Most buyers focus on what to ask a seller, but sometimes the most important questions are the ones you ask yourself.
To help buyers orient themselves, understand their options, and find the right practice, here are five questions (plus a bonus!) to guide the way.
1. Do I Understand the Purchasing Process?
I’m a Certified Business Intermediary, which means I’ve undergone extensive business valuations and data analysis training. I can tell you firsthand: few businesses are as complex and multifaceted as chiropractic practices.
In addition to the usual variables of size, location, income, etc., practices vary by technique, management style, treatment model, and patient demographic. As a buyer, you’ll be weighing those variables to find a clinic that creates sustainable cash flow.
Doctors rightly put their focus on patient care more than operational record keeping. Documentation is often fragmented and incomplete. As the buyer, you’ll need to sort through those fragments, understand the factors at play, and form an in-depth understanding of the practice.
Financial statements are a central part of this process. They are the best window into the revenue, expenses, and health of a practice. But they are often confusing to read and interpret.
Before you begin the practice acquisition process, make sure you have a sound understanding of practice attributes and the sales process steps. Financial due diligence is critical, and it pays to have expert help with the analysis to make sure you’re stepping into ownership of a stable and successful practice.
2. Does the Chiropractic Practice Fit Me?
This is the time to take an honest inventory of your strengths and weaknesses.
You want your practice to shore up your weaknesses and allow room for growth in areas of strength. That way, your learning curve is shortened, and your return on investment is maximized. Many buyers neglect this step, but it can make all the difference in the long run.
Consider your management experience, knowledge base, and skill set. You haven’t hired or managed employees before, but you do have experience with online marketing. In that case, you’d want to look for a practice with long-term employees who aren’t of retirement age. That way, you’ll have a strong support system as you learn the ropes of management. A clinic that lacks strong marketing systems is a great opportunity — you can buy at a lower price and put your expertise into boosting online presence and creating growth.
Every doctor is different, which means that every purchase is different. Taking stock of your talents and limitations will help you find a clinic where you can thrive.
3. How Big of a Chiropractic Practice Do I Need?
Most doctors excel at patient care. Helping people is why most chiropractors do what they do.
But buyers are often unprepared for the demands of managing a business. Depending on the practice model, the owner may spend as much time — or more! — on the business side as they do on patient care.
Demands on an owner’s time increase with practice size. The more staff, equipment, and patients are involved, the more time needs to be devoted to management, organization, marketing, etc.
While it’s commendable to dream big, buying above your skillset is a recipe for disaster. Learning the ropes of a small clinic is difficult enough, and even experienced owners need time to understand a new practice. When you’re still honing your management skills, taking on a large operation only increases the risk of burnout and failure.
4. What Can I Afford?
As high-quality candidates come in, we provide a thorough vetting and interview process to ensure a great match
On the flip side, you want to buy a clinic large and stable enough to support your personal and professional goals.
Many buyers are tempted to buy a fixer-upper. Every practice and market has unique requirements for success. While struggling practices can be acquired at bargain prices, it takes a lot of effort and expertise to turn one around. It usually takes an experienced eye to know what needs changing. Just like a fixer-upper home, expect the turn-around process to require twice as much time and money as you first thought.
It’s best to buy a clinic that supports a professional income right from the start. This is not unrealistic, even for young doctors with a typical SBA loan. If the clinic you buy has a strong net income, you’ll get a jump on your payments and come out ahead in the long run.
After ten years of ownership, most doctors will want to own a home, have student debt paid, and have savings in the bank. Look for a practice that will support those goals. From purchase, most buyers can expect 5% growth in the first few years (or up to 10% with smart marketing), followed by 2-3% annually as your time becomes more valuable to you than your money.
5. Do I Have the Time?
Finding a practice that checks all the boxes takes work. A lot of work.
The practice acquisition process usually requires 50-100 hours from the buyer. To secure a loan, expect another 100 hours. Any missteps, false starts, or wrong turns will add time and expense.
Be ready for the demands of the process and set aside the necessary time. Consider it an investment in your future — the time you put in now will determine the course of your professional and financial destiny.
The most challenging aspect is that you don’t know what you don’t know. Prepare as best you can, but be ready for unexpected bumps in the road. Don’t let them discourage you.
Where possible, connect with experts who understand the acquisition process. Qualified guidance can provide a welcome shortcut through some of the red tape.