If you get accustomed to making a comfortable income from a practice with flat growth, you may face a sobering reality when it’s time to sell. Execute a detailed financial plan for continued growth—and reach your financial retirement goals.
The principle of relaxing applied to independent optometry has created too many complacent doctors, unable to retire or compete with commercial optometry. Most doctors work to the point of making adequate income based on their desired lifestyle, relative to the cost of living in their community. Once achieved, they focus on other goals or outside activities and stop driving practice growth. Competitive advantages of a large practice are not fully realized. The practice may be precluded from: utilization of multiple doctors that could offer specialty services; ability to open nights and weekends; the advantage of quantity discounts on frames and other materials; and other advantages related to economies of scale (also known in the business world as “operating leverage”). Here are tips to set the financial plan you need to successfully compete.
Determine Current Practice Value
Since practice value is a multiple of practice net cash flow, practice value does not increase when there is no growth in net cash flow. When the doctor reaches retirement age, too often the practice value is insufficient to fund retirement.
You may need third-party assistance to determine the difference between your wealth target and current value of assets. Companies like Vision One Credit Union, can provide tools and support to help a doctor transform their practice into a pathway to personal wealth. Understanding the relationship between practice net cash flow, value and wealth is a start. For example, you can take ODs through a Private Banking Services to establish a ”Your Personal Plan,” a process that involves wealth goal setting and creating a plan specific to your situation to achieve it. An evaluation of your assets will be performed, including the practice. The difference between your wealth target and the current value of your assets will determine the amount of wealth that needs to be created (also known as the “GAP”). A practice growth plan can be designed to fit the remaining term of your career.