A naturopathic physician looks at ways to fund her practice.

What's the Best Way to Fund a New Business?

There are many ways you can go when it comes to funding your business needs - cash, credit, loans and leases, to name a few. How do you know what best suits your needs?

Owning your own practice involves a lot more than simply being a skilled healthcare professional. To be successful you’ll also need to be part HR manager, part marketing genius, part operations specialist, oh, and also a financial guru.

But one of your most important ‘jobs’ is always going to be financial manager. If you understand how different financial products work, you’ll be able to decide what makes the most sense for your immediate needs and long-term goals. Let’s look at an example.

Case Study

Nancy ND wants to expand her practice to a second location in another part of the city. She’s currently juggling a backlog of patients, and many must drive across town to her office. If she adds a second location, she can make the patient experience better both by reducing travel time and by shortening the wait for an appointment.

Nancy is very smart with her money. She wants to make every penny work hard so the cost of setting up doesn’t impact her ability to be profitable sooner rather than later.

For the new office, she’ll need:

  • A facility
  • Waiting room furnishings
  • Office and desks, chairs and storage; private area for breaks
  • Staffing
  • Marketing
  • Technology
  • Exam room equipment

Nancy anticipates it will cost $150,000 to $200,000 to set up the new location. There are several ways she can fund this venture. Let’s take a look at the options, and then see what she went with after considering the options explained below.

Types of Funding


Credit Card

Bank Loans


There are two types:

Operating Lease – lower payments, and you can purchase the equipment at the end of the term for fair marketing value. You can trade in the equipment and start a new lease, or buyout at the end.

Capital Lease – higher payments, with a very inexpensive buyout at the end ($1 or 10% of the purchase price are common). This nominal buy-out is sometimes called a “PUT” – Payment Upon Termination, and the buy-out is required rather than optional.

Equipment Loan

Working Capital, Unsecured

What did Nancy decide?

Let’s see how Nancy decided to manage the expansion of her practice to a second location.


Nancy has chosen to lease a space that’s already built out for a medical practice, rather than building from scratch. Real estate can be a good investment, but right now she’d prefer to invest in her practice. Leasing will save hundreds of thousands of dollars up front, and she’s made a deal with the building owner for right of first refusal should they ever decide to sell. Nancy sees that as a win-win.

Nancy will sign a lease.

Waiting room furnishings

Realizing that visiting a medical practice can be intimidating, and patient comfort is important to a good experience (and can generate word-of-mouth referrals), Nancy wants to create a warm, welcoming, safe space for both adults and children. Instead of rows of hard “reception seating,” she intends to buy gently-used furniture from a friend’s newly updated family room. Soft, squishy sofas and oversized armchairs will help people relax. Paying cash will get a lot more bang for her buck.

Nancy will pay cash.

Office and break room furniture

Great staff is even more important than marketing, in Nancy’s mind, because the team increases production while providing a better patient experience. When it comes to receptionist and staff areas, Nancy knows her team will be most effective when their workspaces are laid out efficiently and comfortably. She’d rather spend a little bit more on good ergonomic chairs than go cheap and possibly have to deal with back pain down the road.

Nancy will use working capital.


Her current office manager will manage both locations. Each office will have a dedicated physician’s assistant and receptionist, so she’ll need to find and place those roles.

Nancy will pay staff out of generated revenues and use her working capital if needed. She has a personal line of credit available as a backup in case of emergencies, but she’d prefer to keep that on hand for, well, personal use.


Even though there’s currently a lot of demand for her services in the new part of town, Nancy will need to do some marketing to ensure there’s enough traffic to make the location self-supporting. She’ll invite her current patients to an open house and send a direct mail invitation to prospects in the area. Of course, she’ll need new signage, and printed materials with the new address. She may join the neighborhood association and do some sponsorship.

Nancy will use working capital.

Computers, printers, practice management software/EHR equipment

While Nancy’s considers herself a bit of a techno buff, she knows when she’s out of her league, so she’s bringing in a consultant to ensure wiring is appropriate for all the digital needs of the practice. Even though the previous tenant was a healthcare practitioner, she wasn’t as up-to-date as Nancy’s plans require, so there’s some work to be done.

Nancy will also need to purchase five new computers, printers, and practice management software. While she’ll purchase the hardware outright, much of the software, including EHR products, is cloud-based and licensed per seat.

Nancy will use equipment financing.

Equipment for one exam room

Last but definitely not least, Nancy will need to equip the treatment rooms appropriately. Purchasing a mix of new and high-quality used items will cost approximately $100,000.

Nancy will use equipment financing.

As a business owner, every day is a new opportunity, and every day comes with a number of decisions to be made. Having a solid understanding of the many aspects of running a business will help lead you to greater success. Recognizing opportunities, and knowing how best to take advantage of them, is one of the most valuable strengths you can have as a (business owner/entrepreneur).

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