Guest Blogger: Jenna
Regardless of your reasons for wanting to start your own practice, one thing is for sure: you’re going to need to come up with a lot of money to get those doors open and people walking through them. So how do you do that? How do you get the funding you need?
It will take a while for your business to build credit in its own name. To get that process started you can use your own personal credit rating to secure business credit in your practice’s name (advice can be found on NerdWallet). However, when you’re looking for business credit cards, it is important that you understand a few things:
1. The way you handle your business credit will affect your personal credit. If you default on a business credit card you will be personally responsible for that debt. The companies can come after your personal assets to recoup the debt.
2. You might not qualify for high credit limits in the beginning. It’s best to use your business credit cards for smaller things like office supplies and marketing materials than for larger things like big equipment or leasing a space.
Loans and Grants
There are all sorts of small business loans available. The best place to start looking for them is at your business’s bank. Your bank probably has a financing system in place for small business loans. Another good place to search for loans and grants is the Small Business Administration website. If you decide to pursue grants and loans, keep these factors in mind:
1. Obviously you will have to pay back any loan you get and sometimes the interest rates on those loans can be quite high. Only borrow what you are confident you will be able to pay back in the time allotted.
2. Grants, depending on who supplies the funds and how much you’re given, sometimes have to be declared as income come tax time. This can affect how much you have to pay in estimated income tax, payroll tax, etc. Make sure you understand what your tax obligations are for any grant you accept.
Investors–particularly if you can attract angel investors–can be your bread and butter. At the same time, figuring out the logistics of attracting investors, using their funds and keeping them happy can be complicated.
1. How will you pay your investors back? Do they want shares of your company? Can you simply repay them when you start turning a profit? Do they want a portion of the profits for a number of years? Money is only good money if the terms by which you get it are agreeable to you.
2. Do you want to allow your investors to have a say in how your business is run? This can be problematic in most businesses but even more so in the medical field. Figuring out how to balance patients’ needs vs. the demands of investors is difficult on a good day. If you are thinking of allowing your investors to have business input, consider going after investors who are doctors and medical professionals themselves so that they’ll understand how to balance profit and medicine.