The Verdict | March 2014 Plastic Surgery Practice
You likely remember it well—from hanging that first shingle outside of your first tiny office to your first patient and the first laser you leased. You had one receptionist (who may or may not have also been your medical assistant and wife).
Times have changed.
You are now staffed up, own several lasers, have an impressive Rolodex of clients who love you, and have hired a crackerjack PR firm that is helping you grow your practice further and just landed you a spot on The Doctors.
Life is good.
Is the time right for expansion to a second location?
It just may be.
Here are some important questions to ask yourself before signing a new lease.
Are you too busy at your current location?
Does you staff operate like a well-oiled machine?
Are your services in demand?
Do you have the means to invest in yourself? Depending on the size and scope of your new facility, the endeavor can cost anywhere from $25K to hundreds of thousands of dollars if a build-out is required.
To proceed, the answers to all these “why” questions should be a resounding yes!
Now ask yourself, would your new space be able to stand on its own?
Any future location has to be profitable on its own merit, not through the support of the primary location. It’s OK if the primary location shares in the expenses and labor, but co-mingling should end there. Separate all of the expenses or you won’t know the true profitability of either location.
LOCATION, LOCATION, LOCATION
Another issue is staffing. Who will help you run your new location?
It might be difficult for your current office manager or administrator to pick up the extra responsibility that comes with a second location. Can you afford to hire and train new employees?
TIP: It is always best to hire people locally, since they will also serve as a good referral source.
As they like to say in real estate: location, location, location. How close is or will the new location be to your current one? You want to keep current loyal patients where they are. The key to opening a new location is to grow the new location with new patients. It should be far enough away from your primary location to attract a new patient base, but close enough that you could travel between the two locations. Once you find the location, you have to make sure your services will be welcome.
TIP: Recruit someone on your team to get involved in the community and promote your services ahead of the anticipated grand opening.
Lack of funding and poor staffing and management are the primary reasons a new entity will fail. A new entity should either be self-funded, financed by a third party (bank, finance company, or private lender, for example), or by a merger or sale of part or all of your existing practice.
Banks are pretty finite in their guidelines with interest and payment terms. A private investor may be your saving grace, but if it isn’t family (which opens up a whole other can of worms), the financial backer may require a large percentage of ownership, inclusive of a principal payback of the original loan, similar to standards on the popular television show Shark Tank. The investor may not even want any operational decision-making power, but truly expects a rate of return on their investment. n
Jay A. Shorr, BA, MBM-C, MAACS-AH, CAC I, II, III, is the founder and managing partner of The Best Medical Business Solutions, based in Fort Lauderdale and Orlando, Fla. He can be reached via [email protected].
Stay tuned for Part II in this series, where Shorr will help you write a fail-safe business plan for your new location.
Original citation for this article: Shorr, J. Grand opening: Is it really time to open an additional location?, Plastic Surgery Practice. 2014; March: 10