Ready to Grow Your Practice?

At some point after starting up your own private practice, you may begin to think about opening a second location. Before you sign the lease or loan to make location number two yours, consider the points below to help you decide if now is the right time.

POINTS TO PONDER

Begin With the End in Mind

Set aside plenty of time to define what you hope to accomplish by opening a second location. This will help you not only decide if you want to open the new location at all, but how that location will be set up. If your ultimate goal is to build a two-location practice, then your plans for expansion will look very different than plans for, say, opening five new locations over the next 10 years. If you plan on opening a pod of practices (eg, four–10), then you will need to consider if your existing systems can grow at scale. For example, some EMR Systems work well for managing patients at one or two locations, but are not suited for multiple location practices. You will also want to set up a point-of-sale system that can handle patient payments at multiple offices and a designated administrative office space where employees can manage schedules, file insurance claims, and process accounts receivable.

It’s Not All About You

Your goals may also need to be carefully planned out with your significant other and/or loved ones. Operating multiple locations will take an immense amount of time and effort, which can be stressful at times. Communicate your vision effectively with your family members so they are not caught off guard by the changes in your life.

Consider Expansion Options First

If you are merely motivated by size constraints at your current location, you may be able to expand your footprint and avoid having to open up a secondary location. Try asking your landlord if an adjacent space may be coming available soon—if so, you and your patients may be better served by waiting to expand into that space. You will still have to go through the challenges of space redesign and construction, but managing one larger location is still easier than managing multiple locations.

PREPARE FINANCIALLY

Whether you decide to open up a second location or expand your existing location, one fact remains the same: It’s going to cost money. Follow the two steps below to get yourself and your business ready.

Step No. 1: Plan to Upgrade

You would think that having opened one practice already would prepare you for the initial cost of setup, but if you ran out of space in a 3,000-square-foot, four lane practice, you are probably going to want your second location to be 4,500 square feet with six lanes. Be prepared to spend more on fixtures, frames, and other infrastructure as well.

Step No. 2: Calculate Your Liquidity and Cash Burn Rate

An optometry practice is one of the safest investments you can make; however, you will still need to push through the initial cash burn. Before opening your second location, figure out your current practice’s liquidity, solvency (the amount of debt owed on your existing practice), operating efficiency, and profitability, then budget for about 6 to 12 months of initial losses and make sure you have enough capital to keep your second location afloat until it can stand on its own two legs. This capital can come from your primary business, your personal savings, or a business loan.

STAFFING AND DELEGATION

Effectively managing a second location requires proper staff training and systems in place to hold everyone accountable. You may be used to making every decision at your primary location, but running a multi-unit operation requires delegation. Use an organizational chart to identify all of the new positions you will need to fill. This doesn’t have to be done immediately, but it will help prepare you for the eventual hiring stage.

A practice with multiple locations gives your staff the opportunity to grow. Each office needs an office manager, but multiple locations may also need a regional manager. This growth can help you retain your top talent by creating new opportunities for your rock star employees.

Before opening a second location, you as the owner must decide which aspects of your job you enjoy the most. Properly managing multiple locations is a full-time job, as is being a full-time optometrist. Unless you plan on working 80 hours each week, you simply cannot do both effectively. If you enjoy seeing patients the most, hire someone to manage your practice locations. If you enjoy the management side, hire a full-time OD to cut down on your direct patient care.

IT’S ALL IN THE LOCATION

Now that you have tackled the issues of staffing and cash flow, the next question is simply: Where should you open your second location? Consider the points below.

Examine Your Patient Data

One common pitfall you can avoid is opening a new practice location in a geographic area from where most of your patients are already coming. Although doing so may help jump-start your second location, you will quickly begin to cannibalize your primary location because the patient bases overlap too much. After all, if you are opening closer to many who are already your patients, why would they want to drive further to get to your primary location?

Instead, examine your existing patient data to see where there are individuals whom you are currently unable to reach. This inability could be due to distance to your primary office, or something as simple as traffic flow patterns. If there is an unmet demand in an area you are not currently servicing, opening your second location there would be a great way to reach them.

Don’t Move Too Far Away

Don’t underestimate the amount of time you will need to spend at your second location. Although it may be most time-consuming during the initial setup and staffing, you will always need to keep a close eye on it and visit regularly. Anything more than a 30- to 45-minute drive from your primary location will be difficult to manage effectively.

Visit Your City Planners

Municipal planning offices can offer additional insights that few practice owners think to tap into. A visit to your local city planners’ office can tell you which new developments are pending approval, and which have been approved. Upon reviewing these data, you are likely to see that most of the new developments are concentrated in one area. This information can be helpful in determining where your next location should be.

Owning vs. Renting

Most optometrists open their first practice by identifying a prime space and signing a lease. Although owning your office space is a great way to build equity and diversify your income, it is prudent to keep your priorities aligned. The optometry practice is your primary business. You should always open in the best location you can, even if it means that you will need to rent instead of owning the real estate.

KEEP YOUR HEAD UP

Despite some potential logistical challenges, purchasing a second location is an achievable goal and can be beneficial to you, your staff, and your patients. With the proper planning, location, and liquidity, you will be able to diversify your portfolio and reach more patients with a secondary location.