An Effective Business Plan to Grow Your Therapy Business

Click here to read part 1 of this article.

4. Financials

Businesses run with money coming in and going out. In general, you’ll need to start off with some expenses in order to grow your therapy business before you start making money. Most Independent Clinicians don’t have a tremendous amount of start-up costs, but that is what this section will cover.

• Expenses: In thinking about the start-up expenses for the business, you’ll be thinking about things you need to operate your business efficiently. These may be things like formal evaluations or therapy materials,, a laptop or iPad, office supplies, marketing materials/stamps, billing software like Freshbooks, a website, etc. It’s extremely important to save your receipts for each of these items as they are tax deductible. In addition to materials for treatment and marketing, you’ll need to consider other expenses like professional liability insurance.
  
  If you are treating patients in your home or in your therapy clinic, you’ll need to purchase business insurance and general liability insurance to make sure you’re fully covered in case anything happens on your property.
  
  Compared to almost any business you can open, treating private patients has relatively few expenses. Given this example, let’s say that your start-up expenses for your therapy business is around $3,000, especially since you decided to buy the iPad. You don’t have to buy everything all at once. You could start with your essentials: the marketing materials and website, office supplies and therapy materials. In the meantime, take advantage of the free trial for Freshbooks. You can then reward yourself with the iPad after you’ve been working for 6-12 months and can afford to buy it with your private patient earnings.
   
• Estimated income: How much money will you be making each month, realistically. If you ideally want to see two patients, twice a week at $125 per session, that would be $2,000 month. You’re going to have to account for two things: cancellations or no shows and taxes. To be on the safe side, let’s take out 30% for taxes, which leaves us with $1,400. You’ll also need to think about a cancellation or no show rate that perhaps two of the therapy sessions in a given month won’t happen, that leaves us with $1,150 which is almost half of what we ideally would be making. Now let’s multiply $1,150 by 12 months to get $13,800 per year. That may sound like a low figure- but it’s not a bad outcome of working two hours per week!
  
  It’s better to be realistic and slightly under estimate your income than over estimate it especially if you have large expenses such as office space. If you do this calculation and don’t like the number you see, you’ll have to figure out how to:
  • Make more money by treating more patients and having more sessions
  • Keep your cancellation or no show rate low
  • Have less expenses

• Break even analysis: Let’s use the above two examples above of expenses and earnings to see when the practice will break even. Let’s use the figure of $3,000 for total expenses. If you’re making $1,150 you’ll be able to pay off the debt in two and a half months. If you spread the debt across a longer span of time, it may take you longer to pay off, but you’ll have extra cash to spend in the meantime.
   
• Assumptions on projections: Remember, you’ll have some recurring expenses such as fees for billing software, marketing expenses, buying new materials, etc. Just keep in mind that while you need to “spend money to make money” you don’t want to spend too much money and not have anything left over.
  
  Think about the future and what sorts of projections you see. Let’s say you’re a school therapist and you’re planning to treat two kids per week after school during the year but during the summer, you’re planning to see ten kids per week. Don’t forget to take your own vacations and cancellations into account. You’ll want to figure things like that into your expenses.

Summary and conclusions

Similar to the executive summary, you’ll want to do through and re-hash everything you’ve written and provide a conclusion.

Congratulations if you made it to the end. I hope that you didn’t find this article too overwhelming. Every small business owner needs to at least go through the exercise of writing a business plan for your private therapy business to have a greater concept of what your business is and how it needs to grow.

Sit down and write one using my suggestions above. It doesn’t need to be pretty. Chances are you’re not showing it to anyone but yourself. But I promise you: if you write a plan for your therapy business, you’ll be more focused and have a much greater chance of succeeding than if you skip this valuable step!

About the Author: Jena H. Casbon, MS CCC-SLP spends her days treating adults with cognitive-communication disorders and her nights helping fellow speech, occupational and physical therapy providers start and grow their own private practices. Her company, The Independent Clinician, seeks to provide information, community and a confidence boost to those who want to get started treating privately but don’t know how.

Jena’s first book is available now: The Independent Clinician Guide to Private Patients. She is also finishing her second (yet untitled) book for SLP/OT/PT therapists on building a web presence (websites, social media and more) to grow their private practices.

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