Starting a medical practice is no small feat. You may consider it lucrative and the right step for your career but have you considered all that it takes to start and run a medical practice? This is what a business plan is for.
A business plan is a strategic planning document that lays out in detail the objectives and goals of a company and also how the company plans to achieve its goals. A business plan can be considered a road map for any business that details a business’ profile, products and services, marketing, financials, operations and organizational structure.
Developing a business plan requires strategic planning to identify the mission and vision, target audience, operations and financials of your medical practice. This is a crucial step when starting your medical practice. In this article we will share about how to write a business plan for a new medical practice.
Why you need a business plan for a medical practice
Just like any other business, a business plan is very important before starting a medical practice. In a recent Sermo poll, 52% of respondents indicated it is important to get a business plan for your medical practice and we will share reasons why.
- A business plan helps to define the core essence of your medical practice. With a medical practice business plan, you can properly define your practice’s vision, mission, goals and target audience.
- With a medical practice business plan, one can properly estimate the financial cost of starting up as well make financial projections for a time period.
- A medical business plan can help define marketing for your practice and set SMART marketing goals.
- A medical business plan helps to strategically identify and define all the stakeholders relevant to your practice and their role in the success of your practice.
- A SWOT analysis is a core part of any business plan. This will help the medical practice understand its strengths, its competitors, opportunities and the environment where it plans to operate in.
Types of business plans for a medical practice
There are different types of business plans for different business types. For a medical practice, these two types of business plans are most common: traditional business plan and lean business plan.
A traditional business plan is a more robust type of business plan that covers a wide range of topics regarding business planning. A traditional business plan usually covers areas such as products and services, financing, marketing and organizational structure. It is often used as a guide for business operations and an effective tool for communicating the medical office business plan to investors and business partners.
A lean business plan on the other hand is a more succinct version of a traditional business plan. A lean plan is faster and easier to write. It focuses mainly on strategy, financials, important dates, milestones and activities. Think of a lean business plan as being more straight to the point. Some people use this business plan when trying to grow their business and achieve certain goals at specific timelines.
How to create a medical practice business plan
There are different medical practice business plan templates but most cover four major key areas which are company profile, sales and marketing, operations and financials.
Let’s take a look at what an ideal business plan template for medical practice should look like.
1. Executive Summary
The executive summary is usually the first section in a business plan. It should briefly describe the medical practice, products and service offerings, target audience, the organizational structure and financials.
Executive summaries should be kept short and are usually no longer than a page. However, it should have as much important information as possible. The executive summary is usually the page of interest when your business plan is being reviewed by investors and business partners.
2. Company description
This section of the business plan allows you to define your medical practice in full detail. It should include the practice’s vision and mission statements, its goals and objectives and products and offerings.
This section should detail the type of medical services your medical practice will be offering. If there are other medical experts who will be supporting your offerings, this is a good section to define that. This section should also describe your target patients.
By creating an ideal patient profile, medical practices can better describe their target patients. The ideal patient profile should describe patients best suited for the types of services you offer and who can afford to pay for your services.
3. Market Analysis
Your medical practice is most likely not the only medical practice in your location and there may be alternative options where your patients may go for treatment or medical services. The market analysis section in a medical business plan should describe the current market for your services and present competitors.
The market analysis section may require conducting a market research to understand the patient demographic and your competitors.
4. Marketing and Sales
The importance of marketing in a business cannot be overemphasized. In a Sermo poll, 64% of physicians indicated attracting and retaining patients as the biggest factor in the success of a new practice. The marketing and sales section of a medical business plan should describe how the medical practice intends to attract and retain its target patients. It should describe the marketing plan, marketing activities and the marketing goals of the medical practice.
When describing this section, keep in mind the 7Ps of marketing. This includes the product, people, price, promotion, place, packaging and positioning. Each of these must be considered when developing a successful marketing strategy.
The marketing and sales section is also a good place to include a SWOT analysis. A SWOT analysis is a critical analysis of the Strength, Weakness, Opportunities and Threats of the medical practice.
The Operations section is a very important part of the business plan. It describes how the medical practice will work. Things to cover include, working hours, staff strength, location, technology, outsourcing and logistics.
The operations of a medical practice is very sensitive and it would help if a lot of things are defined before starting the business. For instance, the location and layout of your medical practice should be well captured and defined in the medical business plan. You should also consider outsourcing. Are you handling medical billing in-house or will it be outsourced? Will you be handling recruitment or it will be outsourced to a staffing agency?
Also supplies and logistics of medical materials should be considered and defined. If your medical practice will have a pharmacy, how will the drugs be sourced? These are some of the important questions that should be answered in this section.
6. Milestones and Timelines
This section involves setting and defining achievable milestones and corresponding deadlines. This way it is clear what needs to be done and by when it needs to be completed.
For setting up a medical practice, milestones can include major events like renting a place, purchase of medical equipment, recruitment of staff and set up of medical devices.
7. Organizational structure
A business plan is not complete without defining the organizational structure and/or team that will carry out business operations. In this section, define the management team and their required qualifications. It is also important to define roles of the management team and projected salaries.
At this point, one can also add in the hiring plan for other members of the organization. Define the other roles, how they will be recruited, skill set of interest and how much they will earn.
8. Financial plan
A solid financial plan must be included in every business plan. For a start up medical practice, the financial plan should include start up costs. The financial plan should also include a cash flow forecast that shows projections of cash inflow and outflow over a time period. This is usually broken down on a monthly basis.
A good financial plan should tell a story of how the business will grow income-wise. If your medical practice has already been established, other financial statements like income statements, balance sheets and cash flow statements will help give a better picture of the financial stability of your medical practice.
This is a section reserved for miscellaneous topics. Other supporting documents such as pictures, charts, reference letters that may be of interest can be added in this section.
Building a successful medical practice starts with writing a good medical business plan. Start by strategically thinking about your medical practice. Using the guide above of a private practice business plan template, you can think through all the important aspects of starting your medical practice and write an effective business plan that will help the process.
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