Has the “man” got you down and now you ready to serve justice by being the “man or woman” yourself? I’m only kidding but has the entrepreneur itch seized it’s grip on you?
Are you tired of not running the show, being told when to show up and how it’s done?
Maybe you are one of those fiscally responsible folks who has been hoarding your paychecks under your bed waiting for the day, when you can finally buy out the boss and stick your name on the door.
No matter the reasoning, becoming the boss can be one of the most exciting undertakings or the most terrifying.
Even though I haven’t currently purchased a business. However, I have spent a lot of time re-searching, asking questions and figuring out all the information needed before purchasing an existing business. (I’ve had opportunities).
If you're in the market to buy a chiropractic office then check out my top 8 things to ponder and investigate before making one of the biggest financial decisions of your life. (And get yourself a lawyer and an accountant if you don’t already have them).
1. Is this office currently making money or in distress?
Don’t be fooled by what the owner tells you. Numbers don’t lie so you have to look at P&L statements for a couple of years, ex-penses, taxes, payroll and how much profit there actually is at the end of every month.
2. Create a separate company for yourself and the only way you should ever buy anything is through that entity. You never want to buy the business but the assets of the business. Say What?
If the practice you are interested in happens to be an LLC, you don’t buy that LLC you buy all the stuff or the assets that the LLC owns. Examples would be the building, company car, office furniture, patient lists, cash, accounts receivables or even the brand if you're buying a franchise. Completely taking on the LLC means if that entity is being sued, has a lien or anything else undesirable that will become your problem. The assets are every-thing else that makes the business run.
3. Are the employees coming too?
I always assumed the “easiest” way to buy a practice would be if your currently working in it. You know the front desk staff, the patients and the whole vibe of the place so when you go to take it over the transition to your leadership is relatively seamless for you, the patients and the current staff in place. If you're not working in the practice, are some of the key staff members going to stay once you take over? There is nothing like the feeling of a shiny new office and all the staff quits (that’s an ulcer starting moment for sure)
4. What’s the lease situation?
First of all, are they behind on it? When is the lease up? If the lease has two years or less on it does it makes sense to negotiate a new one or will the land-lord let you assume the lease without a price increase?
5. Accounts Receivables?
I’ve heard there is a growing movement towards having patients pur-chase treatment plans in advance. Are you going to buy them at closing or are you going to let the current owner try and collect them at his own leisure (Oh heck no!)?
6. Any Prepaid liabilities?
I know some offices that sell large treatment packages in advanced to patients. The patient pays for their care up front and then the service is rendered to them after they pay. It’s a good idea to know if they're any floating around, how many there are and what your responsibility is.
ooh fancy lawyer words now. Google says it means a “security or protection against a loss or other financial burden.” Getting an indemnity from the seller means you are getting something like a guarantee, insurance, protection, etc. in case after closing someone comes back and tries to sue you over something that happened previously. That way the seller will financial back and take responsibility for the lawsuit. Don’t be surprised if the seller wants one from you too.
8. Last but not least…
do you really, really, really want to buy this particular place? Let’s say hypothetically 1-7 are home runs, everything financially makes sense, it would be a great deal, investment, you would make a bunch of money from it but when you think about this business it makes your ulcer bleed and skin crawl..should you still go through with buying it?
When my business partner and I were looking at possibly buying some other kickboxing studios some of them were almost too good to be true except for one thing the… location. You see, I already live in Ohio and the idea of buying a business that has even a shorter summer season and requires shoveling more snow was not exciting to me.
The first location we looked at was in Iowa. I distinctly remember sitting straight up in bed the next morning and thinking “oh my god if I have to spend any more time here I’m going to fling myself off a bridge.” What’s wrong with Iowa you ask? Nothing for some, but for me it’s not a place I want to spend more than 24 hours in. I felt the same way about Wisconsin and Arizona (I already lived in the desert, eh). But when there was a location not far from the beach in Florida, oh man did that get me excited!
I even volunteered to manage it from November to April! Those might be silly examples for you but you have your own “Iowa” and your own “Florida.” Owning/buying/starting a business is one of those life changing decisions sort of like getting married. Yeah you can change your mind but it’s really tough to back out of. Owning a business is very much like being in love, you better be over the moon and giddy about it in the beginning because there will be days, weeks, months and maybe years where you think what the hell did I do?
… You're going to have inordinate amounts of stress sometimes so don’t let the location of the business add to it.
Kassandra Schultz DC