The first issue most young DCs struggle with is whether to start their own practice, to purchase a practice, or to work for someone else.
Let’s sort out the factors involved in this decision and compare the options against those factors.
ATTRIBUTES FOR PRIVATE PRACTICE
We’ll begin with the decision of whether to work for yourself in a startup or purchase vs. working for someone else.
The primary decision factors are:
“¢ Knowledge of business. Graduates who have knowledge of business operations in general and chiropractic practice in particular are good candidates for starting their own practice or buying a practice.
“¢ Confidence in chiropractic abilities. As we have stated in the StudentDC.com newsletter, chiropractic ability is a primary factor in successful practice. Your chiropractic skill set at the time of graduation is an important consideration in whether you feel confident in working in your own practice.
“¢ Funds available for startup. If you have some money for collateral on a business loan or if you have a co-signer, you are in a good position to pursue a startup or purchase.
Many new DCs are concerned that they will not have enough money for the required collateral for a startup loan. If this is the case with you, be sure to read the Financial Preparation section for ideas. If you have a family, you may also find private practice a scary proposition.
You may note that we didn’t include “marketing ability” as a decision factor, because the ability to do personal selling and to attract and retain patients is important no matter which option you choose. Certainly, if you are working for yourself, you’ll have to get and keep patients, but even if you’re working for someone else, you will be required to do patient marketing in order to obtain bonuses and make a decent living.
If you have decided to work for yourself, you will need to decide whether to purchase a practice or start your own. In general, if you can find a practice for sale in the area where you want to live and it is acceptable to you, purchasing is a great way to begin practice quickly.
INDEPENDENT CONTRACTOR ALTERNATIVE
If you have decided to work for someone else for a few years, you might consider becoming an independent contractor. In this “hybrid” situation, you would be setting up your own practice within another practice.
You would set up your own business entity (usually a sole proprietorship) and use the other doctor’s facilities and equipment and staff, doing your own marketing and creating your own patient base. This option saves you money, provides you with a built-in mentor, and allows both doctors the ability to have a colleague to see patients and share the overhead.
TO START UP OR BUY?
The final decision in this section relates to starting your own practice vs. buying a practice. Here are some considerations:
You should start your own practice if:
- You can buy your equipment (new or used) at a reasonable price;
- You wish to practice in a specific geographic location and there is no practice at that location that fits your needs;
- You are confident that you can obtain financing for a startup (It’s more difficult to get a startup loan compared to a loan for an existing business.);
- You have enough financial backing or savings to live on while you’re getting started.
You should purchase an existing practice if:
- It is in the right location;
- You can negotiate an acceptable price;
- It has good employees in place;
- You can reliably determine that it is generating profits consistently at a comfortable level;
- You can reliably determine that the information about the patients and financials is correctly stated;
- You feel confident that you can make a reasonable living at this practice within a year or two.
In general, if you can find an acceptable practice in the area where you want to live, buying an existing practice will save you lots of time and money, since the systems and equipment and patients are in place and the business has a track record which you can use as a basis for financing. You can generally make a profit faster by purchasing a practice than by starting a new practice, if you can get it for a reasonable price.