Once those documents are in good order, obtaining a loan is relatively quick and simple for most physicians. You may be asked to put up collateral, perhaps in the form of your home, but in many cases you will be able to bypass the formal SBA process if your lender is experienced with medical practices.
Will the current economic downturn affect banks’ willingness to lend to upstart physicians? Probably. But healthcare remains a growth industry. Banks may require more detailed documentation of your intentions and a more in-depth business plan, but the exercise of providing that information will ultimately strengthen the practice and hopefully make its first years all the smoother.
Alternative financing sources are always available, too. Ask your accountant whether a venture capital firm is an option, for instance. Remember, any loan becomes vastly more complicated when you bring partners into the equation — it’s critical to consult with an attorney who can draw up the necessary protective documents.
In most cases you can expect to enjoy a steady stream of patients eventually. How quickly they begin to arrive on your doorstep depends on factors like the strength of your marketing effort. It’s therefore critical to build sufficient funds for a concerted marketing and PR strategy into the business plan. These activities will represent a significant expense in the beginning, so they should be part of the initial financial assumptions. A good marketing plan will help you keep that negative cash flow period to a minimum.
A few of Borglum’s favorite insider tips on the details:
- Avoid multicolored stationery. “It’s going to cost you extra to print everything for the rest of your life. Most practices spend thousands of dollars a year on business cards, patient education materials, etc.,” he says. “Keeping those costs down is smart, because they can reduce your profitability significantly.”
- If you choose to have a logo developed, take heed: “It’s not a mistake to have a logo. It’s a mistake to have the wrong logo.” Look at the design from the patient’s perspective. Avoid anything that reminds people of bodily fluids (or solids) that your specialty deals with.
- Consider whether different is really better. “Every little weird administrative thing you do — like doing your own bookkeeping — pushes you a little further outside the mainstream and increases your risk,” Borglum maintains.
Laurie Hyland Robertson is a senior editor with Physicians Practice. She can be reached at lchrobertson@physicianspractice.com.
This article originally appeared in the April 2008 issue of Physicians Practice.
