— Kymberli Zeno, MSN, FNP -BC
So, you think that you want to start your own independent practice (IP) as a PMHNP? Well let’s review some essentials regarding the feasibility of starting your own practice. This article highlights topics to allow you to better evaluate if your dream practice can be viably successful. Entrepreneurship takes a lot of assessing and planning. “It requires compassion, passion for your specialty, and drive” to weather the unrelenting juggling acts, frequent obstacles encountered, and multiple competencies required (Scharmaine Lawson-Baker, 2009).
There are several benefits to independent practice, which include, autonomy, flexibility, control of quality improvement, improved patient satisfaction, ability to specialize and create your niche and the ability to become more compensated then being traditionally employed. There are also downfalls to which focus on an increase in responsibilities and challenges such as practice management, increased financial demands and providing consistent quality patient care while balancing routine daily life tasks for self and loved ones. My goal is to provide PMHNPs with some basic assessment questions to help decide if one is prepared and equipped to manage an independent practice. If you are not ready at this time, it will hopefully give you an idea of what you need to do to prepare.
I have been an Advanced Practice Nurse for 18 years and started a small free standing clinic in 2004. My practice accepted Medicare, Medicaid and out of pocket payments. I found out very quickly that lack of preparation and planning along with an underestimated overhead projection could ruin an independent practice. Fortunately, I was able to revamp my business model, move out of my free-standing clinic and start a successful house call mobile practice without overhead costs and with more flexibility. What did this mean for me at that time? It meant I was able to generate more income while having a more flexible schedule that could accommodate my personal life.
TAKING YOUR DREAM AND TURNING IT INTO A REALITY; THE ASSESSMENT PHASE – (PHASE 1)
First things first… Just like the nursing process the first step begins with assessing. Answering basic questions about yourself can help you learn about your individual personal readiness to start a business before planning to move forward with entrepreneurship. The Small Business Association (SBA) has a personal assessment tool that can be used to assess your readiness. Answering these types of questions can clarify a lot about you as a person and possibly save you a lot of time and money regarding your personal readiness to handle a commitment such as starting a business.
ASSESSING YOUR NICHE
Your next logical step is deciding what type of IP you would like to operate. This is where you get a chance to be creative and unique. This step allows you to take most ideas that you dreamed of having in your business and making your dream a reality. Creating a niche allows you to become an expert in this arena which can ultimately offer other resources and opportunities to generate income. Start with making a list of your passions and interests, think of problems that you are great at solving and research using an online search engine by putting in keywords that represent your interests. Then test your thoughts and ideas by asking friends, family and/or a test market population if they would use your services. Use your online search engine to see if there are any other businesses similar to your desired niche and review their business designs
ASSESSING THE COMPETITION
After deciding your type of practice the next step would be to assess the competition by doing a competitor analysis. This is a critical step in assessing other businesses in your area that offer services closest to yours. The use of social media is a viable way to complete your competitor analysis. Using such applications as Instagram, Twitter, Facebook and LinkedIn, you can find out a plethora of information as to what your competition is doing and what their customers are saying. Using different search engines by entering key words can also give business details from both the company and customers perspective. Let’s not forget the old fashion way of simply calling up the competition and inconspicuously asking relevant questions. Exploring your competition’s strengths, weaknesses, threats and opportunities can assist you in finding ways to dominate the market. Therefore, knowing who you’re up against can be vital to your success.
ASSESSING THE SUPPLY AND DEMAND You also need to factor in assessing supply and demand. It is reasonable to provide the same service that a competitor offers if the demand for service is there. Have you ever heard the saying that there is “room for more fish in the pond?” If there is room in that pond or a demand for the service you and a competitor are supplying, then offering the same or similar services are feasible. The key here is to provide better customer service and offer key services that your competition doesn’t provide. By providing these two key features you will be setting yourself up as the business to patronize.
ASSESSING YOUR PROFIT MARGIN
Assessing your profit margins on a specific timeline is paramount for a viable business. Setting unrealistic profit projections is one of the top 3 reasons that businesses fail. Doing simple math will help you to project the amount of money needed to operate and calculate potential profit from your dream IP. First it is paramount that you determine the dollar amount that you need to profit per patient each month to cover your monthly overhead costs. Determining this number will give you a baseline figure of how much profit you MUST render per patient visit monthly to your monthly financial obligations. This is calculated by taking your estimated monthly
overhead and dividing it by the anticipated number of patients per month which would give you a dollar amount per each patient that you must profit to operate. Multiplying your dollar amount per visit by the number of visits per day then multiplying that number by the number of days you operate per month will give you a rough estimate of your monthly income.
$ per visit X # of visits per day X # of days of operation per month = Estimated Monthly Revenue
Although this gives you a rough estimate of potential profits, it is important to thoroughly assess this before creating a financial burden for yourself in the long run. It is also essential to include profit from other revenue sources in the business such as ancillary services (ex. lab, injections) and other products for sale (ex. enhancement products, supplements). Estimate your potential overall revenue, subtract your monthly business expenses to give yourself a baseline of your anticipated profit.
Revenue – Expenses = Profit.
ASSESSING YOUR SUPPORT SYSTEM
Assessing your support system is another important step in deciding to start a business. You may ask…why is this important? Because starting a business takes a lot of time away from your daily routine with family and friends. Being able to provide support to your family members such as cooking, shopping, doing homework and running errands may become secondary. Spending time with friends and social interaction may decline. These things are all important to a healthy well balanced life and there may be less time to enjoy the people that you care for the most. Another important factor in assessing your support system is the need for free labor. Who better to assist with this but those that are closest to you? Things such as setting up your new office space, clerical duties, cleaning and helping with general organization free of costs is great, especially with new and unexpected financial responsibilities.
