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Patrick Myers of consultancy Myers La Roche explains the risks involved with the three routes to running your own practice
Many women eye care professionals find that running their own businesses is more rewarding than working for other people. A well-managed practice will typically produce higher incomes for the owners than employed female professionals can enjoy. It also allows more freedom to practise in the way that they want and it can fit in with their busy lifestyles and demanding family commitments. However, running a successful practice is not an easy option and it requires hard work, tenacity and dedication.
In ascending orders of risk, there are three routes to running your own business. You might consider a franchise, you could buy an existing practice or you might set up a new business from scratch. You also need to decide if you are going to run the practice on your own or as a partnership. There is some evidence to show that the most successful optical ventures have joint owners with complementary skill sets, typically a dispensing optician and an optometrist. However, there does not appear to be any correlation between the gender mix of partners and success.
Franchises
There are two main benefits of an optical franchise. First, you receive the expertise and on-going support of the franchisor. With a well-established franchise, this will include professional marketing, business advice and training. Many women in business say that the support package was the main reason that they chose to go for a franchise rather than going it alone. Second, you buy into a proven business concept with a proven record of accomplishment which reduces the risk of the business failing. In return for these two benefits, the franchisor will take a slice of the sales turnover, control your buying and selling prices and tell you what to sell and when.
Although there is a lower risk attached to buying a franchise than owning a business outright, it is likely to need the greatest investment. In these difficult economic times, banks tend to look favourably on loan applications for franchises.
It is important to obtain independent legal advice before entering into a franchise or joint venture agreement from your own solicitor and not the solicitor introduced to you by the franchisor.
Established practice
Buying an established business offers a good alternative for women who want to practise in the way that they want but do not want to run the risk of starting from scratch. However, existing practices come with baggage. The existing staff in particular can often present challenges to new female owners who want to introduce changes to long-established working practices. Moving the practice on is often a real test of diplomacy and stamina.
Professional journals such as Optician often carry advertisements for businesses for sale. These mainly contain outline information such as the area where the practice is located, the sales turnover and the asking price. They nearly always require you to respond to a box number. In return, you might expect to receive more details about the practice and even some financial information. This should give you sufficient information to decide whether to arrange to view the practice in much the same way that you might visit a house for sale.
The advantage of responding to an advertisement is that you will know reasonably succinctly what is on offer, where it is located and what the vendor hopes to achieve. This still leaves room for negotiation and you should take advice before coming to an outline agreement to reduce misunderstandings and costs later in the transfer process.
You might approach a potential vendor directly, or they may even approach you. You might also consult people on the local optometric committee for the area in which you would like to practise, to ascertain if there are any local practitioners who wish to sell their practices. This can be a relatively trouble-free way to strike a deal but you may find that you end up paying the vendor's price with little room for negotiation.
You could also use the services of a business transfer agent. They will have a number of practices for sale at any one time. Although they act on instructions of the vendor, who pays their fees, they will be able to advise you throughout the transfer process. They will be seeking a win-win deal where the buyer disposes of the practice on fair terms and the business is transferred to you as smoothly as possible. They should be able to help you with a valuation, sources of finance and sourcing experienced lawyers and accountants. You should look for an agent who has a successful track record of selling optometric practices and is a member of the Institution of Commercial Business Agents.
Starting from scratch
The upside of starting from scratch is that everything is new - location, fittings/equipment and staff. The downside is no patients and no income.
Typically, the investment required to get a new practice off the ground will be £150,000 and it will take two years for a new practice to produce a net profit. In today's market, over two out of three start-up optometric practices fail to reach year four, so it is vital to make sure that yours will survive. With the odds of success stacked against you, you need to make sure that you have the full support and understanding of your family and friends.
To verify viability, you need to calculate the size of the available market in terms of eye exams and sales turnover. Local authorities can tell you the numbers of residents, ward by ward. You should also refer to central government statistics. From the total population in any catchment area, it is possible to estimate the numbers of potential patients, the annual numbers of eye exams and the amount spent at optometric practices. As a guide, in any given area 68 per cent of the resident population will have some kind of refractive error. The average interval between practice visits is 2.4 years and the average sales revenue is £120 per patient examination.
Planning ahead
Before starting any business, it is essential to have a business and marketing plan. Remember that you will need to not only use the plan as a working document but also update it as your practice develops. You will have to disclose the plan to lenders and other stakeholders so that they can decide if they will support you. ?