Like any business, running a successful treatment center calls for detailed financial planning. This is the process of reviewing your company’s current financial state, your future goals, and your plans to achieve those goals. Writing a financial plan helps you create long-term strategies for your center’s growth.
On top of that, most financiers and investors will ask for your detailed financial plan before they give you any start-up funding. This is why treatment center entrepreneurs need to research startup funding guides and seek advice on how to apply for funding. Read on for a quick guide on how to write a financial plan and get startup funding for your treatment center.
Identify Your Vision and Long-Term Goals
Before creating a financial plan or applying for startup funding, you must clarify your vision and long-term strategy. Your vision will dictate how much money your center will need and when it will need it. Investors will also buy into your vision so it needs to be a compelling one.
Write a Financial Plan
Once your vision is clear, the next step is to draft a business plan to prove the viability of your rehabilitation center. Any financier you approach will ask you for a financial plan that explains why you need funding. Constructing a detailed plan will help you know the ins and outs of your business. This means that you won’t get stumped by any questions lenders ask you when you approach them for funding.
While writing your financial plan, try and come up with several business scenarios that may happen over the coming year. For instance, you may open your center and not get any clients. Maybe your key employees may resign.
Think of possible risks to your business and strategies you would follow if things don’t go as planned. Doing so will give your investors confidence that you will be able to push through adversities that come up.
A financial plan will show your key assumptions such as how many patients you expect to have, your prices, your revenue, and your profit. Once you have your projected revenue, you need to figure out your operating expenses as well as other costs your center will incur to achieve your projected revenue.
This is the cost of goods sold (COGS). For instance, how much will it cost to rent or buy a property? How many support staff will you need? How much equipment and furniture?
These costs are what you may end up seeking startup funding for. Your financial plan may also reveal that you need funding to increase your operations or to maintain a competitive advantage. Any reason you have for funding should be clear from your financial plan.
The financial plan will help you produce a projected balance sheet, profit and loss statement, and cash flow statement. These are the key documents that most financiers will ask for. At this point, you should also decide how much funding you need from lenders and how much from equity.
Seek Board Approval
If you have a board of directors for your center, you may need to present to them your financial plan for approval. Check your stock purchase agreements and investor rights agreements to see what your obligations are. Some board members may not want to give away any of your company’s equity to investors so you may need other sources of funding.
Approach Lenders and Investors
The next step after writing your business plan is to approach lenders, investors, and donors for your startup funding. Lenders are the people you approach if you want to raise your startup funding via debt. The main suppliers of debt financing are banks, cooperatives, and other commercial institutions.
The advantage of debt funding is that the control of the company stays with you and your shareholders. You can also deduct interest on debt payments from your income tax, hence lowering your tax bills.
You can also get funding from investors that want to buy some company equity. For instance, an angel investor or venture capitalist could invest money in your company in exchange for shares. There are many venture capitalists with high liquidity looking for worthy causes to invest in.
The disadvantage is that you will lose some ownership of your center and will have to share profits with the investor. In case your business goes bust, the investor loses their money. This is why many investors take an active role in the business, which could be good or bad depending on your dynamics.
Another great source of funding that you should investigate is subsidies and grants. Most states have financial schemes that they roll out to encourage entrepreneurship within their geographical area. There are also many organizations and startup platforms that provide grants to companies that improve social welfare.
You’ll need to write a report showing why your company qualifies for a grant or subsidy. If you get the grant, you may also need to have clear auditable reports of how you used the money. Still, this is free money that will benefit your business so it’s a source of funding you can’t afford to ignore.
Find Startup Funding for Your Treatment Center
Now that you have different avenues to access funding, you can prepare your pitch and approach investors. One of the best startup funding tips we can give you is to ask for feedback from any investor that you approach. Find out if your business is fundable or not.
If not, ask them what you could do to make your treatment center more attractive to investors. Finding out this information will help you get funding quicker as you improve with each pitch.
Another point to be aware of is you should not raise more funds than you need. You will pay interest on any loans and your company ownership will be diluted if you give away equity. There is no point in doing this for the money you don’t need. Keep your financial plan tight and raise only what you need to operate your business.
If you need help with accelerating the growth of your rehab, request a consultation with Faebl Studios to find out more about how we can help you.