Cold-starting an optometry practice can be one of the most rewarding and challenging things an optometrist can do.
Full of ups and downs, it’s definitely not for everyone. As I’ve written before, there are opportunities and tradeoffs to both owning a practice and working as an associate optometrist. There’s freedom down both roads.
For those who want to pursue the opportunity, it takes a lot of planning, patience, and some sacrifice. From everything I’ve read, heard, learned, and experienced personally, there are 3 factors that can make or break any new business.
These aren’t the typical business tips – secure lending, keep occupancy costs low, etc.
Instead, they’re all on the personal side of your life. If you work on these 3 things, you can improve your new practice’s odds of success and your ability to handle the ups and downs that come with it.
Have a Plan for Personal Cash Flow
How are you going to pay the bills? It’s super important to have a plan to cover your living expenses for 2-3 years. It’ll take time for the new practice to be able to support your lifestyle. In the beginning, it’s just trying to survive.
You don’t want to be in a position where you can’t cover your living expenses and need to take cash from the business. That’s a critical resource the business can’t go without.
Paying the bills can be a huge point of stress. Knowing you have that covered can be a huge relief and let you keep a cool mind around the business.
If you’re getting a loan, the bank will likely require you to have a plan for cash flow. You will need to associate with other practices 2-3 days a week or have savings set aside. Different banks may favor one more than the other.
How do you plan this out? Start with listing out your monthly expenses and anything you expect to come up. Look for areas you can trim. Try to keep the household as lean as possible in the early years. Again, you don’t want the household to put pressure on the business. In fact, I created a spreadsheet to help you do just that – click here to download and adjust the tool as needed.
Once you have a good grip on your household spending, think about how to fill the gap. How many days do you need to associate at other practices to fill the gap? Do you have a spouse that works? Other income sources?
Keep cash in the bank. This gives you some breathing room to handle unexpected expenses that can creep up (life happens, after all). Banks may require a certain level of cash set aside, and you may need to pay lease down payments, attorney retainers, and other expenses before lending kicks in.
Preparing your personal finances for the cold-start should lead you to think carefully about your debts. For example, what should you do with student loans? Think about your personal and professional goals before deciding on a student loan repayment plan.
It’s tempting to take a bazooka to the loans and pay them off ASAP. Committing to a short repayment term with a big minimum payment could hurt your chances for lending and squeeze your monthly cash flow.
If a cold-start is in the cards, the name of the game is flexible cash flow and liquidity. To keep your fixed payments low, you may opt for a longer-term or an income-driven repayment plan. You can always adjust down the road as the business picks up.
The same goes for buying a house, taking a mortgage, or any other debt you’re considering. It may make sense to hold off until the practice is up and running.
Knowing your bills are paid and you have cash available can relieve some stress in the early years. This helps you to think clearly about the practice, avoiding short-term decisions that don’t work long-term.
Make Sure Your Spouse or Partner is Onboard
Starting a business is freaking hard.
It takes most of your time and energy, and there will be plenty of long hours, stress, and sacrifice. You’ll be thinking about the business all day and at home. You’ll find yourself working evenings and weekends.
If you’re in a relationship, this can all be hard on your spouse or partner. I know my wife picks up the slack with our kids and responsibilities around the house when my business demands it.
Before starting the practice, be sure your spouse or partner is on board with it. Talk it through a lot and make sure everyone has good expectations. Talk about why you want to own your business and what the steps look like. How long until it breaks even? How will the bills get paid? What can go wrong? What’s the long-term opportunity?
It may make sense to delay or put it off altogether. If you move forward and your spouse or partner isn’t onboard, there’s a lot of opportunity for stress, frustration, and resentment to set in. Something will have to give – either the practice or the relationship. One of them (or both) will suffer from it.
Have a Great Support Network
Some times will be great, others incredibly stressful – sometimes all in the same day! You need a good support network to celebrate wins and pick you up when things are looking down.
Your significant other is the first line of defense. He or she can be the biggest ally and source of support you’ll ever have. Friends and family are important. But be careful to surround yourself with people full of honesty and optimism. You’ll fill your own mind with head trash, doubts, and concerns. You don’t want other people filling it up too.
Last, but not least, immerse yourself in your profession. Meet other optometrists and get involved with local associations. Pick their brains and bounce ideas off of them. Get mentors and learn everything you can from them. Some of your best ideas may come from other practice owners who’ve been there and done that. And the internet allows you to connect with any optometrist anywhere.
Read articles from optometry publications like Review of Optometric Business and Eyes on Eyecare. Dive into books from optometrists like Dr. Neil Gailmard’s Practice Management in Optometry and Dr. Adam Ramsey’s Play Chess Not Checkers.
Celebrate your wins – no matter how small – with your people. During tough times, have peers you can vent to and lean on for support. They’ll be the only ones that really understand what you’re going through!
When it makes sense, connect with consultants like iCare Advisors and Akrinos. They can help your cold-start from the beginning and lower the learning curve.
There’s still a lot of opportunity out there for new practices. Plan to cover your monthly bills and have some flexibility with cash flow. Be sure your significant other is on board, and lean heavily on your fellow optometrists. These 3 things will help you celebrate the good times, work through stressful times, and increase the odds of a successful start up.
Want to learn more about financial planning for cold-start optometry practices? Check out this 3-part video series I did with Erich Mattei of Akrinos as we dive into what you need to know.
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Any questions about preparing for a cold-start? Want help putting together a cash flow projection? Let’s chat! Schedule a time to talk or email me at evon@optometrywealth.com.
Optometry Wealth Advisors LLC
