our elements list, but it’s ultimately up to each business to modify as they see fit.
When you’re writing a PT business plan, keep the following in mind.
Litzy was quick to highlight the benefits of specificity when writing a business plan. She noted that this is especially true when you’re identifying your ideal target market and patient. As the business owner, it’s your job to dig into the details of your target demographic—and it goes beyond age range and income level. You’re asking yourself who the ideal patient is for your business and what they value. You’re thinking through the specific ways in which you hope to impact their life.
For example, Litzy’s business plan is filled with precise details: She treats individuals in person, and her business is cash-based. It’s important to note that specificity doesn’t mean inflexibility, though. When the pandemic hit, she pivoted her business model to incorporate remote telehealth services so she could continue to provide her patients with the high-quality care they needed.
It might help to think of your marketing on a larger scale. For example, if you can establish strong relationships with major companies in your area, you can have a stable revenue stream treating those suffering from workplace injuries.
This might mean visiting the largest employers each week to get a sense of the perils of the job. Even largely sedentary office workers can face serious mobility issues. From chronic back pain to carpal tunnel, there are countless opportunities for PTs to help employees lead better lives.
Ideally, your business plan should include how you plan to help the community—not just paying customers. This could be anything from hosting free demonstrations at community events to publishing a weekly blog that provides useful information to readers. Investors are looking for profit statements, but they care about the bigger picture, too.
For Litzy, financials, legality, and liability are important, but they take a back seat to the people she treats. When she works with patients, she takes the time to understand how their lives will be impacted by her work.
This is your business and your baby, so you’re the one who should be creating the rules by which it operates. For example, if you’re operating as a sole proprietor and you aren’t comfortable seeing more than 10 patients a day, build this limit into your business plan. If you want to grow your business but don’t want to break your 10-patient limit, consider bringing on a partner or independent contractor to help you out.
The same applies to the technology you use to run your business. From online scheduling to per-project billing services, your solutions should be tailored to you. Litzy uses an EMR system that makes billing, scheduling, and paperwork a snap.
Business plans for PTs will depend on who you’re creating the plan for. A professional seeking funding will likely drill into each point, with a longer financial section. A PT who is creating it for their own benefit might focus more on marketing or patient care. However you approach the endeavor, though, it’s critical to use your business plan as a roadmap — one that plots out the milestones and anticipates the red tape ahead.
Image courtesy of iStock.com/andresr
Last updated on Jul 24, 2024.
Originally published on Oct 17, 2021.
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