5 Key Issues To Consider When Starting Private Practice
Over the last couple of months we have assisted various medical and dental clients with starting their private practice. While some have purchased an existing practice, just as many clients decided to go down the start-up route. Obviously, for some medical specialties, purchasing is really not an option.
In this article, I want to highlight 5 key considerations when starting out in Private Practice.
1) Purchase Or Start-Up?
In the GP and dentist space, purchasing an existing practice is a common scenario. Given the abundance of existing practices, there may be too much competition to start a brand-new venture.
There is also the potential to purchase an underperforming practice and turn it around. However, buying an existing practice can be expensive as buyer competition drives up prices, particularly in the dental industry.
Several of our clients have decided to start a brand new practice, as they saw the potential for new providers to be successful in areas that are experiencing rapid population growth. They key here is to start lean, and grow the business as cash flow grows.
For medical specialists and surgeons, starting a new practice can be done quite cost-effectively, particularly if you consider the option of sessional suites
From a finance point of view, there should not be too much difference in securing funding for a new or existing practice: as long as you have a solid business plan, a good personal financial position, and the numbers stack up, specialist finance providers will offer the required capital.
2) Business Partners Or Solo?
Whilst some of our clients were contemplating going into business with a partner, in the end they all decided to go solo. Often it comes down to differences in opinion about certain key issues or financial considerations, in particular where non-clinical partners are involved.
Where you do decide to go in business with a partner, it is absolutely essential that you address succession planning during the start-up phase of the practice. This includes establishing a shareholders agreement, a buy-sell agreement and key-man insurance to cover outstanding loans and facilitate succession planning.
3) Business Structures For Your Private Practice
In our experience, all of our clients have opted for a sole trader structure, whether they ran a specialist medical or surgical practice, a GP or dentist practice. In many of those cases they also implemented a service entity arrangement, to allow for effective tax planning.
It is imperative you work with a specialist medical and dental accountant, to get the best possible tax advice.
4) Financing Your Private Practice
Whether purchasing or starting a new practice, the structure of your finance will have a significant impact on your cash flow. You need to ensure you have sufficient access to funds in the first 2-3 years of your practice, and should negotiate flexible loan repayments terms. Even successful businesses can get into trouble due to cash flow issues.
From a personal point of view, you also need to put in place sufficient cash flow and funding options, and may be able to transition from an employed/public position to maintain some form of income.
We always recommend working with a medical finance specialist, as they can provide you with independent advice and have access to various providers.
5) Marketing Your Private Practice
It is essential you dedicate sufficient time, money and other resources to marketing, and thus growing, your practice.
Certainly, based on our experience, you should consider both online and offline marketing strategies.
If you are not found online, or are unable to engage with your target audience, you will find it hard to grow your practice. You may need to engage a specialist digital marketing agency to manage this aspect of your marketing in a professional and consistent manner.
In terms of offline marketing strategies, if you are a specialist medical or dental professional, one of your key priorities will be to manage relationships with referring practitioners.
The success of your practice will largely depend on how well you market yourself, so don’t ignore this aspect of your business.
If you are contemplating starting your own practice, please feel free to contact us for your free Strategy Session.
We offer a unique perspective that considers both your personal and business goals and circumstances. We have also developed a particular expertise in assisting various medical and dental clients through this process.
Contact Mitchell on 08 9466 8478 or Mitchell@affluenceca.com.au