Whether you’re in the process of starting your own business, or you’ve been in business for years now but just never got around to writing your business plan, this blog post is for you. Here, we’ve compiled some great information to help you put together this ultra-important document. But before we get into the details of a great business plan, let’s cover the basics:
What is a business plan?
A business plan is a formal document detailing everything about your business. Venture coach Stever Robbins writes in this article on Entrepreneur.com that a business plan includes “your value proposition, marketing assumptions, operations plan, financial plan, and staffing plan.” He also points out that your business plan drives the future of your organization, because it contains goals for all major areas: sales, expenses, hiring, and financing. “Once laid out,” he writes, “the targets become performance goals.” As such, your business plan will act as both:
- a baseline for monitoring your progress so you remain accountable, and
- a tool for “after-the-fact learning” if you perform better or worse than expected.
Who needs a business plan?
In short, anyone who is running a business should have a business plan—especially when working with investors, partners, or employees. According to another article on Entrepreneur.com, “…anybody beginning or extending a venture that will consume significant resources [money, energy, or time]…and that is expected to return a profit, should take the time to draft some kind of plan.”
What are the elements of a business plan?
Now, let’s dive into the specifics of your business plan. Keep in mind that, just as no two PT clinics are identical, business plans will differ from practice to practice. Furthermore, your business plan should be a living document that you can adapt as your practice grows and the market changes.
1. Executive Summary
In essence, the Executive Summary is a general overview of a practice’s purpose and goals—and it’s often the make-or-break section of a business plan. This section should clearly and succinctly describe how your practice plans to address patient health concerns while remaining profitable. It also works as a type of framework you can refer back to when developing the rest of your business plan. So, each element should be easy to expand on. If any part is fuzzy or unclear, it’ll make it difficult to hammer out later on down the line.
In the case of an outpatient physical therapy practice, this section should briefly summarize:
- what niche your clinic intends to fill,
- the services your clinic will provide,
- how you intend to spread the word about your services,
- the clinic’s growth potential,
- competitive advantages, and
- overall funding requirements.
Now it’s time to dig into the nitty-gritty. What does your practice actually do? And what are your goals? If your business is already up and running, you can probably outline your objectives and services pretty easily. But even if you’re a seasoned veteran, it can be exponentially more difficult to explain what you want to accomplish long term without putting your goals to paper. So, in this section, start by thinking about where your business is now versus where you want it to be later on down the line—as well as the action items necessary for realizing that growth. Here are a few questions this section should answer:
Who are you?
Consider your clinic’s overarching purpose: are you focused on keeping athletes in top shape to help them perform their best? Or, are you more focused on raising awareness about health and wellness in a specific community? And what is your clinic’s treatment philosophy? Some practices may focus heavily on overall health and wellness, while others are intent on restoring function after injury.
What services will you offer?
No matter how you answer the questions above, the services you provide should align with your goals. For example, if you’re community-focused, services like employment health screenings are a great way to serve the population at large. Alternatively, fitness assessments and injury prevention services help athletes stay sharp and improve performance.
What is your patient market like?
The point of this section is to justify your goals by identifying who your audience is—and making sure you can easily reach your desired patient population.
Who is your competition?
Look at the current market in your locale. Are there other practices in your area that focus on the same things that are important to you? This question is important, because:
- you don’t want to practice in an over-saturated market, and
- existing competitors will give you an idea of what works versus what doesn’t, which will be especially crucial once you start formulating your marketing strategy.
Also, performing a SWOT analysis will help you understand how you stack up to surrounding PT practices. This analysis includes everything from practice location and niche services to the payers you’re credentialed with.
Where do you see yourself in five to ten years?
Now, it’s time to get out your crystal ball and gaze into the future. (If you don’t have one handy, your imagination will do just fine.) Think about some tangible goals for your practice, such as:
- how large you want your practice to be (e.g., building square footage, number of locations, etc.);
- what community events you’d like to be involved in—or create yourself; and
- how many clinicians and front office staff you want on your team.
While your goals and services are unquestionably important, how you plan to market your practice is just as crucial—if not more so. After all, your services will have little impact if your target audience doesn’t know you offer them. Ideally, you should break this section down into three smaller subsections:
The Message You Want to Deliver
Your ideal patients need to know who you are and what you’re about, so ponder what you want your messaging to communicate. The contents of this section are informed by:
- your practice’s strengths,
- the benefits of physical therapy versus other types of treatment,
- trends in physical therapy and wellness services, and
- how patients can access your services.
Who Your Ideal Patients Are
This section should talk about your target audience. It should explain:
- who your ideal patients are,
- what types of activities they engage in,
- which services they’ll benefit from, and
- the types of marketing they engage with (e.g., social media, print, events, etc.).
How You’ll Deliver Your Message
Once you know who your target audience is and what message you want to communicate to them, research effective ways to engage with your audience. For example, social media marketing can be an effective tool for engaging with patients of all ages. However, some social platforms have a user base that skews towards the under-30 crowd (e.g., Twitter), while other platforms tend to attract users over the age of 30 (e.g., Facebook). Then there’s print marketing, which is a great way to market to people who are less likely to be on any social media platforms at all (e.g., people 65 and older). Remember, though, that you don’t want to make any assumptions about seniors and technology: depending on your specific audience, older patients may very well use digital platforms on a regular basis.
That’s why it’s important to do your due diligence and explore the varied ways in which your messaging reaches your intended audience. As we mentioned above, this also includes assessing your competitors’ marketing strategy, borrowing inspiration from similar practices, and filling any market gaps. Then, outline your marketing strategy for the next few years—while allowing some room for adjustment as the market changes.
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Here’s where the rubber really meets the road. Understanding your day-to-day operations—as well as who’s in charge of what—can make or break your success in private practice. According to this article from Inc.com, your operations section should answer the following questions:
- “What facilities, equipment, and supplies do you need?
- What is your organizational structure? Who is responsible for which aspects of the business?
- Is research and development required, either during start up or as an ongoing operation? If so, how will you accomplish this task?
- What are your initial staffing needs? When and how will you add staff?
- How will you establish business relationships with vendors and suppliers? How will those relationships impact your day-to-day operations?
- How will your operations change as the company grows? What steps will you take to cut costs if the company initially does not perform up to expectations?”
I know, it’s a lot. However, if you’ve worked in a physical therapy practice before, then you should be able to answer a lot of these questions off the top of your head. As for the hypothetical questions, it’s best to glean some wisdom from your mentor or various owners of existing PT practices.
You can’t run a practice effectively without assessing the fiscal landscape, so you’ll need to dig into the dollars and cents as you pen your business plan. Start by laying out your initial start-up costs—as well as whether you plan to fund them through loans, grants, or savings—including:
- facility construction and renovations,
- building lease, and
- equipment and supplies.
Additionally, Inc.com advises that all business plans include—at the very least—the following five reports or projections:
- Balance Sheet (i.e., assets, shareholders, liabilities, and earnings to fund future growth)
- Income Statement (i.e., projected revenue and expenses)
- Cash Flow Statement (i.e., cash receipts and expense payments)
- Operating Budget (i.e., detailed breakdown of income and expenses)
- Break-Even Analysis (i.e., projection of revenue required to cover fixed and variable expenses)
As a final note, it’s absolutely crucial that these numbers be as accurate as possible, so we definitely advise working with your accountant to pull it all together.
There you have it: everything you need to know about putting together a business plan. Got any tips and tricks for creating an effective plan? Let us know in the comment section below!