How to Write a Business Plan for a General Practice

Whether you’re looking to raise funding from private investors or to get a loan from a bank (like a SBA loan) for your general practice, you will first need to prepare a solid business plan.

In this article we go through, step-by-step, all the different sections you need in the business plan of your general practice. Use this template to create a complete, clear and solid business plan that get you funded.

For more information about how to start a general practice, make sure to read our guide below:
How to Start a General Practice in 12 Steps: Complete Guide

1. Executive Summary

The executive summary of a business plan gives a sneak peek of the information about your business plan to lenders and/or investors.

Though the executive summary is the first and the most important section, it should normally be the last section you write as it’s the summary of your business plan.

Why do you need a business plan for a general practice?

The purpose of a business plan is to secure funding through one of the following channels:

• Obtain bank financing or secure a loan from other lenders (such as a SBA loan)
• Obtain private investments from investment funds, angel investors, etc.
• Obtain a public or a private grant

How to write your general practice’s executive summary?

Provide a precise and high-level summary of every section that you have included in the business plan of your general practice. The information and the data you include in this segment should grab the attention of potential investors and lenders immediately.

Also make sure that the executive summary doesn’t exceed 2 pages in total: it’s supposed to be a summary for investors and lenders who don’t have time to scroll through 40-50 pages, so keep it short and brief.

The executive summary usually consists of 5 major sub-sections:

• Business overview: introduce the general practice that you want to open and mention the type of patients you will accept. Provide a brief of the pricing structure and facility capacity (that is, the number of patients you can accommodate at once) so that lenders can understand the scale of your business.

• Market overview: summarise the market where you will operate and provide a brief about your target audience, the total market size, competitors, etc.

• Management & people: hiring goes beyond the medical staff for a general practice. Indeed, if you open a private practice, you may also need a receptionist and other support staff. And if you are partnering with other doctors to form a joint partnership, mention every partner’s role in the setup as well as their experience

• Financial plan: how much profit and revenue do you expect in the next 5 years? When will you reach the break-even point and start making profits? You can include here a chart with your key financials (revenue, gross profit, net profit)

• Funding ask: what loan/investment/grant are you seeking? How much do you need? How long will this last?

2. Business Overview

Here you must clarify the business model that you want to adopt for your general practice. Some of the important questions that you must address include:

• What’s the general practice’s location and why did you select that location?
• Will you start an independent practice or partner with an existing general practice?
• Will you specialise in a few medicine (OB, PEDs, Surgery, Adult Medicine, etc.)?

Let’s look at different subsections that you must include:

a) Business Model

This is where you need to explain the business model you want to adopt. Some of the common models that you can choose from include:

• Single Ownership (or Sole Proprietorship): this format requires a single personal tax return, allowing for easy operation and maintenance of the business.
• Single Owner Professional Corporation: you may decide to incorporate your general practice clinic. The benefits include lower tax rates, faster debt clearance, etc.
• Joint Ownership: you partner with another general physician to start a general practice. This will require you and your partner to have the same goal. Joint ownership reduces startup costs and distributes administrative responsibilities. Two physicians can collectively attend to more patients and proportionately distribute the revenue.
• Cost Sharing: two physicians only share a few expenses, but they maintain their independence. Some expenses that they usually share include administrative costs, equipment costs, rent, utilities, etc.

b) Pricing Strategy

In this segment, you will need to provide your pricing strategy. Indeed, the prices will vary depending on the services that you are offering.

The golden rule is to maintain a pricing strategy that is aligned with the other general practices in the area.

Generally, the average price for primary care is $25 on average for people with insurance and $107 on average for people without insurance.

Also, clearly mention the insurance companies you will work with. Providing your pricing strategy will provide a fair idea to lenders and investors of your target audience (patients) which they will also tie into your financial projections later on.

c) Legal Structure

Finally, your business overview section should specify what type of business structure you want.

