• PT Business Plan – Financial Data & Projections

    January 19, 2019 | Kevin Kasmar
  • Building out and creating financial projections is important to your start-up’s business plan.

    The Importance of Financial Projections

    If you are seeking a loan or other form of financing, financial projections help convince prospective lenders and investors that your business will be profitable.

    Even if you are not seeking financing, financial projections remain important to establishing a budget for your new business and serving as a benchmark for your business’ financial progress.

    How You’ll Use Financial Projections

    By comparing your actual financial statements to your projections, you’ll be able to monitor whether your business is falling short of your projections, or surpassing them.  If your business is falling short of expectations, you will need to take steps to either increase revenues (more new patients and patient visits) reduce operating expenses, or some of both.  Conversely, if your business income is surpassing expectations, you may need to add staff, expand your clinic’s footprint or seek further financing to meet higher than expected working capital needs.

    Creating Projections for your PT Business Plan

    As a rule, financial projections for a start-up should go three years into the future, as it is difficult to project further than that without historical data to support your projection.  Without getting too deep into the accounting weeds, let’s identify what the key contents are for your projections.

    Sales Forecast

    Project your sales (patient visits) out for at least three years, including monthly sales for the first year, then quarterly for the following years.  How many new patient referrals can you expect each month?  Will the volume of patient referrals grow gradually, over time?  Or have you already secured promises from local physicians to refer patients to your physical therapy clinic, therefore avoiding a slow ramp-up of your patient volume?  How many visits can you expect on average from each of your patients?  (12, 14, 16?)  How many units will you/can you bill per patient visit?  What will be your provider mix?  What per cent of you patients will be using commercial insurance?  Medicare?  Workers Compensation?  Each of these patient classes determines what your “net” revenue collected per patient visit will be.

    Expense Budget

    This budget should include both fixed costs (e.g. rent for your location) and variable costs (e.g. advertising and marketing expenses).  Try to account for everything from office and computer equipment to clinic supplies and utility expenses.  And don’t forget to account for payroll and payroll taxes for you and your staff.

     Financial projections include three basic sets of schedules:

    • Income Statement: This set of schedules projects expected gross and net income your business will generate and subtracts expenses from the expected income, resulting in your projected monthly profitability.  And as we mentioned above, for the first year of operation, you’ll want to create a monthly income statement for all twelve months.  For the second year, quarterly statements will suffice.  For any out years, an annual income statement will suffice.
    • Cash Flow Statement: The cash flow statement is akin to a checking account register, but goes into greater detail on how much money will flow into (income) and out of (expenses) your business.  At the end of each period (e.g. monthly, quarterly) you’ll show either a profit or a loss.
    • Balance Sheet: The balance sheet shows the business’s overall finances including assets, liabilities and equity.  The balance sheet reflects a “snapshot” of these items for the period you are measuring, whether that be month-end, quarter’s end, or at year end.

    Projecting three years in the future should enable you to forecast the break-even point, which is the point at which your business stops operating at a loss and starts operating at a profit.  Once you have calculated your break-even point, you can then determine how much funding you will need to carry you through the unprofitable months of your start-up.

    Also, you should include in your Business Plan any other documents that explain the assumptions behind your financial projections.


    An obvious challenge for any entrepreneur is how to create financial projections when your business is not actually up and running. One of your wisest decisions can be enlisting an accountant familiar with small businesses and start-ups in your industry. An accountant will know what type of expenses, sales, and profits a well-run business in your industry can expect. He or she will be able to help you come up with realistic financial projections.