Starting from Scratch: The Devil’s In the Detail

Mark Overton, Managing Director, Ideology Consulting

Acquiring an optometry practice is one of the most important decisions you will ever make – in the same ballpark as choosing a life partner, having a family and buying a home.

There are many important factors to consider and making a rational decision can be hard. Most of the pertinent factors are to some extent, interdependent, and they can influence each other to varying degrees.

Here’s some of the main considerations:

Strategy – What do you want to be? These days its vital to have a clear concept of what you and your practice will say to the market. ‘Optometrist’ is not going to cut it. Differentiation is an essential element of success.

Plan – General George Patton said, “In battle plans are useless, but planning is essential”. If you are starting or buying a practice, a plan (including a budget) is nonnegotiable. This process needs an organised approach and will help you talk to others like banks – it will give them confidence that you have thought of everything.

Location – A good optometrist in a good location will always do better than a good optometrist in a bad location. You don’t necessarily have to be next to Coles, but you do have to get it right. Assessing the environment is very important. In optometry we don’t have to take on the world, just your local market.

New or existing – I don’t think you will find a rational advisor who will tell you that it’s better to start your own practice than buy one. Starting any new business is tough, and optometry is a very competitive market. Starting fresh can be done, and the rewards are good, but it’s also high risk. Buying an existing practice gives you much more information and usually cash flow to buy Baked Beans and Wheaties. Right now, the ‘baby boomer’ optometrists are looking to retire and there are opportunities to buy. They are not necessarily advertised either.

Review – In any decision you make, but particularly buying an existing practice, you need to be rational and objective. Put all your information together and get a complete picture of the full situation. Understand what you don’t know and measure the risk. You have a lot to lose if it goes wrong.

Support and advice – Business is business – it’s really not optometry. Having someone who has done this before can keep you on the right track and make sure you end up where you wanted to be. A truly independent view can make sure your perspective is clear, objective and based on factual and realistic information.

Simon Lewis, General Manager, EyecarePlus

Branding is more than a logo on your shop front and letterhead. It’s a combination of your business values, its mission and goals. And it’s reflected in the way you do business, what you sell, the physical appearance of your business and communication with customers, suppliers and staff.

When you buy or establish a new optometry practice, it is essential to establish your brand within the community. Combining a multi-media advertising approach with some local public relations is an excellent first step. Building relationships with local businesses, GPs, specialists, allied health, pharmacists, and schools, etc is essential.

You also need to ensure your practice fit-out and every touch point in the patient journey reflects your brand. Consider the following:

A modern aesthetic – Renovations have been shown to increase turnover and improve staff morale.

A fresh environment – Refresh old counter cards, faded posters and window displays. Dust frames, eliminate odours, check the music is not too loud.

Staff presentation – Staff who wear name tags and greet people with a smile as soon as they enter the practice help build rapport.

Efficient patient flow – When patients are waiting to see the optometrist, offer to clean their glasses. Delegate responsibility to dispensing staff who can manage pretesting, retinal scans, fields tests, tear film analysis and IPL treatments, etc. This will minimise wasted time for both the patient and the optometrist, and keep consulting rooms free for examinations.

Product delivery – When your patients collect their glasses, present them on a tray, with practice branded bags, cloths and spray bottles – these little things add up to create a welcoming, memorable experience.

Eyecare Plus members can elect to be branded or unbranded. However, the vast majority choose to be branded because of the substantial benefits this brings to them through marketing resources, brand identity and National Office advertising. A good example of this is the current Canstar Blue award for the most satisfied optometry patients in Australia.

Many branded practices use Eyecare Plus branding as their complete identity and are known simply as Eyecare Plus <Suburb>. Others use a different practice name and logo in conjunction with Eyecare Plus branding. This is referred to as ‘co-branding’ and is designed to be used while the practice transitions into full branded membership. Unbranded practices are excluded from any use of Eyecare Plus branding.

Rob Ellis, Retail Operations Manager, ProVision

When it comes to recruiting and retaining people, the following principles can be a useful:

• When in doubt, don’t hire
• Don’t try and discipline the wrong people in to the right behaviours – get the right people in the first place!
• When you need to make a change, act!

But even before you begin to recruit new team members, it is most beneficial to clearly articulate a set of values and behaviours that relate specifically to teamwork and are aligned with your company’s values.