• Is this a corporation or a partnership (LLC)?
• Who are the investors?
• How much equity percentage do they own?
• Is there a Board of Directors? If so, whom? Do they have experience in the industry?

3. Market Overview

Before you start a business, you must get a clear understanding of the market. This knowledge helps to understand the viability of the business and the marketing strategies required to compete with other players.

You must cover 3 important areas in the market overview or market analysis section of your business plan:

• Industry Size & Growth: how big is the primary care or general practice industry in your area? What is its growth rate (or decline rate) and what are the factors contributing to its growth or decline?
• Competitive Landscape: how many competitors are there? How do they compare vs. your business? How can you differentiate yourself from them?
• Patients Overview: who is your target audience? What type of healthcare services do they need the most? What percentage of the target population has insurance?

a) Industry Size & Growth

How big is the Primary Care industry in the US?

The primary care market in the US was worth $266 billion in 2022, and is estimated to grow to $342 billion in 2030 (3.2% CAGR).

There are over 140,600 general practices in the US in 2022. This number increased by 1.1% CAGR from 2017 to 2022.

How big is the Primary Care industry in your area?

Once you provide the overall picture of the US, divert your attention to the area where you want to operate. It might not be possible to find region or area-specific studies, and hence, you must estimate the size. Read our article on how to estimate TAM, SAM and SOM for your business.

For example, we know there are 140,600 general practices in the country with total annual revenue of $266 billion in 2022: that’s an average annual revenue of $1.9 million per general practice.

Therefore, if the area where you want to open your general practice has already 10 competitors, you can safely assume that the primary care industry in your area is worth approximately $19 million.

b) Competitive Landscape

Studying your competitors’ business models is vital. You need to understand what makes them successful or why they fail. A clear understanding of their area of specialization, service offerings, marketing strategies, etc., will allow you to provide a better service.

You must perform proper research (of course, you will have a clear idea of the type of services a general physician can offer depending on specialization) so you can create a competitive chart summarizing their business model, services offered, pricing, etc.

Here is a sample table that you can use:

	Competitor #1	Competitor #2	Competitor #3
Founded in	2005	1990	2014
Location	xx	xx	xx
GPs	3	4	6
Business model	Independent	Cost-sharing	Partnership
Part of a clinic with specialty medicine	No	Yes	Yes
Google rating	4.8 (400+)	4.7 (300+)	4.6 (120+)
General consultation price	xx	xx	xx

The table you will create will depend on what information you need and want to include based on your proposed business model.

General Practice SWOT Analysis

Try to provide a SWOT analysis. Here is a sample that you can use as a reference:

• Strengths: 5 years of experience as a GP in a reputed hospital
• Weaknesses: Startup cost, zero reputation
• Opportunities: High percentage of families with children, ageing population in the area
• Threats: 2 big hospitals in the vicinity that offer the same services

A clear understanding of your strengths and weakness along with opportunities and threats in the real market can help you to design your marketing strategy. It also helps potential investors to assess the risk and reward profile of your general practice.

c) Patients Overview

This is the section of your business plan where you should provide a detailed analysis of your target audience.

Some important points that you must include in your customer analysis include:

• Age and gender distribution (you can get local demographic data from census.gov)
• Per capita expenditure on primary healthcare
• Frequency of primary care clinic visits
• Average monthly income and disposable income
• Percentage of insured people vs uninsured people

If possible, include certain additional data points such as climate (that can cause seasonal recurrence of certain health issues) and eating habits (that can be responsible for things like diabetes, obesity, etc.).

4. Sales & Marketing

This section of your general practice business plan summarizes your strategy for acquiring and retaining new patients.

So, here are a few questions to help you stand out when shaping your marketing strategy:

• What are the different marketing strategies you will use? 
• How do you intend to track the success of your marketing strategy? 
• What is your customer acquisition cost (CAC)? 
• What is your marketing budget? 
• What are your Unique Selling Points (USPs)?

What marketing channels do general practices typically use?

