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!