Every chiropractor who considers the facts about buying a chiropractic practice has some fears that creep into the decision-making process.
Unfortunately, the “rumor mill” is hard at work with our natural fears when we haven’t owned a business before, when we’re just starting out in practice or when we’re considering a move that will significantly impact our future and trying to learn solid facts about buying a chiropractic practice.
Worse, some of these fears are based on myths and old stereotypes that have been around for decades and are shared as whispered conversations among new graduates and others who do not fully understand practice ownership (professors at chiropractic colleges, fellow students, recent graduates, etc.).
The real danger comes when these fears outweigh the facts about buying a chiropractic practice that support them.
In speaking to DC’s who are thinking about buying a practice, here are some of the common fears we hear expressed – and the facts to balance them out!
Myth #1: “I could never afford to buy a chiropractic practice.”
This is perhaps the oldest and most common myth regarding practice ownership among chiropractors.
First, it is important to remember some key facts about buying a chiropractic practice the biggest of which is the fact that the purchase of a chiropractic business is an investment, not an expense. Unlike buying a house, which only produces income when it is sold (at the right time in the market), a practice is a revenue producing asset. You buy a business because it has a track record of producing income for the owner and will continue to do so.
In that sense, while the cost of purchasing a practice is important, it is less important than when you purchase a car — which obviously will decrease in value the minute you drive it off the lot – or even investing in stocks, where you will have to time the market right to buy low and sell high.
What is important is that the cash flow the practice produces enough revenue to meet your income needs and pay for the debt service (for the loan you acquire to purchase it and/or your student loans).
This is one factor that will impact the practice that you can afford to buy.
Another important calculation is the net income percentage that you will be receiving on YOUR individual production. For example, an associate generally makes 30% to 35% of his or her annual collected production. Conversely, a practice owner can easily make 50% to 60% or more of his or her personal production (after all expense and debt service payments). Assuming this is true (and I assure you that it is very true), you can’t afford not to own a practice!
Myth #2: “I don’t know how to run a chiropractic business.”
Many DC’s who are weighing the facts about buying a chiropractic practice may object to the idea because they lack practice management experience. It could be that they have worked as an associate for years and don’t feel that they have a good working knowledge of the business side of running a practice. Or this fear could stem from the fact that they are a newer graduate with little or experience in the field.
If you lack business management experience, the first fear that you should have is starting a practice from scratch. A startup business not only requires a hefty financial investment but should only be undertaken by those with solid experience with running a business.
There is a learning curve to running a practice, but that is exactly why you purchase an existing business where you can leverage the current systems and procedures in place without having to reinvent the wheel.
Unlike a startup practice (where you will learn how to run the business on your own through the “school of hard knocks), when you purchase a practice, the majority of the daily operations are the staff’s responsibility and they already have experience handling them!
Your job is to produce income by doing what you do best — be a chiropractor!
Yes, leadership and business management skills will certainly help you run your practice well. But even a novice owner can learn management skills from the exiting selling doctor during the transition period and/or they can utilize the services of a practice management consultant or attend seminars to help you grow the practice beyond its current performance level.
Myth #3: “I have too student debt to qualify for financing.”
This is one of the most misleading myths when it comes to buying a chiropractic practice. It sounds like it makes sense because the reality is that there are many chiropractors graduating with student loan debts of $200,000 or more.
While it is true that your student loans may impact how much money you can borrow, if you investigate the facts about buying a chiropractic practice a little further, you will find that your student loans will not prohibit you from buying a practice altogether. This is largely because (again) you are purchasing a revenue-producing asset – which is not the same as asking to borrow money to purchase something that will decrease in value or only produce money many years later.
The truth is that in today’s marketplace, we have a number of lenders around the country that are eager to finance practice acquisitions. These lenders have discovered that a chiropractic practice is far less likely to fail than other small businesses. And the outlook on the profession is excellent, especially given the increasing aging population who will continue to use our services and the current trend away from dangerous opioid medications.
As a result, chiropractic practice acquisition loans are now viewed as much safer and, among lenders who specialize in healthcare acquisitions, are much easier to obtain than in years past.
For a more in-depth discussion on this topic, see our previous post: Why Your Student Loans Won’t Stop You From Buying a Chiropractic Practice.
Myth #4: “Practices for sale are old and have outdated chiropractic equipment.”
A significant portion of chiropractors believe that the only practices on the market are those in decline and with outdated equipment.
While this may be true that some practices are being sold because the owner is older and the revenues are declining, not all practices are sold for those reasons.
Yes, chiropractors sell to move towards retirement and some of those practices may have equipment that reflects the doctor’s age. But we often have sellers in their late 40’s and early 50’s with modern facilities and equipment who are looking to relocate, have a life change or become injured and unable to practice.
Even if you think the equipment is outdated, it should be a minor concern for several reasons: first, the equipment is currently serving the patients in that practice! In other words, the worn carpet or older table still has been adequate enough to produce the income the practice has historically been producing year after year. And you could step in and do the same thing with the same equipment, furniture and fixtures!
Secondly, as those buying a practice should realize that the real benefit of purchasing an established business is not in the equipment anyway, but rather in its solid patient base.
You can buy or upgrade equipment easily. It is much tougher to reproduce patients and income. Plus, if you insist on an equipment upgrade, it is possible to add new equipment as a part of the financing to acquire the practice.
Don’t let outdated myths make you miss out on the opportunity for chiropractic practice ownership!
The truth is that there are many reasons (beyond what we discussed here) to own a chiropractic business and very few, reasons to not own a practice. Buying a chiropractic practice continues to be the safest and fastest route to practice ownership that will provide you with many years of income and satisfaction ahead!
Interested in MORE Facts about buying a chiropractic practice, Financing & Details on How to Purchase a Chiropractic Business? Check out our FREE WEBINAR Chiropractic Practice Financing 101: What Chiropractors Need to Know About Buying a Business & Getting a Loan to Purchase