If you are setting up or buying into a medical practice it can be daunting and difficult to know where to start, particularly if you have never been in business before. Below are five of the key considerations you should assess before making this crucial decision.
1. Establishing a business plan
Write a business plan to communicate your vision and provide a roadmap for success. This will ensure all bases are covered and enable you to benchmark progress overtime. A business plan is not something you complete once – it should be regularly referred to and updated as the business grows.
2. Deciding whether to buy into a practice or start from scratch
Buying into an existing practice can have less risk associated, particularly if it is one where you already work, as you have a strong patient base and understand how the practice runs. Whilst these elements are beneficial, you should be cautious if the selling parties are staying on and the culture isn’t adaptable to change.
If the practice is long held by the current owners, then you also need to consider the goodwill component of the purchase price. Goodwill is an intangible asset which builds value overtime. You are paying a premium for receiving an established practice that has already achieved a level of success.
Starting a new practice will enable you to build the culture from the ground up and create your own vision. Of course, the downfall of starting from scratch (inclusive of the patient base), is it will result in a longer establishment time and return on investment.
3. Securing premises
When securing premises for your practice ensure the building has easy access, car parking, visibility, and overall fits the vision outlined in your business plan. If you are buying existing premises you need to ensure they are suitable for a medical practice operation or can be easily converted.
The structure you buy your premises in is almost as important as the premises themselves as this will have future income tax and asset protection consequences if you get it wrong.
4. Surrounding yourself with the right people
If you are going into practice with others it is important to ensure your thoughts and vision for the practice align. It is also crucial to decide on the appropriate operating structure for your practice, ensuring you receive advice from professionals prior to making decisions will put you in the best position.
You and your partners should also align with professionals who understand your industry and share your vision including fit-out, building, legal, banking and accounting professionals.
5. Protecting your investment
Funding your practice start-up is key to getting off the ground, regardless of whether you are investing your own funds or relying on bank funding.
It is important to insure your assets and income to allow you to run your practice without added stress. If you are going into practice with others, then additional protection may be required such; as key person insurance; unitholders or shareholders agreements; and buy/sell agreements.
If you would like to discuss how to set up your practice successfully please contact your local William Buck advisor.