Starting From Scratch
 
   

Scratch-Startup

 
   

........a scary prospect, filled with many unknowns, most expensive; a high risk venture.


By John T. Whitney, D.C.

In past articles I have disparaged starting a chiropractic practice from scratch. However, there are exceptions where starting from scratch is indicated, e.g.. no viable practices for sale in your chosen area, virgin territory, robust opportunity for a quick start due to dearth of chiropractors, or temporary insanity.

In whatever case, for the purpose of this article let us assume a scratch start is indicated; a totally new enterprise.

Remarks made in the past about need for a specific location still apply: high visibility, opportunity to use large area for signage, easy access to parking, ground floor if economic, proximity to other people activity, not an office building. favorable demographics (> 1/5000), not young startup families, reasonable monthly lease payments.

In a scratch-start situation the enthusiasm of, "doing-it-on-your-own",must be tempered with a sharp eye on what your monthly total costs and monthly overhead will be. There is a tendency at this time to overspend. You see, scratch-start is the most expensive method of all to get into practice and carries the highest risk of failure. The average, properly done start-up office costs $100,000. That does not include a marketing budget for the first year that could easily be another $10,000.

Build-out costs average $50. per square foot; a 1000 square foot office space will cost you $50,000 just for the walls, doors ceiling, carpet and paint. Of course you can do it for less, and we have all heard the shoestring startup tales where the doctor rockets to fame and fortune in a matter of months. These cases are rare indeed. In business you begin by counting on the most likely scenario and outcomes. Of course you pray that you will be the exception, and maintain high positive expectancy. But for now, rational thought should prevail. If you could find a place that is already built out or needs little renovation, that is a stroke of luck.

When building out a place you may want to consider, "portable walls" and doors. There are prefabricated office systems/designs that you might want to consider. The new ones are outrageously expensive but due to general downsizing in the business community there is a plethora of used equipment for sale at the moment. Look for all of your needs in this, used, market.

Before you sketch your office layout, take a little time to visit other well done offices that practice much like what you have in mind. You will surely pick up some good ideas. Don't overlook the "open concept", it may sound foreign to you at first but it is a very efficient, inexpensive office design. Few people who work in an open concept would ever do it anyother way.

Think twice before designing your office around your technique. Allow yourself some latitude in this area. It is a well known fact that chiropractors change their technique and approach to practice several times in the first few years, Don't get stuck with an expensive design that accommodates only one approach to practice. This could be a costly error.

It is important that the office design, look, feel, and conform to your patients needs and tastes, not yours. This is not going to be you home or your den, this is a place of business (as well as healing) and should conform to your target markets sense of what is acceptable and desirable This is probably a fitting location for Norman Rockwell rather than Pablo Picasso or Paul Klee. The decor should reflect the values of your market, not yourself. Your office is not about you, it is about them. We are striving to get in tune with and please those whom we serve. If a friend walks into your office, looks around, and says that this office is, "so YOU", you have probably made a mistake.

"Study your market". No matter what your market you can be sure some smart people have studied that psychographic market and know the needs, wants, fears, desires, and expectations of your chosen market. A good place to start is the American Demographics book catalog ( 800- ). You are out of your element in this area, a little homework is indicated.

Health-care office decor is a special and unique area of design, one would be wise to familiarize themselves with the literature in this area. There are decorating ideas to embrace and some to avoid. Try to avoid fluorescent lighting. If you must use fluorescent lighting please use "warm white"tubes, all others give people a cadaveric hue, including the all spectrum variety. Avoid modern art, chrome furnishings, au currant decorator colors and "touches", sofas, love seats, chairs without arms, teller-cage reception areas, staff in white polyester uniforms, painted baseboards,"your" music, hard floors, soft chairs.

Work to embrace an ambiance of warmth and comfort by using natural materials, incandescent lamps, good carpeting, structured environmental sound like Muzak, exclusive reading material (health, food, cooking, spiritual) no news anything, (it's all bad) , lending library, reception room telephone, caring as opposed to efficient staff, congruent decor, exceptional cleanliness throughout the office, private areas for financial discussions.

Long before you have your office physically prepared you should be considering staff... usually one person for start-up. The type of person you are looking for must be multi-tasking and a warm caring people person. It is an error to hire someone primarily because of their experience and office skills. It is good judgment to hire someone primarily for their ability to communicate with and be seen as a warm loving person by patients.

"Employees are the root cause off our success", says Tom Peters, In Search of Excellence. I hope it doesn't take you as long as it took me to grasp this truth.

Many new DC's decide not to hire a chiropractic assistant until the practice builds to the point where the DC can no longer handle the paperwork, ...stinkin' thinkin'.

If one is undercapitalized (the #1 reason for practice failure) a CA is still a necessity. A part time CA at first is an acceptable substitute until a little growth is experienced. The new start-up doctor could hire a person for 2 hours per day three days per week for example.

Most start-up doctors have not been employers before and there is a lot to learn for this new role, both from a business standpoint and a management/communication perspective. Too many of us seem to think simplisticly as employers. We seem to think that being an employer is just telling people what to do. At this stage we don't even know what to do.

Prior to hiring an employee we must have a plan to train those, extremely important- to -our- success, people. Obtain a complete office employees manual too. There are many good sources for both of these items in chiropracticland.

Surveys consistently show that CA's get frustrated and quit due to poor employee management by the doctor. The American Management Association also tells us that it cost us approximately 12,000 to replace a CA. This is not an exercise to repeat frequently.

Further on the business end of practice, one requires a system for keeping track of the bookkeeping, accounting, claims submission, third party payers, bank deposits, loans, accounts receivable, payables, payroll, taxes. For this purpose an office computer and simple software is essential. Use an accountant to help you set up your books (internal bookkeeping/ accounting framework).

The question, " should I incorporate", is often posed at this point. Frequently the answer is," yes", and the vehicle of choice is often a Limited Liability Corporation. Once again you must read a little bit more to understand this aspect of practice. This in particular has to do with liability and taxation.


A final thought for you to noodle : "when there are dozens of practices for sale, with well trained staff, proven performance, and positive cashflow,........ who would buy a practice for $100,000......with no patients?!" Essentially that is a description of a start-up practice.



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