ASSESSING YOUR CONSUMER
Assessing exactly who your consumer is also essential in starting your IP. Answering questions such as: What types of patients you would like to serve and what demographics will you primarily serve while considering things such as age, location, language and culture, spending power and patterns, interests and stage of life are paramount in crafting your marketing strategy. Target marketing will be key in increasing your clientele by focusing in on potential users of your provided services. Determining these factors can give you an idea on how to engage and cater to the dominant population that will support your business.
ASSESSING YOUR PERSONAL FINANCES
Assessing your personal finances is also key to deciding if now is the right time to start an IP. Such things as looking at your current spending habits and looking for ways to minimize unnecessary spending is a great start. Creating a budget, keeping your current income, considering a second income, increasing your savings, looking at your credit score and assessing your current assets are important during this assessment. Organizing your personal finances is the first step in getting ready to be as organized as possible with your business finances.
Remember, the goal is to be able to make as much profit as possible which subsequently will become a major resource for your personal income. I recommend discussing this with a banker or financial planner if this area needs assistance. Don’t feel discouraged if after assessing this area it looks as if you have some work to do, it’s better to organize this now so that money or access to money is not the reason your business doesn’t survive. Just make a plan and stick to it. Underestimating or running out of capital is another top reason that businesses fail within the first year.
ASSESSING YOUR START UP COSTS
Assessing and calculating a rough estimate of what your startup costs will be is essential. There are a variety of costs to consider such as office leasing (first, last and security deposit, build out costs), utilities, telephone, electricity, payroll for your employees and contractors, office equipment, office supplies, laboratory fees and electronic medical records. Marketing costs are to be heavily evaluated. Starting an online presence with creating a website, brochures, advertisements and business cards are some things to consider. Include amenities such as professional liability insurance, MD collaboration/consulting fees, professional fees, CEUs and license renewal costs. Budget enough to pay yourself, your employees and your consultants such as accountants, attorneys and a financial planner at least for the first 3 months. Startup costs can vary depending on the needs of each practice.
ASSESSING YOUR FINANCIAL RESOURCES
Assessing resources to acquire the actual cash you need to fulfill your start-up costs is crucial. Considering a small business loan, an investment from a family member or friend, money from a business investor, a line of credit, obtaining a business partner to split the costs, using your savings or applying for a 2nd mortgage on a home or other collateral are all options to finance your startup costs. Another viable option is obtaining a business loan from a conventional lending institution. There are different options from banks or credit unions that are interested in lending to new entrepreneurs, but they normally require a business plan.
In “phase 2”, this is where you would create your business plan. Creating a business plan is a clear plan that will allow you to define your goals and the steps needed to reach them. It spells out your purpose, vision and plans of operation. Your unique plan will spell out your company’s resume, by explaining your objectives to lendors, investors, potential partners, employees and vendors. There are many resources to help with formulating the best business plan possible. The Small Business Administration (www.sba.gov) is a great place to start.
Starting your own business comes with many pros and cons. Ownership can be a very big task and considered to be very challenging, interesting, rewarding, exciting and fulfilling in most regards. But on the flip side it can also be frustrating, exhausting, frightening and tricky. An entrepreneur should have self-discipline, be a self -starter, a hard worker, a problem solver and have the ability to handle uncertainty. According to an article written in www.richman.com blog, pros such as: (1) Control – You have full control, including over your income, expenses and debt. (2) Leverage of Other People’s Time (OPT) – Eventually, OPT can replace your time completely. If you are working in someone else’s business, then you are the OPT. (3) Unlimited revenue – There is no limit to how much revenue you and your company can make. (4)Tax advantages – Most of the tax law, in most countries, is geared toward reducing the taxes of business owners. Almost all business expenses are deductible, meaning you deduct them against the revenue, which reduces the company’s taxable income. If you are investing in someone’s private business, the losses from the business are deductible against income from other passive business or real estate investments. Gains often are subject to the lower long-term capital-gains rates. (5) Flexible hours – You set your own hours. (6) Freedom to express yourself – You can fully express who you are and what you stand for through your business.
Still stuck? Maybe after doing this assessment you may find that you need to go back to the drawing board. Perhaps that means that you need to see more patients, work on decreasing your overhead expenses or maybe it means that you need to include more viable services or include more of a service mix. Reorganizing and revamping your plan during the initial phase is smart, shows that you are proactive and will increase your opportunity of a successful independent practice.
Utilizing a thorough assessment ensures the successful development of your own independent practice. A thorough assessment is paramount to the first step in planning your dream IP. Taking adequate time to assess your desire and preparedness to be an employee or to be self-employed is critical in making your final decisions in practice as a nurse practitioner in this revolutionary new decade. Creating your niche and activating your ability to become better compensated through your own IP rather than being traditionally employed can potentially create a measure of success that is rewarding to your patients, your family and most importantly yourself.
After 5 years of growing my independent practice I closed my doors. I can proudly say that I was not forced to close for financial reasons and was able to close with a profit after my expenses were paid in full. I must say that I learned a lot professionally and personally in both of my scenarios with my independent practice. There were many challenging days but overall the good days and rewards outweighed the bad days. You may ask…would I do it again and my answer would undoubtedly be YES! In my opinion, “hanging out your own shingle” is a wonderful choice when the proper preparations are considered and utilized