At ProVision, we recently reviewed our values and agreed the words, “we are a team”. Beneath that we articulated relevant behaviours such as:

• Encourage healthy discussion to leverage the collective intelligence of the team,
• Create space for quieter team members to contribute,
• Offer assistance when your colleagues need help, and
• Have fun and celebrate team and individual success.

On this basis, we now have a common understanding that working as a team is important, and this understanding can be highlighted at recruitment interviews.

Of course, this is just the beginning. On an ongoing basis, teamwork should be promoted at staff meetings and individual catch ups. Identifying specific behaviours that either reflect the value or fall short will open opportunities for discussion and recognition. There is a proven adage that, “what gets recognised gets repeated!”

LEADERSHIP IS IMPORTANT

Research tells us team members are more likely to be engaged, productive and loyal if they are treated well and feel valued. The onus of responsibility for this lies with the owner/leader.

Strong leaders recognise that to get the best from their team they need to:

• Make personal sacrifices and commit to being selfless and humble,
• Set clear goals,
• Build trust,
• Hold team members accountable,
• Be remarkable communicators,
• Acknowledge team members,
• Invest in their team members, and
• Remain positive, even when faced with challenging situations.

Peter Larsen, Executive Director, Specavers

Attracting customers is one thing, but winning their loyalty is quite another. The biggest factor in whether patients and customers return is the experience they receive personally. Looking back 10 years or so ago, our revisit cycle was sitting at over five years on average and now it is around the two year mark – and that’s because we look at optimising the care package for all people who enter our stores, from meet and greet, all the way through to the eye care and dispensing care experience.

Our partners expect to see a large number of patients every day and they are adept at optimising the flow of patients through their clinics using industry leading benchmark reporting on patient outcomes. Many now have bespoke clinic co-ordinators in place and the majority use a flexible diary management structure with multiple clinics running in parallel. This allows the optometrist to flex the duration of their appointments that vary with every patient to best accommodate the needs of every individual.

Clinical expertise has also been essential to developing a sustainable business. We already offer more than 100 CPD points a year across our various activities which include our two-year graduate program, ongoing CPD days and roadshows, Profileanz. com and our pinnacle SCC event. Recently, we expanded our professional development team and are in the process of introducing a first of its kind optometrist education program across Australia and New Zealand. This ophthalmology led training will be delivered into each area’s referral network by local specialists. It will be uniquely informed by the referral pattern data of attending optometrists and measured for impact based on improvements in detection of avoidable causes of blindness.

This is an important next step in the Specsavers Transforming Eye Health agenda. Our professional development team will also continue to support partners with CPD tracking for all optometrists, registration services, and online education. A suite of cases studies has been completed for monthly release throughout the year.

Lily Wegrzynowski, Chief Business Development Officer, EyeQ Optometrists

An optometry practice needs systems, policies, processes and procedures to run efficiently and to ensure that the clinical care, services and products provided meet expectations and standards.

‘Start as you mean to continue’ is a good mantra to use – so, whether you are buying an existing practice or opening a brand new one, it is important to establish the right foundation. Buying an established practice doesn’t necessarily mean you’re inheriting all the right systems. This is why a thorough evaluation of what is in place and what is required, right at the start, makes it easier in the long run.

The administrative side of the business is one area that can be overlooked or left to be tackled at a later stage. The danger here is that ‘later’ never comes and apart from having a messy business, potential profit and business growth is not maximised. Even worse, if clinical record keeping is below par, the practice is at risk should any adverse actions be taken against it.

Under the EyeQ Optometrists Franchise Associate model, while the practice is always your practice you’re able to use EyeQ’s systems to enhance profitability and work/life balance. This support includes taking care of the business back-end. Support is customised to the individual needs of the franchise associate and can include payroll, accounts payable, financial reporting and full IT management.

Our training and continuing improvement programs cover areas such as clinical record keeping and standards, along with support for specialisations. Having all the support and systems to set you up for success ensures the excitement of owning your own practice is not overshadowed by the many different elements required.

EyeQ Optometrists has the expertise and experience to assist the next generation of independent practice owners.

