Do You Treat Your Practice Like a Business?
Do you treat your practice like a business?
Or are you just trading time for money…thinking one day everything will just work itself out and your business will magically be worth something?
Unfortunately, the majority of private practice owners do not think this through.
Nor take it seriously.
Let’s take a look at two owners’ stories I recently talked with…
“I am my business.” Paul’s Story.
We’ll call the first owner Paul (not his real name of course).
Paul is at the end of his treating career.
Like most of us, he had graduated PT school, earned his degree, passed his license and went to work for someone else.
He did this for a 3.5 years.
Eventually, as his skills developed, and his young family grew, he decided to strike out on his own…
That was 29 years ago.
In the beginning Paul believed he would just deliver the “highest quality PT services in his area” and word-of-mouth would spread like wild-fire…
But it didn’t quite work out that way.
Paul would run out and get a few mercy referrals from the local docs…
Then he would run back to the clinic to treat them.
Over the years, he would try to hire a second PT.
But every one wanted to see Paul.
So the second PT would leave for a better opportunity at the hospital…or a competitor. Once, Paul had to let a second PT go…that didn’t feel good.
Sure he had a handful of team members over the years. A receptionist…an office manager…a PTA…and techs.
However, Paul was still his practice…he was his business.
He couldn’t take off without his business crashing…
He managed his business finances by looking at his checking account balance…
He never had the time to put marketing systems, personnel systems – in fact, any key systems in place.
He knew he needed to build processes and systems, he just didn’t know how to do it – never quite getting around to do it.
Never having time to work on his business (maybe he just resorted to treating because that’s what he knew how to do)…always working in it.
Sure he had made a decent living – but he felt like he sacrificed a bit of his original vision – didn’t quite leave the impact in his community that he could have – never achieved the time flexibility and freedom he was looking for.
Plus now treating 50 hours per week was painful – manual therapy was becoming impossible with his deteriorating hip and all – Paul’s ability to work in the business was slipping away fast.
He always assumed one day he would be able to sell his business when he couldn’t treat anymore…but now – caught like a deer in the headlights – he wasn’t sure what his business was worth.
It definitely wasn’t worth what he was wishfully hoping it was.
The practice was his baby…his nest egg…his retirement.
Sure he and his wife would survive…but they wouldn’t be able to travel like they had planned on…or support the charities they had been passionately involved with. Flying out to Colorado to spend time with their granddaughter? They weren’t going to be able to do that nearly enough…
The staff and patients who’ve been loyal to Paul? They’re likely going to be looking for work or treatment elsewhere…
Would you buy Paul’s practice?
If so, why?
How much is sentiment worth?
“I have a business with systems in place.” Joe’s Story.
Joe has a different story to tell…
Like Paul, Joe graduated from PT school, passed his license and went to work for a local POPTS practice.
It was a great experience and allowed Joe to work on his treatment skills.
Two years in, in a young marriage, and with a daughter on the way, Joe and his wife made the decision to open up their own practice.
His goal in the beginning was to just earn enough money that his wife could stay home with their daughter (and eventually – their 3 other children).
Things went fairly well at first.
Like Paul, Joe had built a solid reputation with referral sources (this was before Direct Access) – having a solid following from patients for his “high quality of care.”
However, about 3 years in…Joe too was struggling to find the balance between time and money.
He kept hitting a ceiling of 100 visits per week or so.
He tried to hire a PT – and that didn’t work out so well. (The PT left to open her own practice).
Joe knew he had to learn a new skill set. His inability to manage his time and the business was leading to some stress at home – and he didn’t want that.
Plus, in opening a practice, he recognized the risk. At the same time, to balance that risk, he believed there should be an increase in the back end reward…
So he decided to learn how to build a business…not just be a self-employed slave to his business.
And this is where Paul and Joe’s paths diverge – a single decision point.
Over time he recognized there were trends in the PT market: hospitals buying physicians, POPTS practices opening up in basements, physician referrals drying up in general, Direct Access & direct to consumer marketing, a tight PT job market, rising co-pays and deductibles…he needed a plan to not only weather the storms, but also to secure the future of his business. He wanted to stay ahead of the trends…and be scientific about it.
Minimize his risk.
Maximize his rewards.
Joe knew that having a business which relied solely on his ability to treat was super risky.
So he started learning how to build systems…and ultimately how to build a real business. One where he was not the business. One where he systematically replaced himself over time.
(I’ll share with you how he did it).
The youngest of Joe’s children – a son – is now a senior at a private university. He decided to be an engineer…
And that’s great. (Joe and his wife didn’t want to pressure any of their kids to become a PT and take over the business).
On the eve of being an “empty-nester”, Joe and his wife are ready. They’ve prepared for this for years.
They have 3 commercial real estate properties which will give them passive income regardless of what they’re doing…whether they’re in Birmingham or Bali.
They have no debt.
The practice itself? The 37 staff members are comfortable and ready for the transition…
That’s right. Joe and his wife sold their practice.
And because of market timing (Joe and his wife were under no pressure to sell) – they realized maximum value for their practice. They had systems in place for marketing (specifically they had learned how to build direct-to-consumer systems that didn’t rely on physician referrals), personnel, finances and operations.
In fact, Joe replaced himself long ago in the clinic.
He has key manager’s in place for each role. The management team is trained well.
Joe’s only role now is to paint the vision of where the practice is going.
His team has done well integrating that vision into reality.
Joe’s going to stay on for 6 months helping to make sure everything goes smoothly.
He feels like he owes it to the people who he’s had the privilege to serve – his clients (patients) and his team.
He likes the new owners…and is comfortable his legacy will live on…even in re-deployment (Joe prefers this word over the “retirement” word). They get his vision…and even embrace it.
See, Joe has another passion too, outside of PT. He and his wife love horses. So for the past few years, they’ve been turning their farm into a therapeutic farm with horses, goats and donkeys – they have a passion for helping children with special needs. It drives them.
One little decision.
With major consequences.
And two very different outcomes.
Do you think Joe and his wife will have any trouble finding the time or financial resources to fly across the country to be there when their grandchildren are born?
What about Paul?
Who do you think gets to spend 3 weeks every year with their grandchildren?
Who do you think has their legacy and future secured for their patients? For their team? For their family?
Want to learn the difference between what Paul did and what Joe did?
Next week, I’ll be hosting a free online workshop on this very topic at 1:00 PM ET.
I’m calling this new training:
If you want to build a practice of your dreams that will also pay for you to achieve your dreams then click the link below to register for the training.
You Will Also Discover:
–> How To Best Increase Valuation: Which Reliable And Repeatable Systems You Need In Place To Add Value To A Prospective Buyer.
–> Beginning With The End In Mind: How To Guarantee Your Practice Is Built To Sell No Matter How Long You’ve Been In Practice
–> Valuation Strategies: How To Prepare Your Financials In Order To Receive The Highest Multiple For When You Do Sell
–> Attracting The Ideal Buyers: How To Find The Find The Right Person To Provide The Level Of Care Your Patients Are Accustomed While Also Protecting Your Staff & Your Reputation In The Community
–> And So Much More..
Keep in mind that this is never before shared content and spots will be limited.