A One-million Dollar Optometry Practice in Two Simple Steps!
What does it take to own a $1M dollar practice? There are no simple answers; this blog title is a bit of a lie. That said, there are some universal elements required to get there, and without them, you have no chance. Pardon the analogy, but I think it mostly works as an illustration. Of course, as with any analogy, there are some holes in it. Just go with me on this one.
Having a $1M practice is like having a diamond. To create a diamond, you need three things: heat, pressure, and time. If you have more heat, you can get away with a little less pressure. The converse is also true: if you have more pressure, you can get away with a little less heat. All of this takes time. Diamonds are not created in an instant. Some amount of time is always required.
So now, thanks to heat, pressure, and time (and carbon, obviously) you have a diamond. Except that you don’t. A diamond now exists but it’s probably buried in the earth somewhere. You can’t walk into a JewelryMart and buy this specific diamond until it’s been brought to market. Getting a diamond to market involves a lot of steps, but let’s just call it mining and refining for the sake of simplicity. Once you’ve mined and refined the diamond it shows up in your favorite jewelry store and you can go buy it and own it. Easy peasy.
One Million Dollar Practices
Developing a $1M practice requires three things: differentiation, marketing, and time. Similar to the diamond, if you have more time, you can get away with a little less marketing. The converse is also true: if you have more marketing, you can get away with a little less time. All of this takes differentiation. $1M practices are not created out doing the same thing everybody else is doing (even if you do it better than most). Some amount of differentiation is always required.
Unearth The Diamond By Execution
So now, thanks to differentiation, marketing, and time (carbon here is just a bonus, obviously) you have a $1M practice. Except that you don’t. A $1M practice now exists in plan and concept but it needs to be unearthed as well, via execution. Getting a $1M practice through execution requires a lot of steps, but let’s simplify (greatly) and focus on the most important ones: acceptance of risk and resources (money and time). You execute by investing resources – both time and money – into the practice. Differentiation requires investment. Marketing requires investment (more than most owners are comfortable or willing to put in, but more on that in a minute). If you invest the average amount in marketing, let’s say that is 3% of gross collections, you are under-investing. In real dollar terms, if you are spending $6000 on marketing, you are under-investing. What amount of marketing investment does it take? A minimum of $20,000, but more realistically $30,000 and up.
Can You Handle The Risk
Those real dollar figures freak some people out. What if the investment doesn’t net the revenue necessary to cover the cost? What if it does work but we don’t have the people and processes in place to take advantage of the increased patient load and it results in a decrease in revenue per patient? There are a million ‘what if’ questions. That’s the risk involved in doing business. If you can’t accept this level of risk, that $1M practice will remain subterranean forever.
Of Course, There Is More To The Story
Obviously, there is more to the story. But I am 100% comfortable saying that if you don’t have these foundational pieces in place and working for you, you are relying on luck to get you there. I don’t know about you, but fickle luck scares me more than it reassures me.
John McDaniel, OD, MLHR