Craig Spiegel, Finance Specialist, Credabl

Whether you’ve chosen to buy an existing practice, buy into a practice or start up your own, creating a business plan that defines what you are doing and how you are going to do it is your roadmap to success. The business plan should articulate:

• Why you have chosen the proposed location and type of practice,
• Your competitive advantage and how it will differentiate you from others,
• Your competition,
• Your hours of operation,
• Cash flow considerations,
• Legal/accounting structures, and
• A general vision for the practice.

You’ll also need to decide on a business structure, and in today’s world there are many options – from sole traders and companies to partnerships, and of course various trusts. Consult with your accountant to ascertain which structure will be the most effective for you, in particular for accounting and legal reasons.

CASH FLOW

There will be costs to set up your practice. If you are buying a practice, you need to fund goodwill, stock and equipment. You may want additional funding to upgrade the current chair and stand, add some additional equipment such as an optical coherence tomographer or a retinal imaging system. If you are establishing a practice, you’ll need to determine the equipment you need and the costs of fitout and/or renovations. Seeing patients is the only way to cover these costs – so you need to figure out how much will you charge them early on. Once you’re operational, day to day expenses of running a practice can be easily supported by an overdraft facility.

If you’re retaining employment elsewhere while establishing your own practice, which is not uncommon, you may find you don’t need as much working capital as you have an additional income source to provide the capital support.

Credabl offers finance for medical professionals. Our knowledge of the ins and outs and are just a click (www. credabl.com.au) or phone call away, and we welcome the opportunity to talk to you about your private practice dreams.

Paul McKinley, Managing Director, Optometry Finance Australia

When investing in clinical equipment for your new practice you can either pay for it with existing cash or arrange finance.

Paying cash will save the expense of borrowing (interest). However, before going down this path you need to be careful to ensure you’re leaving enough ‘cash in the kitty’ to meet the working capital (daily cash flow) needs of your practice.

Purchasing clinical equipment via a lease will enable you to make manageable repayments over time and free up your cash flow.

NEW OR USED EQUIPMENT

When deciding whether to purchase new or second hand equipment, there are a few options to consider:

• New equipment is likely to be technologically ‘current’ for a longer period than older equipment, which means despite a larger capital outlay upfront, you are likely to save over time due to a reduced need for maintenance/ repair and replacement.
• Additionally, loan periods and interest rates on new equipment are usually more favourable than those for second hand equipment.
• Lenders for equipment purchased that is up to three years old will generally include a residual/ balloon in the loan facility, helping lower your repayments. At the end of the loan term, you’ll usually have three options:

o Refinance that residual for another loan period (say three years),

o Pay out the balance and own the equipment outright, or

o Trade the equipment in on new equipment (assuming the supplier wants it, there is a market for it, and it has not become technically obsolete). In this case, the supplier will pay out the residual.

In short, a new piece of equipment purchased within a finance structure that includes a residual, may incur repayments that are very similar to those required for cheaper second hand equipment financed with no residual.

As well as offering financial advantages, purchasing new equipment can enhance the public perception of your practice and your clinical expertise.

If you’re a young practitioner starting out, purchasing second hand equipment will lower your capital outlay, especially if you’re paying cash, and don’t wish to borrow. Take a look around, and you may find a practice closing its doors – this can be an opportunity to pick up some bargains. Do so with a plan to upgrade to newer equipment in a few years’ time, when business picks up.

Before making a financial decision it is important to consult your accountant.

William Robertson, Designs for Vision

Whether purchasing new or second hand equipment for your practice, it’s important to do your homework. Like all technology, software is constantly being upgraded and so you need to be careful that you won’t be hit with unforeseen upgrade expenses (or the need to replace redundant technology) in the near future.

To do this, check the manufacture date – there is usually a plate indicating the serial number and manufacture year (sometimes month), then call the supplier for insider knowledge.

If the equipment is controlled by a computer, check the operating system, and the year the computer was activated. If it is old – eg. XP Vista or Windows 7, contact the supplier to see if the device will run on the latest operating system.

If you’re considering the purchase and use of a medical device with an obscure brand, visit the Therapeutics Goods Administration (www.tga.gov.au) to see if it is registered. If it is not registered, you will need to register it, or it is worthless. According to the TGA, “Unless exempt, medical devices must be ‘included’ onto the Australian Register of Therapeutic Goods (ARTG) before they may be supplied in or exported from Australia”.

Reference 

1. www.tga.gov.au/how-tell-if-medical-device-legallysupplied- use-australia