What Does it Take to Start a Business?
This week, a friend asked about next steps for starting a new direct primary care business.
For smart people who’ve never started their own business, people like young doctors, young lawyers, or young dentists, graduating from medical school or professional school and entering the work force, it can feel like the only option for you is to get hired by a big firm or to join an existing practice.
But, you have to know that you can start your own business - and that’s the point of this blog post!
So how do you know when you have a business? When someone tells you that they want to pay you, yes you directly for your services, you have a business. For example, if a neighbor lady asks your son or daughter to mow their lawn, your child has a business. If that same neighbor wants to hire you as their doctor, you now have a business.
In short, you have a business when you have your first customer.
You Have a Business When You Have Your First Customer
Now that we know what makes a business, how do you capitalize on that business? Meaning, how do you legally accept payments from someone as a business, and not as an individual?
1.) Register for a PLLC - your PLLC can be anything, ours is "PLUM HEALTH PLLC" but we're doing business as (dba) Plum Health DPC. You could be Fred’s PLLC and dba "Smart Street Health", or Karl’s Dad's PLLC and dba Cool Dad DPC etc... The PLLC tells the state government that you have a business. Here in Michigan, we register PLLC’s, but it may be different in your state.
2.) Get an EIN from your accountant - once you register your PLLC, get the EIN from your accountant. This is a unique number that is essentially a social security number for your business. You need it to open any major accounts, including a bank account. From the IRS:
An employer identification number (EIN) is a nine-digit number assigned by the IRS. It's used to identify the tax accounts of employers and certain others who have no employees. The IRS uses the number to identify taxpayers who are required to file various business tax returns.
3.) Set up a bank account! I started mine with $90 that I had in my pocket:
4.) Deliver services - this could be refilling a medication, performing a physical exam, performing a Beck’s Depression Inventory, or giving a joint injection. Never underestimate how much value you can provide for patients with your brain and your stethoscope. As your company grows and as you refine your services, you’ll be offering more services and broader services. But for now, focus on getting started rather than having everything that you could possibly need to start.
As an example, I didn’t have an office when I first started - I started by making house calls for the first 2 months of my business. I also didn’t have an EKG machine when I started, but I bought one within 3 months of starting. I didn’t have a spirometer when I started, but I bought one within 5 months of running the business. As you get more revenue, you can use that extra revenue to make your services more robust.
5.) Track payments. This could be as simple as a spreadsheet with a Microsoft product or a Google Doc spread sheet, or it could be a more sophisticated product like QuickBooks or FreshBooks. I started during my first two months using Microsoft Excel to track revenue and expenses, but it was tedious! I quickly switched over to QuickBooks and I’ve never looked back. Often times, these companies will offer a free 30-day trial or a discounted fee for the first 3 months - it makes taking the leap easier. If you hate the service or the product interface, you can always switch companies!
NOW GET OUT THERE AND GET MORE CUSTOMERS.
Have a great weekend,
- Paul
P.S. If you enjoyed learning this material and if you want to take the next step, please check out the Startup DPC book - there’s a step-by-step guide on how to start your direct primary care practice in the book
Additionally, check out the Business Plan Course where I take a deep dive and show you how to write a business plan that will help you grow your direct primary care practice, starting with a written foundation.