Successful Strategies for Buying and Selling your Practice

Whether you are searching for a house, car or practice the key to finding and buying your dream is knowing what you want –and what you don’t want.

Finding your dream practice is made of 3 primary subjective and objective criteria. They include: The style of practice, the region or area, and the immediate profit generated.

Determining the “gotta haves” and “don’t wants” in these specific areas will improve your chances and reduce wasted searches.

First, decide where you want to live. Keep this as broad as possible to improve your selection. A smaller geographic area will substantially lengthen your search time.

Second, figure out the style of how you want to practice. Is your focus more medical or high end retail eyewear? Is there a specialty you like? Each has their pros and cons. Retail settings will have higher rents, require Sunday and evening hour, street signage or visibility and much more walk by traffic. Medical offices will have lower rents, little or no signage and much less walk by traffic. Expensive frame lines needed for retail settings require minimum stocking levels and more cash outlay. Also determine your socioeconomic make up desired for your patients. Often lower economic patients can be more rewarding as a doctor.

Third, figure out how much money you need to earn immediately (your personal budget). Does you spouse work? Do you have savings or family support. If you must earn an immediate income of $80,000 and have no other source of secondary income or help from family --- then do not look at small grossing practices with profits of less than $80,000. This is a waste of time for you and the seller.

Write these criteria down and only search for practices that fit. You can always amend your goals in the future – but if you change, then be diligent and write it down.

To review:
Determine the style of how you want to practice: Retail, high end eyewear sales, vision therapy, low vision, general medical eye health, contact lens specialties.

Do your personal budget: What is the minimum income you need to have immediately and for up to 2 years? After any secondary income from a spouse, family or second job. A general rule of thumb for adjusted profit is 1/3 of the gross. However, practices grossing under $300,000 will have a lower profit margin. If you need to make a minimum of $100,000 income and cannot wait 2 years or longer to build ---then only look at practices grossing $400,000 and higher. If you do decide on a smaller grossing office, then be realistic about how long it will take to grow the profits. Also secure a second part time job until the practice can sustain itself. Can you afford to earn less money and for how long? This will determine the smallest practices you should consider.

Where (city, state) do I want to practice? Cities and more popular areas will have a higher demand and often bigger price tags on the practices. Rural offices will often have higher net profits, opportunities to purchase the real estate and are often more value priced. Urban or retail settings have higher rents, more competitors and bigger populations. (patient opportunities)

Every practice has its pros and cons. There is no perfect practice. Your dream practice will become a reality much faster if you follow your written guidelines. The checklists below will help understand your budget, practice style preferences and narrow your focus on your search.

Current Monthly Income
Gross Salary/Owner Draw ...........................................................................____________________
Spousal Salary ...............................................................................................____________________
Gross Rental Income ...................................................................................____________________
Interest Income/Dividend Income...............................................................____________________
Other Income (__________________________________) ...............____________________
Other Income (__________________________________) ...............____________________

                                                      A. Total Monthly Income .......................____________________
Current Monthly Expenses
Residence Mortgage or Rent ........................................................................____________________
Mortgage Payment (rental) .............................................................................____________________
Rental Expenses .............................................................................................____________________
Auto Loan/Lease Payments ..........................................................................____________________
Installment Loan Payments ..........................................................................____________________
Credit Card/Line Payments ..........................................................................____________________
Utilities/Phone .................................................................................................____________________
Insurance (personal/household) .................................................................____________________
Food ..................................................................................................................____________________
Clothing ............................................................................................................____________________
Property Taxes (historical rate) .....................................................................____________________
Alimony/Child Support ....................................................................................____________________
Medical .............................................................................................................____________________
Childcare .........................................................................................................____________________
Other Expense (____________________________) ...........................____________________
Other Expense (____________________________) ...........................____________________

                                           B. Total Monthly Expenses                              ____________________
                                           C. Net Discretionary Monthly Income            ____________________
                                           (A - B = C)

                                           D. Net Discretionary Annual Income              ____________________
                                           (C x 12)


Choose your Style of Practice:

                                                                         Want                                  Don’t want

Retail setting (mall)
Medical professional bldg
Sunday hours
Evening hours
General optometry services
Vision therapy specialty
Low vision specialty
Contact lens specialty
High end eyewear
Buy a building
Dispensary
Professional services only

Choose your Geography:
                                                                        Want                                   Don’t want

Rural (small town)
Suburban
Urban (city)