You've opened the doors to your new practice and you're
ready to go. Before you go off on your new business
venture, I'd like to tell you about three venture-killers
that you need to watch out for. If you can get control of
these three areas, you will be successful in your first
year; if you don't, you'll be among the statistics of
first-year business failures. Here they are:
Conserve: Be careful how you spend your money. The
biggest startup mistake is to spend too much money getting
started, only to find you have nothing left to pay the
bills while you wait for clients or patients to show up.
First-year business failures usually are due to lack of
"capital." This means they don't have enough money to pay
the bills. Cash is King, or, "Cash Rules." Harold Geneen
(former CEO of ITT) said, "If you run out of cash they take
you out of the game."
When you go to the bank for a loan, you'll be asking for an
amount for startup, to pay for the initial assets and fees
you'll need to open your doors. You should also ask for an
amount for "working capital;" i.e., capital (cash) to work
with. Most often, you'll be given a line of credit that
you can draw from as you need it. If you spend all of it
the first month, on stuff you're just sure you must have,
you won't have any to pay your employees (or the rent!) the
second month.
The trick is, as one wise doctor told me once, "DSATM" –
"Don't spend all the money." Think carefully about "needs"
vs. "wants." Do you really need that Blackberry when you
have a computer and cell phone at your command all the
time? Do you really need the newest, most powerful digital
x-ray equipment? Be creative – how could you get it done
for a while without spending a lot of money?
Collect: Getting the Money. Your wonderful clients or
patients may be flocking to your door. And you may be
providing wonderful service for them. But if you don't
collect the money they owe you, you could be out of
business before you first anniversary. Here are three
strategies for assuring you will get your money: 1. Set
up the expectation of payment with new patients. From the
very first conversation you have with your clients, make
certain they understand that they are responsible for
paying all bills at the time of service. Just having a
sign in your office won't do it. Your staff must talk to
the new patient and explain payment procedures. Have the
person sign a financial responsibility statement. If there
is insurance involved, explain that the patient is
responsible for what insurance won't pay, or that you will
help with the insurance submission but they must pay you up
front. 2. Make it easy for people to pay and keep
reminding them of their obligation. Set up a script for all
patients as they are leaving "How will you be paying today,
by check or credit card?" Offer credit and debit card
payment options. Offer payment plans for slow or
no-payers. 3. Review your Accounts Receivable Aging
report monthly and set up a process to get payment from
slow payers. The cardinal rule of collections is "The
longer the bill has been outstanding, the less likely you
are to get paid." Be prepared to follow up and send an
account to a collections agency or take it to small claims
court.
Connect: Establish Relationships with Patients and
Clients. This one is the most important and also the most
difficult; without connection, you won't have the patients
or clients to provide the income for your practice. The
more quickly you can connect with people, the more people
will come to your practice, and the more people will stay.
People will continue to come to your practice if they are
receiving value, and if they feel they are liked and
appreciated. Learning how to connect with people is a
skill, that comes with practice. Three quick tips for
connecting: 1. Remember names; people love it when you
remember their name. 2. Learn to listen; really listen to
what people are saying, about their fears and joys and
about what matters to them. 2. Find something common and
remember it. If you can learn how to connect with people,
manage collections, and keep your spending under control,
you can have a great first year in practice!
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Copyright 2007 Jean Wilson Murray, MBA, PhD.
Dr. Jean Murray has been advising small business owners
since 1974. As the founder of Planning for Practice
Success, she specializes in assisting health care
professionals with business plan construction and startup
details. She can help you gain the knowledge to act and the
confidence to begin. Learn more at
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