You find a space that could work. The rent seems manageable. Then the other quotes arrive: insurance, equipment, software, a phone system, payroll support. Each looks reasonable on its own. Together, they raise a harder question: how much cash do you need before you can comfortably see the first patient?
Start with three amounts
Your opening budget should cover setup payments, the cash shortfall during the early months, and a reserve for uncertainty. There is no single price that describes a virtual solo practice, a leased primary care office and an orthopedic group buying equipment. Your services, location, team and payment model change the answer.
Separate money spent before opening from recurring bills. Then forecast when cash will actually arrive. The SBA’s startup-planning guidance provides a useful starting method: list expenses, obtain estimates, and distinguish one-time costs from monthly commitments.
Below are the categories to price, followed by two fictional budgets showing the arithmetic. Use them to organize quotes, rather than as market price estimates.
Price the work required before opening
| Category | What to include | Where to get your estimate |
|---|---|---|
| Formation and advice | Entity setup, legal review, accounting setup and ownership agreements where needed. | An attorney and accountant familiar with medical practices in your state. |
| Space | Deposit, work needed for the premises, furniture, signage and rent before opening. | Written lease terms, contractor estimates and applicable local requirements. |
| Clinical equipment | Equipment required for your actual services, delivery, installation, maintenance and supplies. | Supplier quotes matched to the services you plan to offer. |
| Licensing and insurance | Applicable registrations, professional liability and business coverage; include renewal dates. | Current issuing-agency fees and practice-specific insurer quotes. |
| Technology | Computers, connectivity, EHR setup, phone setup, training and any separately priced connections. | A written quote covering your clinicians, staff, locations and workflows. |
| People and launch | Recruiting, pre-opening payroll, training, website and initial patient-acquisition work. | Local compensation estimates and a dated launch plan. |
Record the amount, payment date and whether each quote is confirmed. A refundable deposit still uses cash. A financed equipment purchase uses less cash upfront but creates payments later. Put both in the months when you expect to pay them, without counting the full purchase and the financed principal twice.
Discuss your proposed services and premises with the appropriate advisers before signing a lease. A room that looks ready may still need work for your particular use.
Build a monthly cash budget
List rent, payroll, employer costs, insurance, software, communications, supplies, billing support and professional services. Add financing payments, tax payments and the amount the owner needs to draw from the business. Have your accountant review how those items should be treated in your accounts. Here, the question is when money leaves the bank.
For staff, a salary is only one input. Ask your payroll adviser to estimate employer taxes, benefits and other applicable costs. Include paid training before opening and coverage for time off. For software, include the features and usage you expect to need, not just the advertised entry price.
Next, enter expected cash collections by month. Appointment charges and claims submitted are not deposits. An insurance-based practice should model its own payer setup and collection timing. A cash-pay practice still needs realistic booking, cancellation and payment assumptions.
The business-plan template and budget workbook give you a place to enter setup payments, monthly cash outflows and expected collections. Leave unknown amounts visibly unfinished until you can replace them with estimates.
Two worked examples, with the assumptions visible
These are invented planning examples in U.S. dollars, not average startup costs, supplier quotes or a recommended reserve. They show how the same method works for different practice sizes. The operating shortfalls are assumed to occur before cash recovery; the worksheet lets you model your own monthly sequence.
| Cash requirement | Solo physician example | Small-group example |
|---|---|---|
| Setup payments before opening | $60,000 | $180,000 |
| Early operating cash shortfalls | $20,000 + $15,000 + $10,000 = $45,000 | $45,000 + $35,000 + $20,000 = $100,000 |
| Additional reserve chosen for this example | $15,000 | $30,000 |
| Total funding in this simplified example | $120,000 | $310,000 |
The solo example needs $120,000 because $60,000 + $45,000 + $15,000 = $120,000. That does not mean your solo practice needs that amount. Change the premises, staffing or expected receipts and the result changes. A group should also agree how much each owner contributes, when that money is available and how later funding decisions will be made.
Do not simply add every loss-making month if profitable months come between them. Track the cumulative cash balance, including the timing of financing, and find its lowest point. Then decide what additional cash cushion is appropriate. Extend the forecast if the practice has not reached stable cash generation by its end.
Test the assumptions that could change the answer
Run the plan again with a later opening date, slower collections and fewer completed appointments. Change one assumption at a time so you can see which one creates the largest cash gap. Avoid filling the schedule in month one merely because that makes the budget balance.
For an insurance-based practice, keep a separate list of payer applications and confirmed effective dates. Medicare enrollment has its own process through CMS. Its enrollment resources distinguish individual clinicians and organizational suppliers. Confirm the arrangement that applies to your practice and do not count an application as approval.
Also allow for the owner’s household needs. A practice can have enough money to pay rent while leaving its founder unable to take the expected income. Make that tradeoff visible before committing to a launch date.
Reduce commitments carefully
Ask which purchases are needed for the services offered on day one and which can wait. Compare a suitable fitted space with a larger buildout. Price staffing around actual clinical and administrative responsibilities. Compare complete software configurations so a low base fee does not hide several extra subscriptions.
Moxcares brings scheduling, intake, charting and revenue workflows into a connected practice platform. For a new practice, the useful question is which of your planned workflows it can cover, what remains with staff and what the complete configuration costs. Ask us to walk through that scope using your launch plan.
A smaller opening budget is helpful only if the practice can still deliver its intended care and handle the work around it. Before removing a line item, name the person or process that will cover the responsibility.
Common questions about startup costs
How much money should I set aside? Start with written setup estimates, a monthly collections forecast and your expected cash outflows. The largest projected cash gap plus your chosen reserve is more useful than a generic national total.
Does a group cost the same amount per physician as a solo practice? Not necessarily. Some costs can be shared, while larger premises, additional clinical capacity and more complex staffing can add costs. Build the group’s budget from its actual service plan.
Is the budget workbook a complete financial model? It is a starting cash-planning tool. Use your accountant’s advice for taxes, financing structure, financial statements and lender-specific requirements.
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