Don't bother with copy and paste.

Get this complete sample business plan as a free text document.

Download for free

Medical Practice icon Chiropractic Clinic Business Plan

Start your plan

Accurate Chiropractic

Financial Plan

  1. We want to finance growth mainly through cash flow. We recognize that this means we will have to grow more slowly than we might like.
  2. The most important factor in our situation is maintaining or growing our case average (i.e., the amount of revenue per case per year).  This is the area that will account for exponential growth.  While the goal of our external sales and marketing plan is to bring new patients to the practice, the focus of our internal program will be to increase the value of the service provided.
  3. We are also assuming start-up capital of  $43,575 (provided by the owner), and an initial long-term loan from a reputable funding source of another $164,000.

8.1 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following table as annual assumptions. The monthly assumptions are included in the appendices.  From the beginning, we recognize that collection days are critical. Interest rates, tax rates, and personnel burden are based on worst case scenario assumptions.

Three of the more important underlying assumptions are:

  1. We assume that there are no unforeseen changes in automobile insurance provisions regarding personal injury protection coverage.
  2. We assume that motor vehicle accidents and injuries will continue at a rate commensurate with that of the last 10-year period.
  3. We assume that work place injuries continue at a rate commensurate with that of the last 10 years as well. 
General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0

8.2 Break-even Analysis

  • Fixed costs are calculated as day-to-day running expenses and are averaged out over the course of 12 months to develop the one month figure.
  • Fixed costs include owner’s salary, rent, payroll, utilities, commonly used supplies and forms, necessary insurance, legal and technical support, professional memberships, continuing education, and employee benefits.
  • Variable Cost includes our costs for inventory sold, and direct costs per patient of chiropractic care.
Chiropractic clinic business plan, financial plan chart image

Break-even Analysis
Monthly Revenue Break-even $14,694
Assumptions:
Average Percent Variable Cost 3%
Estimated Monthly Fixed Cost $14,216

8.3 Projected Profit and Loss

Our projected profit and loss is shown in the following table, with sales increasing from just under $450K the first year to more than $1.2 million the third. Due in part to the nature of our business (service oriented, without the need of expensive production cost or inventory), we expect modest profits for the first year. Although our location is somewhat subject to seasonal shifts, particularly in the senior citizen population, or main target group is year round residents; therefore, we can expect linear growth as opposed to cyclical growth.  In other words, our year two earnings are based on growth from the average sales of month 12 in year one, rather than the twelve month average of year one. We anticipate this growth will level out somewhat near the end of year 3, as we reach maximum capacity in terms of case load for our present staff size. Prior to that point, we will review our business plan and determine if space additions are necessary and viable for our present office location, or if we should consider developing an office in a neighboring town. 

Marketing/Promotion expenses are estimated at $300 per client for the first year, decreasing over the next two years as word of mouth and corporate affiliations generate sales without extra advertising.

Depreciation of long-term assets is as follows: X-ray equipment over a thirty year period, chiropractic tables over a twenty year period, and computerized diagnostic equipment over a seven year period.

As with the break-even, we are projecting very conservatively regarding fixed cost, cost of sales, and gross margin. Our fixed cost and cost of sales should be slightly lower in reality, and gross margin higher, than in this projection.  In determining insurance, printing, and advertising expenses, we purposely projected higher than average costs. We prefer to project conservatively so that we ensure adequate cash flow.

The detailed monthly projections are included in the appendices.

Chiropractic clinic business plan, financial plan chart image

Chiropractic clinic business plan, financial plan chart image

Chiropractic clinic business plan, financial plan chart image

Chiropractic clinic business plan, financial plan chart image

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $449,055 $1,040,256 $1,248,739
Direct Cost of Sales $14,603 $24,846 $30,014
Other Costs of Sales $0 $0 $0
Total Cost of Sales $14,603 $24,846 $30,014
Gross Margin $434,452 $1,015,410 $1,218,725
Gross Margin % 96.75% 97.61% 97.60%
Expenses
Payroll $109,166 $448,544 $753,692
Marketing/Promotion $20,000 $20,000 $20,000
Depreciation $4,248 $4,634 $4,634
Rent $15,100 $22,335 $25,455
Utilities $5,500 $9,000 $11,500
Insurance $925 $2,965 $3,575
Payroll Taxes $0 $0 $0
Office Supplies $4,763 $11,353 $14,205
Legal Fees $0 $2,500 $2,500
Accounting Fees $1,100 $2,500 $2,500
Computer Technical Support $660 $792 $872
XRay Film and Processor Maintenance $1,925 $3,890 $5,980
Professional Organization Membership $770 $966 $1,110
Employee Benefits Package $6,435 $21,060 $42,120
Total Operating Expenses $170,592 $550,539 $888,143
Profit Before Interest and Taxes $263,860 $464,871 $330,582
EBITDA $268,108 $469,505 $335,216
Interest Expense $14,910 $12,275 $9,525
Taxes Incurred $74,685 $135,779 $96,317
Net Profit $174,265 $316,817 $224,740
Net Profit/Sales 38.81% 30.46% 18.00%

8.4 Projected Cash Flow

Cash flow projections are critical to our success. The monthly cash flow is shown in the illustration, with one bar representing the cash flow per month, and the other the monthly cash balance. The annual cash flow figures are included here and the more important detailed monthly numbers are included in the appendices.

