I presented a lecture to optometry students at Vision Expo West two weeks ago and it seemed to generate a good response. I recommended a different business model for opening cold than the one I usually see outlined by consultants and practice management instructors. My approach is much more practical and costs much less than the typical practice start-up plan. It's enough to make new graduates actually believe they can do it! Of course, that's the point and they absolutely can do it.
Optometry school graduates are not the only folks interested in owning a practice. Many doctors in various employed modes of practice or in retail leases are contemplating it as well. I'll share my practical approach in this article and in a few more to come. I opened my practice cold using this method and I've helped other ODs do it as well. It works.
The road to ownership
There are many excellent paths to owning your own practice. You could buy a practice from a retiring doctor. You could buy into an established practice and become a partner. There is nothing wrong with these scenarios and they may be the best option in many cases, but the method I like best, and advise doctors to look strongly into, is opening cold. Starting your own practice:
- Is the least expensive way to own.
- Is the one sure way that I'm sure you will not pay too much.
- Is the one sure way that I'm sure you won't buy things you don't need.
- Allows you to follow your own vision.
- Allows you to build your own reputation.
When to do it
Many new optometry grads today want to work for a year or two before opening their own practice. I understand the reasoning. New ODs have high student loan debt and they would also like to gain some real-world experience. There is no right or wrong answer here, and it is a personal decision, but it is often based on a concept that owning a practice is extremely expensive. That is not necessarily true and if the cost of start-up is low enough, the decision may change.
I think the best time to open a practice of optometry is directly out of school. Generally speaking, life only gets more complex as time goes on. It becomes harder to do it. A new graduate has the highest level of drive, energy and idealism and those are factors that are extremely important in starting a business. In the first few years out of school, many people begin to have families, buy cars and other consumer items, and they buy a house. The cost of the lifestyle increases dramatically and it becomes difficult to take a step down in income. As life gets more complex, it takes more time to manage it. Many optometrists intend to open a practice someday, but never feel they are at the right time to proceed.
I realize that even with my low-cost approach to opening cold, it may still be impossible for many people right out of school. If that's the case, go ahead and accept a job but stay determined to save money and reach your goal as soon as possible.
The start-up cost
I think of the cost of a start-up practice as having two parts: the initial start-up costs and the ongoing monthly expenses. As we develop a mini-business plan over the next few tips, we will keep these separate and we will consider both.
The initial start-up cost can vary greatly based on many factors. Here is one simplified example that is fairly typical:
·Frame inventory (500 frames X $60)
·First three months expenses
A price of nearly $300,000 is enough to make anyone think twice and probably choose another route. Fortunately, with some creativity, you can own your practice for much less.
Tune in next week and I'll show you how to open a new practice for $62,000. That's the price of a new car. A very nice car, but a car! That is a price tag that many ODs can arrange to have financed, or borrow from a relative, or work hard and save up. Here are some additional benefits of working with a low start-up cost: the monthly loan payment is quite affordable and the total risk of the business venture is reduced.
I know critics will say that one of the leading causes of new business failure is underfunding and that it would be foolish to start a practice without far more resources than I'm advocating. I say another leading cause of new business failure is spending far more money than necessary and not being able to pay the bills! Stay open-minded and wait until you see more next week.
As my friend Irving Bennett, O.D. says: don't open cold - open hot!