Starting a practice from the ground up is something that many medical professionals dream of.
However, starting your own practice can be complicated and challenging. It’s vital to have a clear and goal-driven plan from the beginning to make the dream a reality.
From finding a location, to understanding cash flow to keeping up with patient satisfaction, starting a medical practice requires your full attention.
Starting Out Isn’t Easy
Doctors, or any medical professional, who have just gotten out of medical school or received their degree, don’t always understand the financial complications that go into starting a business. That’s why finding a financial institution that understands the industry is a great way to start.
“Some are likely more familiar than others,” Boquist said. “But the great thing is banks like Stearns are here to help those that are brand new in the field. We have many years of experience. It’s important to have resources like that in place from the beginning. It helps ensure the practice gets started on the right foot.”
Boquist said they have engaged with young doctors at all different comfort levels. Many will start working for another practice owner, gain some hands-on experience without the financial and administrative obligations, and then build their own business model.
“The existing practice owner knows their investment will be well cared for in the years to come and the new owner will be inheriting a well-oiled machine,” Boquist said. “The new graduates that start their own businesses are typically at a disadvantage. The rising cost of college education, in addition to the monetary requirements, can be daunting.”
Some new practices can fail because they might not pick the correct name for their business right out of the gate. Others, in many cases, just don’t know the ins and outs of their industry.
“It’s like the old adage says, ‘You never get a second chance to make a first impression,” Boquist said. “Things like the practice name, appearance and initial encounter can make a big impact on a customer. Networking, utilizing marketing and social media, referrals and word of mouth can all help spread the word.”
“You want to explain, in just a few words, what you are and what services you offer. For example, veterinarians who specialize in equine or exotics, will often have that in their business name. And once you’ve established that name, it’s a lot more difficult to change it without having a stack of paperwork to complete with confused customers.”
Healthy Cash Flow Leads To Success
One area younger medical professionals can struggle to grasp is how to manage their practice’s cash flow. Cash flow management is a big key for any successful business.
Financing, whether with equipment or for amenities in the office, helps any business owner conserve their cash flow so that they can better budget for payroll, overhead expenses, unforeseen costs, or even natural disasters.
Equipment financing – in particular – can help steady a practice’s cash flow.
“Fixed monthly payments when you utilize equipment financing can help with cash flow consistency,” Boquist said. “It allows you to know your monthly payment from day one, so no surprises later. A person can have a better determination of what to charge for visits, extra care and products to bring in enough revenue to cover that monthly payment.”
As new business owners, many medical professionals can underestimate the potential expenses that can arise when starting up. Many times, they will use their cash for equipment or construction. But that cash can run out fast when the final details are being ironed out.
Securing financing for construction and equipment on manageable terms is crucial. Cash can be used for other things like soft costs, payroll and disposable supplies.
“This is important because rarely when a new practice opens does it hit capacity right away. That can lead to a variable income, which can be hard to forecast as the business gets off the ground,” Boquist said.
Marketing New Equipment
After new equipment is purchased, a marketing plan is always needed to let the public know what a new, or old, practice has to offer. Whether it’s advertising on the radio or television, or something as simple as doing a social media post, if the public doesn’t know the type of equipment a practice has, cash flow can never be improved upon.
“Marketing is important, because it offers many avenues to capture attention of potential new patients, in addition to keeping constant contact with current patients,” Boquist said.
Boquist is high on what social media advertising can provide business owners on a budget.
“Social media is huge, and in some ways the best bang for your buck for marketing campaigns,” she said. “It’s important to monitor your customer reviews as well. One negative review on social media can have serious ramifications.
“And, incentivizing new customers with some sort of complementary service allows them to experience what you have to offer with little to no risk to them. Many customers will have an open house to allow potential clients that live in their area the opportunity to get to know the business and staff.”
A Few Resources
There are many resources available to someone just starting out. The Medical Group Management Association, the national organization that represents health care administrators, has detailed information for starting a practice.
In addition, many medical professionals can join the American Medical Association to get information about legal issues, medical ethics and practice management.
And, each state has a medical association that can provide state-specific information. The Accreditation Council for Continuing Medical Education has a list of medical societies for each state.
To inquire about equipment financing with Stearns Bank, just click the button below. For an SBA loan for your business, just click here.