Many nurse practitioners believe they must take out a business loan to start their practice. They have this grand fantasy of having a fancy and sophisticated practice with multiple employees, new furniture, and being housed in a new construction medical office. Listen to me, it is imperative that you do not take out a loan to start a business. The self-made billionaire Mark Cuban from the show Shark Tank once said “Anyone who starts a business with debt is an idiot.” He is right. Your goal is to be debt free in all aspects of your life if you follow the Elite Nurse Practitioner Model.

Remember, business debt is YOUR DEBT!  You are liable for every penny you borrow for your business. One of the reasons businesses fail and business owners declare bankruptcy is because they borrowed too much money that could not be paid back.

When you start your business with debt, you are starting on the wrong foot. It is hard enough for a business to generate profit. When your business is in debt, it will never generate a real profit until that debt is paid off.

It is just like your personal net worth: you can make $150,000 a year but if you have $400,000 in debt, you are poor, your net worth is in the negative. The same goes with your business: you can bring in $10,000 a month, but as long as your business owes money, it is not making a real profit until that debt is paid off!

Your stress levels will also be exponentially more if you have business debt. You will always have this monkey on your back. You will always have this financial obligation you must pay or you risk defaulting on that loan which will lead to the demise of your business.

Revenue – Expenses – Debt = Profit.

Let’s take a look at the hypothetical numbers for two different businesses where one has debt and the other does not. These will be estimates for the monthly profit and loss numbers during the critical 3-6 month startup phase of a practice. It is during this time your business will fail or flourish.

1. $4,000 revenue – $3,000 expenses – $1,000 debt payment = $0 profit
2. $4,000 revenue – $3,000 expenses = $1,000 profit.

Adding a debt payment to your monthly expenses will eat into your profits. This debt payment will vary based off its terms, but business loans typically are 5 years in length (we are talking about business loans, DO NOT START A BUSINESS WITH CREDIT CARD DEBT). This payment might not seem significant, but during the initial 3-6 month startup phase of your business, that extra money will be needed to go towards marketing your business so it can grow! Do not assume your revenue will be more than its expenses either, often times this is not the case during the first 3 months.

You will not know how profitable your business will be. NO ONE WILL! That is the risk and part of the fun of starting a business. It will either fail or flourish. If you maintain a job and fund your business with your personal money until it goes on autopilot, then when it becomes profitable it will be 100% yours! You will not owe anyone a dime. This is why it is critical to consider utilizing the Elite Nurse Practitioner Model when you start your business. It will mitigate the risk which will ultimately protect you financially.

So how do you stay out of debt with your business?

1. Save money for the initial startup costs: It does not cost that much to start a niched Elite NP side business. Remember, your business should be part-time. Start small and cheap and grow from there. If you want to start a side practice, then begin saving immediately. If it is within your means, put aside $500 a month into a separate checking account called “business startup fund.” During the time you are saving up, get all the small details and busy worth for your business out of the way (making your website, creating policies/procedures, learning your niche skill, etc…).
2. Create a budget: Be reasonable and stay strict with following the budget. Creating a practice should not cost you an arm and a leg.
3. Keep business expenses low: You do not need top of the line furniture and medical equipment. Used furniture and medical equipment work just fine. As long as these items are in decent shape and not from the 1970’s, your patients wont care. They are there for your service, not a fancy waiting room chair. You would be amazed at how cheap you can find used exam tables, vital signs machines, otoscopes, and other pieces of medical equipment online.
4. Partner with someone: I never recommend starting a business with someone else. It brings drama and headaches into your business life. Only consider partnering with someone else if you absolutely must for business funding.

The most important way to stay out of business debt is to simply save for the start up. If you cannot save $500 a month, then you need to reevaluate your personal expenses. Every nurse practitioner should be able to find a side job that can fund your first business. This is what I did. I picked up an extra shift every week in an emergency department to fund my first business. It was hard work, but it was worth it. I was debt free with my first business!

When it is time to start your second business, your first one should be generating a profit which can then be used tax free to start the next business. I discuss this principle in detail in my upcoming book The Elite Nurse Practitioner Model. Remember, do not start your business with debt, you can open a profitable and flourishing side practice on your own!