By Justin Manning, OD, MPH, FAAO
March 30, 2022
A cold-start practice offers a blank slate for your dreams and business ideas. Though it is often more challenging than buying an existing practice, a cold-start practice can be the most rewarding, fulfilling and life-changing opportunity a business-minded OD can pursue. Every practice not only impacts the patients who walk through the door, but the lives of the team members who work in it, the surrounding communities that benefit from it and you and your family. You have the potential for a better quality of life as revenue and take-home pay grows.
Here are key actions you will need to take before opening a cold-start practice.
Get Clear on Why You Want a Cold-Start Vs. Buying an Existing Practice
The biggest question an OD should ask themselves before starting down the road to a cold-start practice is why. What is your “why” for opening the practice? Well-known author and speaker, Simon Sinek, defines the “why” as the purpose, cause or belief that drives every one of us. Business ownership and the entrepreneurial spirit should align with the OD’s “why.”
Opening a practice cold is extremely difficult – you’re in startup mode for awhile. This means long hours, late nights, anxiety and little-to-no take-home pay for some time. The “why” must be strong enough to sustain the OD during these challenging stages.
Define Your Target Demographic & the Team You Need to Serve Patients
You also need to ask “who.” Who is the ideal patient you desire to serve? Who do you need on your team to make your cold-start practice successful?
Contact Local Banks to Get Financing
After determining the “why” for opening your own practice, speak with the banks in your area. Each bank may have a slightly different process for securing a small-business loan to open the practice, so you must understand the intricacies of applying for a loan and what the bank needs to approve you for a loan.
Contact an Attorney to Set Up a Legal Entity for Your Practice
Speak with an attorney about setting up the legal entity behind your practice. Is an LLC, S-Corp or Professional Corporation the best approach for you? What fees are involved in each of these arrangements, and is an operating agreement needed? Will there be business partners involved at the outset or will you have 100 percent ownership in the business entity?
Prepare for Additional Challenges Due to Continuing Supply-Chain Issues
The pandemic and its associated supply-chain issues have caused added headaches for cold-start practices. Many office build-outs have been significantly delayed due to human capital and supply-chain issues. These supply-chain issues often mean certain materials and products are delayed or back-ordered. Healthy Eyes Advantage (HEA), which recently rebranded to PECAA, has had members delayed 22 weeks or more for office design and construction work. We’ve had members have to switch up their flooring and cabinets due to back-ordered products.
One of our members in Gainesville, Va, recently opened their practice cold. The doctor originally planned to open in May 2021, but faced many challenges in opening their practice at that time due to permitting issues and supply-chain related construction challenges. This meant a delay in opening their practice over their originally planned timeline. They began marketing their new practice well before the practice opened and successfully started seeing patients in February 2022. The long and careful planning paid off. They already have a 5-star Google rating.
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Tap Help from the Experts in Opening Cold Starts
There are several industry partners that can help a practice owner open successfully. Alliances like PECAA, IDOC and Vision Source all have resources for helping cold-start owners thrive. Consulting companies like Williams Group have paid cold-start programs an OD can take advantage of. It’s key that you find the right partner and take full advantage of all the resources these groups provide cold-starts.
Similarly, practice vendors can support you in the opening of your new practice. The majority of cold-start owners aren’t flush with cash, and therefore, have to budget appropriately to build-out their practice, purchase equipment and frames, hire staff and have enough working capital leftover to make it at least 3-4 months before the practice starts generating revenue. The right vendors understand this and want to partner with the cold-start for the long run, not just the short-term sale.