Opening an optometry practice cold could be one the greatest things you will do in your optometry career.
It can also be one of the most challenging, but iCare Advisors makes it easy.
There are many challenges, difficulties, and considerations one must make before attempting to take on this feat.
There are many strategies and resources out there to help you; however it can be difficult to determine where to begin and what resources to use when getting started.
We hosted a discussion panel at Vision Expo East 2017 where a couple of experts in the industry shared their knowledge on opening an optometry practice cold.
The panel discussion features the thoughts of:
- Eric Baas, OD – Optometrist and Co-Founder iCare Advisors LLC
- Bob Steinmetz, OD – Optometrist and Co-Founder iCare Advisors LLC
- Matt Geller, OD – Founder of NewGradOptometry.com and Co-Founder CovalentCareers.com
Who are iCare Advisors?
iCare Advisors are leaders in the profession who are committed to private practice. They have dedicated much of their careers to helping new graduates achieve goals of practice ownership and reach their full potential while overcoming the challenges of massive student loan debt in an increasingly competitive eyecare market.
Do new graduates have the capabilities to open cold with increasing student loan debt?
The answer is that new graduates absolutely have the ability and resources to open cold. You don't need to have money to open a practice. It is not like buying a home when you are expected to put down 20%.
Lending institutions have great confidence in optometry and optometrists and are more than willing to loan money to ODs to help in opening an optometry practice cold.
What is are the top 3 steps in opening an optometry practice cold:
- Choosing a location
- Creating a mission statement
- Understanding your patient demographic
Finding a location.
This is the first thing you should do when considering opening an optometry practice cold.
You need to choose a location that can support what you hope to achieve. You must understand the patient demographic in the area you are opening. iCare Advisors typically utilizes geospatial analytics to understand a demographic and how they are spending their eyecare dollars. This can be extremely advantageous. No matter what you do, you need to be extremely strategic in choosing a location.
Is it possible to open up next to a corporate entity?
Opening up next to a corporate office can be and is done all the time.
If anything, it secures the idea that the area can support a practice and might even provide you with a stream of patients who might be seeking an alternative experience.
After narrowing down a location, then you need to work with a broker to find an actual space to open up in.
Never sign a lease without having someone review it!
You must have the right mindset.
It is not easy to open cold. You therefore need to have the right mindset and the right motivation.
There might be mental hurdles along the way, feelings of anxiety and overwhelming; however, one of the first things you should do is create a mission statement and work around that.
You absolutely cannot overspend in the beginning.
Starting lean is key in a cold start practice and having a stream of supplemental income can provide as a major mental relief in the early days.
Starting lean is key. But starting lean does not mean starting cheap.
Obtaining supplemental income.
Associating with another practice can be paramount when opening cold.
Lending institutions want to see some form of supplemental income to know you have some starting cashflow. It also will allow you to make connections and learn from an established practice.
What does it cost to open cold?
You can open practices for under 200K. This number can vary dramatically however.
When you are working with lenders, they understand this. Most lending institutions have a sliding scale of payments. You might pay very little in the early stages, and as the practice grows your payments grow. This ensures you are not overburdened in the beginning when cash flow might be low.
What happens with my student loans?
Most clients will stay on their same payment schedule with their student loans.
If you have massive credit card debt and low credit scores, lending institutions likely will not even consider loaning to you.
To own or to lease?
This depends drastically on the location.
Building costs can vary depending on what area you are practicing. It is feasible to own a location from the beginning, but this does increase your overall debt to value in the beginning.
If you have the opportunity to own, this can be extremely beneficial. This will allow you to build equity in your building and your practice at the same time.
Basic business terms to know
Profit and Loss Statement - Outlays your expenses and your income on the top line, cost of goods sold, deductions. You'll utilize that to track your budget over time.
Cashflow Statement - Aggregates end line on your profit and loss statement, so you know if you are operating at a loss or gain. You can compare month to month and it gives you an idea of ho much cash you have on hand before running out.
Balance Sheet - Has assets and liabilities like equipment. This gives a snapshot of the practice at any given time.
Quickbooks is a good resource to utilize.
Remember that many electronic health records have software available that integrate within the business of your practice to help you track these things.
An alternative to opening cold?
Opening cold is not just for everyone. Owning a private practice isn't even for everyone. You can make connections early on in your career and talk to other ODs in your area. You might discover there is a current practice owner who wants to sell his or her practice. This might be a better option for you depending on your life and career goals.