ON THE BUY SIDE OF LIFE
You are the proud new owner of an optometric practice. Before you break open the bubbly or make plans for expanding your empire, consider these five tips from Vision One Credit Union’s CEO, Bob Schultz, for avoiding common pitfalls.
DOLLARS & SENSE
For your accounting system to be effective it must:
- Alert you to financial changes in various segments of the practice (patient volume, billing amounts, collections, cost of goods sold and overhead costs) long before they hit the checking account; and
- Make data available so you can pinpoint the exact problem and more quickly assess a game plan.
Maintain continuity of care. You can also solidify patient relationships through expanded scope of care.
Your new-to-you patients have come to expect a certain “level of care”. In many cases they define this by the amount of time their doctor spends with them.
Your new-to-you patients have come to expect a certain “level of care”. In many cases they define this by the amount of time their doctor spends with them.
DO
- Maintain continuity of care. You can also solidify patient relationships through expanded scope of care.
Your new-to-you patients have come to expect a certain “level of care”. In many cases they define this by the amount of time their doctor spends with them. - Give yourself a “cash cushion” (a.k.a. working capital required in the business)
Business cash flow can fluctuate from month to month and as an owner, you are last in line to be paid. Cash flow fluctuations can occur for many reasons; most common are variable timing of receivable collections, seasonal patient flow, unplanned overhead costs and inventory cost increases. - Implement a foolproof accounting system for keeping accurate records and learn how to read the books and reports. Your accountant can help you accomplish both. A properly constructed, maintained and monitored accounting system can mitigate cash-flow problems and prevent the words “ran out of money” from ever having to leave your mouth. See the sidebar on effective plan basics.
- Keep things, especially the core office team, status quo until everyone has had a chance to acclimate.
Existing staff can help a new-kid-on-the-block maintain patient relations and operational flow. - Allow enough time for you, your staff and your patients to get acquainted. The most effective transition plans include the seller remaining in the practice long enough to train the buyer and introduce/recommend patients to you, the new doctor.
The goal of a good transition plan is to preserve the cash flow of the practice by efficiently passing control from the selling doctor to the buying doctor. This involves patient and staff retention and maintaining normal operations.
DON'T
- Shorten patient exams immediately. Otherwise, Your patients may look to find the level of care they're missing from someone else.
- Underestimate how much working capital you need or use your working capital to reduce your loan balance.
Otherwise...You may be here today but gone tomorrow…lack of adequate working capital is the number one reason new small businesses fail. - Be in the dark about your finances. Otherwise you may be left “empty-handed” with severely diminished cash flow or no cash at all. Not having a handle on your practice’s finances suggests a lack of understanding and a loss of control, two red flags for any lender.
- Immediately change-up staff, operations or equipment. Otherwise you may be row-row-rowing your boat alone. Unnecessary staff or operational changes disorient existing staff. The result: poor patient service, employee dissatisfaction and possible loss of patients and cash flow.
- Make a “cold” transition, particularly if you have never worked in the practice before. Otherwise you may find yourself out in the cold…literally. Without this much-needed reception of sorts, both staff and patients may not warm up to you as quickly as you had hoped.