It’s not like any of us set out to be a colossal failure in our business adventures, but it happens.
An average of 7000 businesses file for bankruptcy in Canada each year.
30% of small businesses won’t survive two years, and only 50% make it to year five. That’s a high failure rate when you consider that 98% of Canadians work in small businesses.
Many healthcare professionals graduate college only to discover the running of their practice is in fact another full aspect of their career that they are ill prepared for.
When I started college I had envisioned a lot of candle light and Enya music.
Reality hit me like an avalanche; the pace and volume of information I ingested was like inadvertently entering an eating contest every day for three years. It was much the same when I decided to be self employed, a sole proprietor, upon graduation.
The reality of my situation was vastly different from the mental picture I had.
I thought I was ready to take on the role of a sole proprietor, that my education had prepared me for life as a healthcare professional.
It became blindingly obvious that there was a whole other side to being a RMT, a side that I was unprepared for, the part where I actually had to run a business. The first 5 years in business would show me how much I had yet to learn and teach me some tough lessons about running a small business in the healthcare industry.
The business of being a healthcare professional comes with it’s own set of rules in addition to all the other more traditional rules of running a business.
There are layers of rules, processes, procedures, variations of business plans and models.
Why did I not know about this? Why did no one seem to know about this? Why did we not learn about this in professional development?
I really had no idea how to get started as a business woman, a sole proprietor, how my proprietorship fit into an existing clinic, or how to open my own clinic based on what I had learned in college.
So, I paid for that education too…eventually.
But first, I jumped into deep waters without a plan or a personal floatation device. I realize retrospectively that there was an easier way, but some people have to experience the shark tank for themselves. And I assure you, my first few years as a clinic owner were akin to swimming in shark infested waters.
I made a plethora of mistakes along the way and witnessed other therapists make their own host of mistakes as well. There were so many things I was just not prepared for, and an equal amount of things I didn’t know I needed to plan for.
After much floundering, I decided to take some business classes, read Business For Dummies, and hire a consulting company to help me stabilize the business.
Those years of change were rough.
I felt like Captain Jack Sparrow, shouting “Stop blowing holes in my ship!”.
The combined efforts of the consulting company I hired, business specific education, a ton of reading, and a collaborative group that I belong to, helped me get my business shipshape and under way.
I just wish that I had been better prepared for the business aspect of my career coming out of college.
I also wish there were more resources and maybe even some continuing education courses about the business for Massage Therapists. As a profession, we quite simply need to learn more about business.
1.The Myth of “Fair Rent”
The question often arises in conversations and on social media around what is “fair rent”.
I honestly think we’re asking the wrong question, and it articulates our collective lack of understanding of the business aspect of our profession. Although, in some situations we might actually be talking about “rent”, such as when a therapist leases/rents a commercial space.
It seems more accurate to describe the fees paid to a clinic as “association fees”.
It’s possible that the relationship between the therapist and the clinic is a straightforward room rental arrangement, but it’s equally possible the relationship is more of an association, like in a law firm or a real estate agency. In which case, there is so much more going on than just simply renting a room.
In order to determine value, we need to distinguish between rent and association, and itemize what services are offered in exchange for the fees. It means we can ask questions that more accurately determine what would be a fair fee based on the services offered.
Consider it this way, what is a fair price for a car?
We would need to consider several things about the car in order to determine it’s value, such as: Make, model, age, features, accessories, mileage, past, maintenance records, tires, etc. It is similar when we inquire about compensation as a sole proprietor/contract worker as well.
The questions could be:
- What services are included in my association fees with the clinic?
- What services are not included in my association fees but are necessary for me to conduct business?
- What services are negotiable, which are not?
- What fees are negotiable and which are not?
There are a variety of different clinics to choose from, with variations of administrative structure, clinic management services, policies, procedures, and unique business models.
Because there are so many variables and differences between clinics, it means there are a variety of association fees that are fair. So, it seems that the correct answer might be something we, as Massage Therapists, are all too familiar hearing…it depends.
