StudentDC Interactive

As I look at business plans, I notice that some grads try to tell the bank what terms they want for their loan - what kind of loan, how the loan package will be structured, even the term of the loan and the interest rate. I saw a business plan today that tried to tell the bank when a line of credit would be converted to a term loan. I’m not sure I understand the logic behind that. Another one stated that the borrower would pay back the loan over 10 years.

Good luck with that.

It’s about what the bank feels comfortable with and the kind of terms they usually give. For example, some banks might give you a line of credit for the whole loan, while some break it up into a term loan for startup, with a credit line. And some aren’t comfortable with credit lines; they want you to take the whole loan as a term loan (easier for the bank, and you have to pay interest on the whole amount.

Go with the flow, talk with several banks, and let them tell you. You can certainly negotiate with the bank, and try to get terms that are most favorable to you. But you aren’t really in a position to dictate, given that many banks won’t even talk with you. Just tell them how much you need and for what. Then take it from there.

It’s more important to get enough money.

Q:  Can I set up an LLC without an attorney? 

A:  Certainly.  Just go to the website of the Secretary of State for your state, find out the requirements, send in the forms and a check and you’re set.  Well, not quite.

You still must spend the time putting together an Operating Agreement.  This document is like a Partnership Agreement, and it spells out who is doing what with who and what happens if someone leaves the LLC or wants to be bought out.  On and on.  It is very important to get an attorney involved with this writing process. You can put together a draft and work out the issues, but have an attorney look at the document and listen to his/her advice.  If you have a single-member LLC, it may not be as important, but a multi-member LLC must have a signed operating agreement.  Don’t wait until you get “settled.”  Do it now. 

I’m not an attorney; my purpose is to help you get started with your practice.  Let me know if you have questions about this subject, or check out StudentDC.com  for more information about LLC’s. 

One of the first things a banker will want to do when you come in to talk about a startup loan is to check your credit.

You need to check your credit first to make sure everything is correct and that old negatives have been removed.  But credit reports are very confusing.  Here is a great video from  that takes you step-by-step through a credit report.

Read more about checking and repairing your credit on the StudentDC website.

This is a sad story I saw about a new DC in Wichita, Kansas .  Reading between the lines, it sounds like he got in too far with a lease commitment, then he couldn’t get patients in the door fast enough (or he couldn’t get them to pay) to meet his commitments.  If he had borrowed a little more and spent a little les on startup, he might have had enough money to pay his bills while he was building his patient base.

This is a classic example of “lack of capital.”  It can happen any time, but is most common in the beginning.  How do you overcome it?  A wise chiropractor told me “DSATM - Don’t Spend All the Money.”  In other words, dole out your loan proceeds very carefully, not spending on all your “wants” but focusing on the minimal needs you have in startup and the requirments to pay back your loans and make required payments (like the lease, utilities, etc.).  Then you’ll (hopefully) have enough money to pay your bills while you work to build up a good patient base.

This young doctor sounds optimistic.  I would encourage him to try again.  What do you think?

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 A tip I received from a student:

He suggested not using your personal name for your practice name.  While we all want to see our “names up in lights,” this may not be the best idea in some circumstances.  If you grew up in the town and you were a rowdy teenager, you might not want everyone in town associating  your practice with your past exploits in  high school.  On the other hand, if you were a model citizen, it might be great for you to tell everyone you’re back in town as a professional.
The biggest reason for not using your own name for your practice is in case you want to sell the practice.  It’s much easier to sell “Perfection Chiropractic” than to sell “Cosgrove Chiropractic.”  The student is looking at buying a practice, but he feels it will be difficult to make the transition from the old practice name, which is the owner’s name, to the name he wants.  One way to transition is to hyphenate the names.  For example, Cosgrove Chiropractic could transition to Cosgrove-Sutlow Chiropractic, then a year or so later the “Cosgrove” could be dropped.   

Choosing your practice name is one of the most difficult and important decisions you’ll make when you start out.  See this article in StudentDC for more tips for choosing a practice name