Your Business Plan: Steps to Success

by Corporate Relations and Business Strategy Staff

For many health professionals, creating a business plan is the necessary first step in charting a path to successful practice. This is true whether you are just starting a practice, looking to expand or diversify the services you provide, or just wanting to work more efficiently and effectively.

A business plan helps you set goals and guides decisions about how to achieve your goals. It can also aid other important processes such as communicating with those who might use your services and facilitating the acquisition of vital resources such as small business loans and new contracts.

Without a viable business plan, you may miss important opportunities to grow your practice and develop new sources of revenue. You also run the risk of squandering limited resources on unproductive activities that force you to work even harder just to make ends meet.

The first section of your business plan should provide a practice overview including:

General information — Your practice name, address and contact information: phone, fax, e-mail address and website.

A one-paragraph summary of your mission — A mission statement briefly identifies the services you provide, the clients you serve, your core values and how you measure the success of your practice.

Rule of thumb. Keep in mind that everyone you meet is a potential client or referral source. You should be able to clearly explain who you are and what you do in no more than 30 seconds. A mission statement offers the basis for a succinct description.

Conclude this section of your business plan with a sentence that conveys your vision for the future of your practice.

The next section should describe your practice in the larger context in which you function. An environmental analysis describes the many factors that affect your practice, including:

External factors — For example, economic trends, changing demographics, legislative and regulatory developments and new technologies that have an impact on practitioners and clients

Internal factors — For example, staffing, facility arrangements, contracts, resource utilization and outcomes measurement.

Periodically assessing your environment can help you meet changing needs, reach untapped markets, and eliminate services that are no longer in demand.

A well-conceptualized marketing plan will help you increase you referral stream and grow your client base. This section of your business plan should describe:

• the geographic region you serve
• potential clients and health insurance payers
• your competitors — individuals and organizations that provide professional services similar to yours
• the benefits you offer clients that your competitors do not. Ask yourself: do I have a particular expertise or “niche” practice area, work in an underserved geographic region, or offer a distinctive service? Your business plan should help you pinpoint unique aspects of your practice and how to use these factors to your competitive advantage.
• how you intend to communicate with potential clients and referral sources. Think beyond traditional (and often expensive) advertising options. Speaking to local civic groups, participating in health-related events, and other forms of community involvement increase your visibility, offer opportunities for networking and have the potential to generate new referrals.

Consult with your accountant to address financial aspects of your practice. This section of the business plan should include:

• three-year projections of your income statement and balance sheet
• a cash flow analysis that documents the movement of money in and out of your practice, such as reimbursement from health insurance payers and monthly rent for your office space and the timing of these transactions, and
• short- and long-term capital requirements

Although it may be tempting just to skim the surface, be specific in this part of your plan. Discuss mechanisms for securing capital and detail your revenue and expenses. An in-depth financial analysis today can help you avoid major headaches tomorrow.

A business plan is a living document that you should review and update regularly. The process unfolds as you begin to document what your practice involves, and how you plan for it to evolve.

“Having a business plan helps communicate your professionalism to those outside your practice,” says David Ballard, PsyD, MBA, the APA Practice Directorate’s assistant executive director for corporate relations and business strategy. Even so, he adds, it’s not just a matter of reacting to the outside world. “By putting a sound plan in place, you are taking proactive steps toward building your professional future.”