Photo courtesy of Erich Mattei, MBA, who is seen here with Dr. Jennifer Chinn at a Business Builder by Akrinos practice management workshop.
Part three of three-part series on the financial comparison of cold-starting or buying a new practice. Click HERE to read part one and HERE to read part two.
By Erich H. Mattei, MBA
June 25, 2025
Planning to open a cold-start or purchase a practice is a huge, life-altering decision requiring conscientious planning.
In part one of this series, we looked at an overall financial comparison of cold-starting versus purchasing, and in part two, we examined how to design revenue and expense models for a new practice.
Now, in part three, we explore how to put together the final financial pro forma.
The pro forma is the culmination of your planning efforts. This analysis will help you determine the financial viability of your business, focusing on projected cash flows and debt service requirements. It is the definitive step in assessing whether your cold-start or acquisition is ready to thrive.
Within this crucial section of your business plan, you should include visual representations like screen grabs from your financial spreadsheets, a concise summary that encapsulates your findings and future financial projections.
Feasibility Analysis Components
- Start-Up Costs: All initial expenses required to get your practice up and running.
- Profit-and-Loss Projections: Based on your revenue and expense modeling for the one, two and three-year milestones.
- Overall Financial Viability: An evaluation encompassing total project cost, deal structure components and financial obligations.
- Forecasted Cash Flows: As detailed in your three-year financial snapshot.
Financial Forecast & Feasibility Checklist
- Profit-and-Loss: Leverage your revenue and expense modeling to project net profitability.
- Debt Service Requirements: This includes project cost plus deal structure elements and financial requirements.
- Project Cost: Your total capital investment combined with transaction costs and additional working capital.
- Deal Structure Elements: Terms of financing provided by banks and owners.
- Financial Requirements: Expected returns on down payment and investments in capital expenditures.
- Financial Feasibility: A critical comparison of profit-and-loss against debt service requirements to gauge overall business viability.
Determining Feasibility
Evaluating feasibility includes aggregating all project start-up or acquisition costs to cold-start or purchase the practice, identifying deal structure elements for amortization of the loan, projecting cash flows and comparing forecasting net operating income with cash flow requirements. Here is a comparative conclusion of feasibility to cold-start vs. purchase a practice:
Source: Erich H. Mattei, MBA
The suite of analytics you’ve meticulously compiled throughout this process is not just a planning exercise—it will transform into the financial backbone of your practice, guiding your budgeting as you navigate the cold-start or purchase process and will set the stage for your production and revenue targets for the first 36 months post-launch.
By constructing a thorough pro forma, you’re not only preparing to meet your business goals and lender expectations but also setting a concrete foundation for your practice’s future. This analysis will be the litmus test of your practice’s readiness to launch and flourish.
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Managing Your Budget, Forecasting Your Future
A detailed and well-managed budgeting and forecasting tool such as the Akrinos Financial Forecast & Feasibility Analysis is invaluable in effectively establishing and managing your start-up or acquisition budget and projecting business growth.
Use it for:
- Initial Projections: Before spending begins, list all potential start-up or acquisition costs to get a comprehensive view of your initial financial requirements.
- Expenditure Tracking: Keep the tool updated with actual expenses to maintain transparency in your financial status.
- Spending Adjustments: Analyze the data regularly to gauge finances and adjust future budgeting as needed.
- Cash Flow Forecasting: Project business performance synthesizing revenue and expense forecasts around metrics and operational key performance indicators.
- Financial Feasibility: Evaluate feasibility for the venture inclusive of all projections, debt service requirements and business performance goals