Chiropractic clinic business plan, financial plan chart image

Pro Forma Cash Flow
Year 1 Year 2 Year 3
Cash Received
Cash from Operations
Cash Sales $112,264 $260,064 $312,185
Cash from Receivables $234,790 $645,903 $889,198
Subtotal Cash from Operations $347,054 $905,967 $1,201,383
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
Subtotal Cash Received $347,054 $905,967 $1,201,383
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $109,166 $448,544 $753,692
Bill Payments $139,334 $270,089 $266,050
Subtotal Spent on Operations $248,500 $718,633 $1,019,742
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $27,504 $27,500 $27,500
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $276,004 $746,133 $1,047,242
Net Cash Flow $71,050 $159,834 $154,141
Cash Balance $140,050 $299,884 $454,024

8.5 Projected Balance Sheet

The balance sheet in the following table shows managed but sufficient growth of net worth, and a healthy financial position.

Pro Forma Balance Sheet
Year 1 Year 2 Year 3
Assets
Current Assets
Cash $140,050 $299,884 $454,024
Accounts Receivable $102,001 $236,290 $283,646
Other Current Assets $0 $0 $0
Total Current Assets $242,051 $536,173 $737,670
Long-term Assets
Long-term Assets $104,000 $104,000 $104,000
Accumulated Depreciation $4,248 $8,882 $13,516
Total Long-term Assets $99,752 $95,118 $90,484
Total Assets $341,803 $631,292 $828,155
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $22,042 $22,213 $21,836
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
Subtotal Current Liabilities $22,042 $22,213 $21,836
Long-term Liabilities $136,496 $108,996 $81,496
Total Liabilities $158,538 $131,209 $103,332
Paid-in Capital $43,575 $43,575 $43,575
Retained Earnings ($34,575) $139,690 $456,507
Earnings $174,265 $316,817 $224,740
Total Capital $183,265 $500,082 $724,823
Total Liabilities and Capital $341,803 $631,292 $828,155
Net Worth $183,265 $500,082 $724,823

8.6 Business Ratios

The following table shows the projected businesses ratios. We expect to maintain healthy ratios for profitability, risk, and return.

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 8041, [Offices and Clinics of Chiropractors], are shown for comparison.

The following table outlines some of the more important ratios from the chiropractic industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 8041.

Ratio Analysis
Year 1 Year 2 Year 3 Industry Profile
Sales Growth 0.00% 131.65% 20.04% 5.93%
Percent of Total Assets
Accounts Receivable 29.84% 37.43% 34.25% 21.14%
Other Current Assets 0.00% 0.00% 0.00% 45.36%
Total Current Assets 70.82% 84.93% 89.07% 71.11%
Long-term Assets 29.18% 15.07% 10.93% 28.89%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabilities 6.45% 3.52% 2.64% 29.10%
Long-term Liabilities 39.93% 17.27% 9.84% 19.50%
Total Liabilities 46.38% 20.78% 12.48% 48.60%
Net Worth 53.62% 79.22% 87.52% 51.40%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 96.75% 97.61% 97.60% 100.00%
Selling, General & Administrative Expenses 58.41% 58.00% 52.82% 75.10%
Advertising Expenses 0.00% 0.00% 0.00% 0.61%
Profit Before Interest and Taxes 58.76% 44.69% 26.47% 3.98%
Main Ratios
Current 10.98 24.14 33.78 1.86
Quick 10.98 24.14 33.78 1.38
Total Debt to Total Assets 46.38% 20.78% 12.48% 10.80%
Pre-tax Return on Net Worth 135.84% 90.50% 44.29% 60.83%
Pre-tax Return on Assets 72.83% 71.69% 38.77% 27.59%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 38.81% 30.46% 18.00% n.a
Return on Equity 95.09% 63.35% 31.01% n.a
Activity Ratios
Accounts Receivable Turnover 3.30 3.30 3.30 n.a
Collection Days 55 79 101 n.a
Accounts Payable Turnover 7.32 12.17 12.17 n.a
Payment Days 27 30 30 n.a
Total Asset Turnover 1.31 1.65 1.51 n.a
Debt Ratios
Debt to Net Worth 0.87 0.26 0.14 n.a
Current Liab. to Liab. 0.14 0.17 0.21 n.a
Liquidity Ratios
Net Working Capital $220,009 $513,960 $715,834 n.a
Interest Coverage 17.70 37.87 34.71 n.a
Additional Ratios
Assets to Sales 0.76 0.61 0.66 n.a
Current Debt/Total Assets 6% 4% 3% n.a
Acid Test 6.35 13.50 20.79 n.a
Sales/Net Worth 2.45 2.08 1.72 n.a
Dividend Payout 0.00 0.00 0.00 n.a