The 3 Hidden Costs to Consider When Opening a PT Practice

Oct 25, 2022

Before opening a physical therapy practice, it can feel like there’s a million things to do before you feel “ready” to open your doors.

Business ownership is a completely different skill set than being a treating physical therapist.  

Sure, you may have taken a “business class” in school, but that only scratched the surface of what it takes to launch a brand-new practice — and more likely than not, it focused a lot on business theory rather than concrete steps. (If you’re anything like I was before I opened my practice, you’re reading tons of “start your own business” books and articles online.)

Looking back, I realize that the majority of my reading and preparation centered around boiler plate business concepts: creating your business name, setting up a corporation, putting together an equipment list, writing a business plan, setting up QuickBooks, and starting a business bank account.

These are all necessary, but they aren’t the most important things to consider when starting a new business.

Creating an actionable marketing plan that includes client acquisition, retention, client nurture, and a sales process will matter more than anything else you put in your business plan.  (Yes, even more than what type of therapy you’re providing!)

After all: if you can’t get clients, you don’t have a business.

The other major aspect to consider when starting a business is your budgeting and finance.  I know this is likely the most boring part of business ownership, but over time, you’ll come to realize that, when you “know your numbers,” it provides clarity and freedom, and it ultimately helps you achieve what you likely set for when opening your business – financial independence. 

Most aspiring business owners have “run the numbers” to figure out what they need to charge, how many clients they need to see, and what their take-home will be.  You’ve probably also figured out how much your startup costs will be for things like PT equipment, office equipment, and legal costs. 

However, after opening my own business and speaking with hundreds of other business owners, I’ve come to realize that there are other “hidden” costs to opening your own business that you need to consider and budget for.  This is especially true if you’re starting your business on a shoestring budget and will have tight margins at first – every little bit counts! 

The “Hidden” Costs 

Client Acquisition Cost 

I opened my PT business after working in the Bay Area for 8 years, and I had developed rock-solid relationships with local orthopedic surgeons who specifically referred all their clients to me. 

Logically, I figured that this referral partnership would transfer over: when I opened my cash practice, they would continue to send clients to me…

That didn’t happen.

I’ve heard the same story from my other cash PT friends who started their own businesses, and despite how amazing you think you are and how “solid” your relationships are with local doctors, if you’re opening a cash practice, they won’t refer to you

To thrive in a cash practice, an absolute non-negotiable component is having a marketing plan and system that generates consistent flow with new clients.

How much is that going to cost?

This depends a great deal on the size of your city or town, the competition, and how you decide to market.  In general — and based on my 7 years of running all types of advertisements — a safe marketing budget to start would be $500-1,000 per month. 

What you should also consider is that it takes 60-90 days for your digital ads to really perform well.  If you haven’t budgeted $3-5,000 in your initial quarterly budget, you should avoid this hidden and non-negotiable cost. 

Website Performance Cost 

Although this could fall under client acquisition, I gave this its own category because I feel this is an area where people try and save money… and it backfires.

You’ve probably looked online at average costs to have a website designed for you and concluded that you can DIY a website yourself on one of the many builders.  

I did the same thing.  It took me 3 months to build my website and it was just “OK”…and that’s being generous.  Aesthetics aside, the biggest issue was that my website didn’t rank well AND it wasn’t designed to capture leads, which is the only reason for a small business to have a website! 

Thinking you can build a high-performing website from a background in kinesiology is ludicrous.  (A website designer wouldn’t believe they can be a physical therapist!)

Let me save you time, headache, and frustration: hire a reputable company to build a “direct response” website.  

The obvious cost here is the difference between the DIY website and having someone build one for you, which is likely about $3-6,000.

I know that feels like a lot to shell out for something you could try your hand at, but there’s a MASSIVE hidden cost of trying to DIY…

A huge loss in new leads and evaluations from having an underperforming website.

When I went back and calculated the difference between starting with my own website versus starting with a professionally designed website, the “loss” of revenue would amount to $70-80,000 over the first 6 months.

That’s a cost you can avoid while helping your business take off from the start. 

Clinic Build-Out Costs

Unless you’re starting your PT business as a table in a gym, you’re going to need to build out a commercial clinic space.

When I was looking for my business location, I tried to find the “perfect” place that had everything I wanted.  

But let me save you some time: that doesn’t exist. 

If you find a premises in an ideal location, you’re going to pay through the nose in rent, and since physical therapy is a “destination” business (i.e., clients drive to us versus find us while retail shopping), you’ll likely want to save on rent and find a B-class space.

Most commercial locations will need a “build out,” which will include flooring, creation or breaking down of walls, new paint, ceiling tile replacements, new lighting, bathroom updates or repairs, and many other improvements.  Oftentimes, you can get your landlord to cover some (if not all) of these improvements.

If you are on a smaller budget and NEED to get just the right price per square foot for rent, you’ll likely compromise on the tenant improvements by handling those on your own. 

(If you’re not handy, that means you’re going to need either a contractor or a handyman.)

This is where this hidden cost comes in.  Depending on supply and demand, these improvements will take longer than expected and cost you extra cash, especially when one service is dependent on the other.

I’ve seen business owners spend upwards of $150,000 for a clinic build out.

So, it’s worth doing your homework on a location before signing the lease! Get contractors out to assess the property and provide quotes and work delivery estimates. 

From there, you can negotiate with your landlord for free rent to cover the build-out cost and time.  Even better, you can do what I did, and offer free service to contractors in exchange for their work — it’s a win-win for both parties!

These 3 “hidden” costs can add up fast and break your budget! As you’re establishing the game plan for your business, be sure to add these costs into your pro forma so you’re not taken by surprise. Knowing what to expect and including it in your strategy will make a WORLD of a difference.