Thinking about buying? Before you leap, here are a few things you should look for.
Posted in Webinars on Tuesday, June 21, 2022
Purchasing a clinic is a major opportunity in a doctor’s career, and it’s nothing like buying a house or getting a mortgage. You’re not just shopping for location and amenities — you’re shopping for treatment model, philosophy, clinic layout, equipment, and a whole list of competing factors.
It can get a little overwhelming, but don’t panic: The process doesn’t have to be a painful one. For doctors who are setting out on their own, here’s what to look for in your first acquisition.
The Right Clinic
For your first practice purchase, don’t buy too large or too small.
Small or struggling clinics bring bargain prices and may have high growth potential, but they aren’t smart investments for first-time buyers. New owners lack the experience to reliably take a clinic from shaky ground to consistent growth. With loan payments knocking at the door, the risk involved isn’t worth the savings.
Buying an overly large clinic is also misguided. While it’s wise to look for a clinic that supports a professional income. Practices that require extensive management of staff, operational oversight, and services are a recipe for disaster with new buyers. Adjusting to ownership is a big enough transition — don’t complicate it more than necessary.
Instead, look for a clinic that covers your financial needs without stretching your management expertise too far. All owners will have to learn new skills, but the more you can match your clinic to your skillset, the better off you’ll be. For buyers who are new to running a business, look for a practice with long-term staff who are committed to the clinic and plan to stay and have established operations in place.
The Right Funding
Most new buyers will apply for a loan guaranteed by the Small Business Administration. SBA loans offer low interest rates and longer payment terms, which make them a good choice for first-time entrepreneurs.
SBA loans also involve a good deal of bureaucracy, which can make it tempting to look for alternative options. This rarely ends well. Most banks won’t offer conventional loans to chiropractic businesses, which have had a history of higher default rates and little to offer as collateral. Owner financing is not likely an option for many clinics, especially for broker-managed transactions, which will be the most supportive option for your first acquisition.
For most first-time buyers it’s best to stick with SBA lending and prepare yourself as best you can:
- Save for a down payment of at least 10%
- Keep your credit score high
- Build up work experience to make yourself an attractive prospect.
Work with a Broker
To further cut down on red tape, work with a broker. A broker with experience in the chiropractic industry can help new owners understand the operations and opportunities of clinics as well as connect buyers to a network of trusted lenders who are familiar with and understand chiropractic practice acquisitions. The broker can help navigate the complex lending process which will result in a higher probability of success. These resources are of considerable value during the buying process, and they free you up to focus on what’s important: finding the perfect clinic for your first purchase.
The Right Attitude
What you bring to the table is just as important as what your new clinic has to offer.
If you bought a clinic that fits your skills well, you may have ideas for improvement when you arrive. For example, if you have a good eye for online marketing, you might want to ramp up your clinic’s social media presence.
As tempting as it is to make changes, don’t get carried away too soon. Your patients need time to build relationships with you. You need to earn the trust of staff members before rewriting the rules. Once your staff and patients trust you, they’ll be much more willing to go along with any changes you want to make.
New owners must stay grounded, adaptable, and humble. Don’t walk in assuming you know what works and what doesn’t — even experienced doctors must learn the ins and outs of a new clinic. Don’t be afraid to change what needs changing, but make sure that you check your ego at the door and arrive ready to be a student of what has and hasn’t worked in the past. Make sure you are not fixing something that is not broke. Remember that one of the advantages of buying a clinic is avoiding reinventing the wheel!
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About Crystal Misenheimer
Crystal Misenheimer received her BBA from Baylor University in International Management Information Systems. She worked in database management in the non-profit sector prior to taking over the management and marketing aspects of three of Kevin's chiropractic clinics. As the Lead Broker for Progressive Practice Sales, Crystal has helped hundreds of chiropractors to successfully transition into the next stage of their careers. With an in-depth understanding of the intricacies of practice valuations, the constantly changing challenges of the current marketplace and the many complexities of practice sales, Crystal is the leading expert in the chiropractic practice sales space. You can find her regularly featured in industry podcasts, blogs and periodicals. She lives in Chattanooga, TN, and enjoys spending her free time hiking, practicing yoga, and spending time with her husband Kevin and their four children.