2. Cost Benefit Analysis, Profit & Loss Statements: Putting It Into Perspective (know your numbers)
You’ve attended school for 2 + years, graduated, passed your board exams, and now you’re looking for a place to hang your shingle.
Or maybe you’re a seasoned therapist, and you just want to go to work, treat your patients, and go home.
And possibly, you’re one of those entrepreneurial marvels and you fancy opening or owning and managing your own clinic. Whichever business model you’re interested in, a solid cost benefit analysis (CBA) or Profit & Loss Statement (P&L) is a good place to start.
“It costs money to make money” is one of my least favourite expressions in business, however true it is.
If you’re a new graduate you’re already wracked with debt, and the thought of start up costs can be overwhelming. Let’s be honest, the risk of loss can be overwhelming for all of us, even successful clinic owners. The object is to plan for success and manage your cash flow.
A CBA will weigh the costs against the benefits in a chart, and should give you a better idea of what you can and can’t afford. The CBA is a technique that is a systematic approach to estimate and compare the benefits and costs of a project or business.
It will help you determine the feasibility of a business decision. It could prevent you from getting into a situation where you hemorrhage cash, and the risks outweigh the potential benefits.
A CBA can morph into, but should not be confused with, a profit and loss statement, which is a financial statement designed to summarize and assess the actual revenues, costs, and expenses incurred during a specified time period, usually a fiscal quarter or year.
This technique may help assess the bottom line by identifying any hemorrhaging of cash or assets in the business, and improving prudent financial planning for the future stability of the business.
3. Massage Therapist Contracts
Contract law is a mirky quagmire to navigate on your own.
It is always a good idea to consult with legal counsel before you sign anything, or if you have any questions or concerns.
Check with your professional association to see if they offer legal advice to their members (The BC association has a legal retainer for members.) I suggest that it is worth the expense if you’re signing a contract in relation to your Massage Therapy practice. This field has a unique language and is too complex for the average Massage Therapist to traverse on their own.
A contract is an agreement between two or more parties, and should be mutually beneficial. It will itemize the exchange of services, goods, or promises.
Contracts are a part of our life in many ways. Everytime you go skiing you sign a contract. When we buy a cell phone plan, lease a car, take out a loan or mortgage, buy insurance for our home or vehicle we are signing a contract. When we go to our physician we sign a contract to agree to receive medical treatment.
If you don’t like the terms of an agreement, or have concerns about a specific term, negotiate them to be something you can agree to. But, don’t ever sign an agreement you don’t understand or don’t agree with.
Contracts are a good idea in any business relationship. They clearly detail the services, expectations, rules, boundaries, and consequences.
They protect not only the investment of the clinic, but also the investment of all the therapists that work in association with, or under the umbrella of the clinic.
A well written contract is beneficial for all parties. Contracts are everywhere, they shouldn’t be a scary or threatening thing for Massage Therapists.
4. Sole Proprietorship: The Good, The Bad, And The Ugly Truth
From new graduates to seasoned therapists, I hear the woes of business and ensuing conflicts from poor management practices, poor communication and misinformation running rampant in the Massage Therapy world.
We are taught the value of our service, but not the costs associated with facilities and amenities needed to conduct such service. We are pumped and primed with what we should expect in compensation, how in demand our services are, and what we’re entitled to.
We were even lured into the programs of Massage Therapy with the enticing expectation of making a six figure income with less than 2 years of college education.
The cold hard facts about proprietorship, association with an existing clinic/associates, or contractual work and the risks associated with this business model were briefly touched on, if at all.
Canada Revenue Agency (or other international regulatory bodies for business) have definitions and expectations for those who would define themselves as sole proprietors.
Understanding that the freedom associated with proprietorships comes at a risk of loss is an important shift in paradigm for many healthcare professionals. We want the benefits of proprietorship without the risk of loss, and who can blame us right?
The ugly truth is, there has to be risk of loss if you want to be considered a sole proprietor.
Personal liability is greater in a sole proprietorship also.