A few marketing channels used by general practices include; 

• Signage (especially if you’re close to a busy street)
• Word-of-mouth, recommendations
• Online local listing (Google Business)
• PPC ads, Facebook ads, etc. 
• Email, SMS marketing (to remind existing customers of regular checkups for example)
• Website
• Content marketing on social media and blogs

5. Management & People

You must address two things here:

• The management team and their experience/track record
• The organization structure: different team members and who reports to whom?

Management

Small businesses often fail because of managerial weaknesses. Thus, having a strong management team is vital. Highlight the experience and education of other general physicians (partners or not).

No need to provide extra details for general administrative staff such as receptionists, assistants, accountants, etc.

Organization Structure

Even if you haven’t already hired any other GPs, nurses, assistants, accountants, receptionists, and other relevant staff, you must provide a chart of the organization structure defining the hierarchy of reporting as shown below.

6. Financial Plan

The financial plan is perhaps, with the executive summary, the most important section of any business plan for a general practice.

Indeed, a solid financial plan tells lenders that your business is viable and can repay the loan you need from them. If you’re looking to raise equity from private investors, a solid financial plan will prove them your general practice is an attractive investment.

There should be 2 sections to your financial plan section:

• The startup costs of your general practice
• The 5-year financial projections

a) Startup Costs

Before we expand on 5-year financial projections in the following section, it’s always best practice to start with listing the startup costs of your project. For a general practice, startup costs are all the expenses you incur before you open your practice and start receiving patients.

These expenses typically are: the lease for the space, the renovation costs, the equipment and furniture.

Logically, the startup costs vary depending on the size of your practice, the treatments you will offer (and therefore the equipment you need), the quality of the equipment and furniture, whether you buy the real estate or rent a commercial space, etc.

b) Financial Projections

In addition to startup costs, you will now need to build a solid 5-year financial model.

Your financial projections should be built using a spreadsheet (e.g. Excel or Google Sheets) and presented in the form of tables and charts in the business plan of your general practice.

As usual, keep it concise here and save details (for example detailed financial statements, financial metrics, key assumptions used for the projections) for the appendix instead.

Your financial projections should answer at least the following questions:

• How much revenue do you expect to generate over the next 5 years?
• When do you expect to break even?
• How much cash will you burn until you get there?
• What’s the impact of a change in pricing (say 15%) on your margins?
• What is your average customer acquisition cost?

You should include here your 3 financial statements (income statement, balance sheet and cash flow statement). This means you must forecast:

• The number of patients you can receive in a day or in a week ;
• Your expected revenue ;
• Operating costs to run the business ;
• Any other cash flow items (e.g. capex, working capital, debt repayment, etc.).

When projecting your revenue, make sure to sensitize pricing (prices of treatments and services) and your sales volume (number of patients). Indeed, a small change in these assumptions may have a significant impact on your revenues and profits.

7. Use of Funds

This is the last section of the business plan of your general practice. Now that we have explained what your general practice’s business model and services are, your marketing strategy, etc., this section must now answer the following questions:

• How much funding do you need?
• What financial instrument(s) do you need: is this equity or debt, or even a free-money public grant?
• How long will this funding last?
• Where else does the money come from? If you apply for a SBA loan for example, where does the other part of the investment come from (your own capital, private investors?)

If you raise debt:

• What percentage of the total funding the loan represents?
• What is the corresponding Debt Service Coverage Ratio?

If you raise equity

• What percentage ownership are you selling as part of this funding round?
• What is the corresponding valuation of your business?

Use of Funds

Any general practice business plan should include a clear use of funds section. This is where you explain how the money will be spent.

Will you spend most of the loan / investment in paying your employees’ salaries? Or will it cover mostly the cost for the lease deposit for the space, the renovation and equipment?

Those are very important questions you should be able to answer in the blink of an eye. Don’t worry, this should come straight from your financial projections.

For the use of funds, we also recommend using a pie chart like the one we have in our financial model template where we outline the main expenses categories as shown below.