There are certainly many advantages to purchasing an existing practice but do you really know what you’re buying? Starting your own practice from scratch gives you more control and independence but will it be as successful? Which is better?
THERE IS NO ONE-SIZE-FITS-ALL SOLUTION
Doctors and Dentists have been plagued with this complex choice for as long as the professions have existed and they will continue to face it for many years to come.
Why? Because there is no one right answer, only the right answer for them.
Every situation is different, as in some geographic areas it might be harder to start from scratch than others; perhaps an opportunity has arisen for buying a practice that is already very well run or there isn’t an option to buy an existing practice at all.
Whatever your situation, it is important that you evaluate your options and choose the right one for you (even if you know someone who started their own medical practice and they highly recommend it!).
ADVANTAGES, DISADVANTAGES AND IMPORTANT CONSIDERATIONS
To decide whether buying a practice or starting your own is the right option for you, you have to look at the pros and cons of each.
BUYING A PRACTICE: THE PROS
Existing patient base
Inherit staff
Immediate cash flow (if the practice is profitable)
Systems already in place
Less debt than a startup
BUYING A PRACTICE: THE CONS
Aging/distressed demographics
Inherit staff
Difficulty changing vision and philosophy
Dysfunctional systems
Outdated facility, floorplan &/or equipment
STARTING A PRACTICE: THE PROS
Customised practice from scratch
New floorplan for efficiency
Implement new systems & technology
Develop your vision and culture
Develop your clinical standards
Pre-chosen patient demographic
Lease negotiated on your terms
Ownership of real estate is possible without a down payment
STARTING A PRACTICE: THE CONS
Debt of $400,000-$700,00
Need a 6-12 month cash flow & profitability plan
Need proper business and staff training
Cash acceptance is lower initially
Assembly of dozens of vendors
5Takes time to build rapport with patients
Once you know the advantages and disadvantages of both options, you then need to consider a very important question; that is “if I start my own practice, will I be able to survive without a salary or profits for the first year?”
Many new practices report taking at least six months to generate a positive cash flow so it’s important that you factor this into your decision as it can make or break you.
TO BUY OR NOT TO BUY?
While buying a practice can offer you immediate cash flow, an existing reputation and patient base, and skilled staff, it could also end up costing you more than it is worth.
Always make sure to do your due diligence before purchasing a practice or if you are thinking of starting your own, you need to spend the necessary time planning to ensure that you are profitable in that first year.
Need help with your decision? We can help you with your business planning, including creating a cash flow and profit strategy to ensure that whatever decision you make is a success. Just contact me via mitchell@affluenceca.com.au and I’d be keen to help.
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