If something should happen in a sole prop. business, if the business should be sued, or if it comes into financial trouble, you’ll be personally on the hook and creditors and lawsuits can come after your personal assets.
If an associate or clinic is audited, and the government determines that the relationship was closer to that of an employee/employer rather than a sole proprietor/contractor, the clinic owner will be at risk of having to back pay the government both the employee and employer portions of CPP, EI, and WCB (taxes and benefits).
The decision is not defined alone by what we say we are, but by how independent the associate is, the autonomy, and the risk of loss. I encourage all sole proprietors to understand how their government distinguishes between proprietorship and employment.
Even an unreasonable client, colleague, or clinic can sue you for breach of contract and you’d be personally liable. It’s important to think about how much risk you’re willing to incur in all your business decisions.
What a proprietorship is not, is a partnership.
Being a sole proprietor working and practicing in a clinic does not entitle the proprietor to a share in the company or make them a business partner. This may seem like a “thank you Captain Obvious” moment, but anecdotal evidence over the last 10 years in business suggests that this is a more common paradigm for registrants than not.
How does proprietorship of individual therapists fit into the business model of modern clinics?
The business model for the Massage Therapy profession is closer to that of a law firm or real estate agency than it is to a tenancy agreement.
While some clinics may choose to remain a tenancy styled model, and some may reflect a limited liability partnership, most clinics are like real estate agencies or law firms in their contractual relationship with their associate therapists.
They offer various associate packages and services in exchange for commision splits or flat fees, but it’s not just based on the splits or fees, there’s a lot more to consider.
- What training and education do you need/does the clinic offer?
- Does the associate require a lot of time and new patient leads provided by the clinic?
- Is the clinic new/is the associate new?
- Is there an existing network of referrals and marketing infrastructure to support an additional associate?
To summarize, being a sole proprietor has many benefits, such as flexibility, autonomy, and higher potential revenue. But, it comes at a cost of increased liability, responsibility, and risk of loss.
5. Business Models: Choosing A Clinic Or Practice Model That Meets Your Needs And Plays To Your Strengths.
There’s no single right answer that applies to all circumstances and individuals when it comes to deciding what clinic or practice model is best for you.
You might decide that working alone is what suits you best; A micro business would be your best option if you love the idea of doing it all, the admin, the paperwork, and the practice. Perhaps you are interested in building a huge corporation or franchise with hundreds of therapists and staff members.
Maybe you don’t want to think about the business side of your practice, you just want to go to work, treat your patients, and have administrative staff do all the paperwork for you. Maybe you would like a small local clinic with a solid team and tight knit network of professionals. Or, perhaps you’d prefer a huge integrated health centre with multiple healthcare providers to collaborate with. Maybe your preference is for corporate, sports teams, or mobile services.
From single person micro businesses to huge corporations, there’s really no wrong decision, except to choose a work environment that you don’t enjoy or that doesn’t meet your needs.
It’s critical to be able to analyze the financial viability of your business, project future expenses, plan for success, and understand how to calculate the value of associate fees/packages. Having a well written contract that is clear and fair will give you security and stability. It’s also important to choose a clinic model that meets your individual needs, it will set you up for success and growth. It’s crucial that you appreciate the role, responsibility, liability, and benefits of proprietorship, and how it fits into a clinic environment. These five things are fundamental to the success of a Massage Therapy business, whether it be a proprietorship, partnership, or corporation. Of course, there’s always the option to jump overboard and take your chances in the shark infested waters of small business. 62% of small businesses in Canada launch without a business plan. In the meantime, I’ve attached a P&L excel spreadsheet from a small Massage Therapy clinic. It itemizes the expenses of a small clinic for 2016 without any of the figures. You can use the list of potential expenses like a draft/template to create a personalized CBA or P&L for your own proprietorship. And, here’s a link to a quick and simple small business startup plan available online through Quickbooks.
- 5 Things You Need To Know About The Business Of Being A Massage Therapist - February 2, 2016