The idea of starting a business is very appealing to many nurse practitioners (NPs). Are you ready for this big step? What will it take to make your idea a reality?
Begin by evaluating your personal financial health. Do you know what it costs to run your household every month? What are your bills for your mortgage, car payments, utilities, telephone, etc? What are your quarterly or yearly bills-insurance premiums, medical expenses, tuition costs? What is your personal debt? How do you handle credit cards? Do you know your total yearly household income (salaries, bonuses, rental income)? What is your plan for savings and retirement? If you can answer these questions or get the information to answer them with ease, then you already have some of the business skills necessary to run your own practice.
Learning About Costs
If you do not know much about your personal finances, then here is where you need to start your business education. Either way, you should meet with an accountant to be sure you have your affairs in good order before you begin. You cannot decide if you can afford to go into business for yourself if you do not know how much you need to live.
Next, figure out what it will cost to run a business. Picture your business. What exactly will you do? What services will you offer? What will you charge and who will pay you? Where will you do it? Who do you need to help you? What equipment will you need?
There are two types of costs to starting a business-start-up costs and operational costs. Start-up costs refer to onetime costs needed to open your doors and get started. This includes medical and office equipment, furniture, signs, start-up fees and services from accountants and lawyers, trade name license fees, business incorporation fees, etc.
Operational fees are the expenses that you need to pay every month to keep those doors open. These include salaries, rent, medical and office supplies, postage, and utilities and expenses that you incur quarterly or yearly such as property, business and malpractice insurance, licensing fees, taxes, equipment repairs, and maintenance. The easiest way to estimate these expenses is to get office supply and medical supply catalogs and go through them, making a list of prices of items you might need. Use a search engine on the Internet to get the names of companies to request catalogs. Remember that buying quality equipment and furniture up front is an investment in your future and will save money in the long run.
Estimate Revenue
Now you need to estimate your revenue, or the money that comes in. Include household salaries and bonuses. Do you have any rental income or dividend income? Will you continue to work part-time while starting your business? To determine how much money you will need before your business is producing enough income depends on many factors. This is an area where your accountant can help you. What other sources of income will you have to develop? Will you need a business loan or line of credit? Will it make sense to have a business credit card? Do you have a backup plan to protect you from unforeseen events like health problems or a family crisis?
For most NPs, working out the finances is the hardest step. Be as realistic as possible and err on the side of caution by overestimating expenses and underestimating revenues. Enlist professional help. Talk to accountants, lawyers, and meet with a banker. Do as much of your own homework as possible by organizing and gathering your own personal financial data. If you cannot afford to start your own business now, plan how much you need to save to be able to do so in the future.