Throughout these last few months, we’ve been doing a deep dive into physical therapy business plans for those interested in opening your own physical therapy practice. The next PT Business Plan section we will discuss is Strategic Position and Risk Assessment. To assist you in this portion of the plan, we cover:
your company’s strengths
a model with which to assess risks and lead you toward your strategic position
What is strategic risk?
Strategic risk is often mistaken for operational risk. As Mike Rost from Workiva observes,
“Good operations mean doing things right, while good strategy means doing the right things.”
“Strategic risk,” he comments, “arises when a company fails to anticipate the market’s needs in time to meet them.” So why is this important to an owner-PT who wishes to launch his own outpatient clinic? Because you need to identify the strength of your Plan and your operation as it pertains to your local patient catchment area.
Understanding “what is strategic risk” will help you remain active in managing strategic risk. You’ll need to identify, quantify, and mitigate any risk that your new company faces. For example, what will be your strategy if one of your main referring doctors decides to open his own PT clinic? And you’ll need to think through your response if a large regional PT clinic opens a location two blocks over. Have you thoroughly anticipated these possibilities, and do you know how to mitigate these risks to your business?
Measuring and managing strategic risk
This subject can get very granular, but we will just hit some of the highlights here. You may have heard the saying, “you can’t manage what you can’t measure”. So, it is best that you keep certain stats from week to week to track progress in areas such as:
Number of new patient referrals
Number of visits per day/week/month
Units billed per visit
Patient cancellation rate
These and other important statistics are considered your Key Performance Indicators, most of which can be gleaned from your EMR/Billing software or tracked manually, if necessary.
The purpose of a SWOT Analysis
Albert Humphrey’s SWOT analysis remains a useful model today for helping businesses assess their risk and strategic position. The purpose of a SWOT analysis is to illustrate internal characteristics (strengths) of the business that give it an advantage over others, while identifying the weaknesses or limitations of the company that place its management team at a disadvantage relative to others. Further, a SWOT has you view from an external perspective, identifying opportunities to improve performance (e.g. improve profitability), while noting what threats of external elements may cause difficulties for the business.
The following SWOT analysis template will give you some ideas regarding things you should evaluate and consider for your start-up physical therapy business.
Strategic risk represents the greatest dangers, and opportunities, your company likely faces. Show lenders that you not only know how to manage your business day-to-day, but how to keep your eyes on the horizon. With this view, you’ll better shape your clinic’s future success while minimizing downside exposure.
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