If you’re contemplating a chiropractic practice purchase, you’re probably experiencing mixed emotions. This is very natural because buying a chiropractic practice is a mixture of possibility and risk, like all the best opportunities.
On the one hand, there’s the fear of debt. For many associates and young doctors, paying down student debt is a top priority, so taking on additional business debt is unappealing. And not everyone has substantial savings put away, which can make purchasing a clinic feel unrealistic. The possibility of making a misstep can feel suffocating – What if the clinic is overpriced? What if it doesn’t hold value? And on top of everything else, the fear of failure can be an everpresent and daunting presence.
On the other hand, owning a practice offers serious benefits for the entrepreneurial-minded chiropractor. For starters, there’s a massive financial upside. An employee only gets only a portion of the financial gain of an owner, but the lower growth potential is also significant. Associate positions typically grow at an annual rate of 2%, while clinic owners can expect 5%. Throughout a career, it adds up. There’s also the ability to control and direct your financial situation and your professional future, which is immensely satisfying. And creating a lifestyle that fits your personal needs and professional goals lets you truly enjoy the best of all worlds.
Starting your clinic from scratch may sound appealing, but the hard truth is that most new businesses fail. According to the Bureau of Labor Statistics, only about 1 in 3 small businesses make it to the ten-year mark. Even successful clinics often take years to be profitable enough to provide a professional income, resulting in a drain on the business owners’ savings that is often unsustainable.
In contrast, buying a chiropractic practice is a great way to maximize your income quickly while mitigating your risk. You get a practice with a proven location and treatment model, immediate cash flow, and a healthy net income. I’ve run the numbers: practice acquisition can increase lifetime earnings by up to 500% compared to an associate position or starting a clinic.
So what’s the catch? It all comes back to risk and whether the demands of clinic ownership are right for you as a doctor.
Most buyers focus on what to ask a seller, but sometimes the most important questions are the ones you ask yourself.
To help buyers orient themselves, understand their options, and find the right practice, here are five questions (plus a bonus!) to guide the way.
1. Do I Understand the Purchasing Process?
I’m a Certified Business Intermediary, which means I’ve undergone extensive business valuations and data analysis training. I can tell you firsthand: few businesses are as complex and multifaceted as chiropractic practices.
In addition to the usual variables of size, location, income, etc., practices vary by technique, management style, treatment model, and patient demographic. As a buyer, you’ll be weighing those variables to find a clinic that creates sustainable cash flow.
Doctors rightly put their focus on patient care more than operational record keeping. Documentation is often fragmented and incomplete. As the buyer, you’ll need to sort through those fragments, understand the factors at play, and form an in-depth understanding of the practice.
Financial statements are a central part of this process. They are the best window into the revenue, expenses, and health of a practice. But they are often confusing to read and interpret.
Before you begin the practice acquisition process, make sure you have a sound understanding of practice attributes and the sales process steps. Financial due diligence is critical, and it pays to have expert help with the analysis to make sure you’re stepping into ownership of a stable and successful practice.
2. Does the Chiropractic Practice Fit Me?
This is the time to take an honest inventory of your strengths and weaknesses.
You want your practice to shore up your weaknesses and allow room for growth in areas of strength. That way, your learning curve is shortened, and your return on investment is maximized. Many buyers neglect this step, but it can make all the difference in the long run.
Consider your management experience, knowledge base, and skill set. You haven’t hired or managed employees before, but you do have experience with online marketing. In that case, you’d want to look for a practice with long-term employees who aren’t of retirement age. That way, you’ll have a strong support system as you learn the ropes of management. A clinic that lacks strong marketing systems is a great opportunity — you can buy at a lower price and put your expertise into boosting online presence and creating growth.
Every doctor is different, which means that every purchase is different. Taking stock of your talents and limitations will help you find a clinic where you can thrive.
3. How Big of a Chiropractic Practice Do I Need?
Most doctors excel at patient care. Helping people is why most chiropractors do what they do.
But buyers are often unprepared for the demands of managing a business. Depending on the practice model, the owner may spend as much time — or more! — on the business side as they do on patient care.
Demands on an owner’s time increase with practice size. The more staff, equipment, and patients are involved, the more time needs to be devoted to management, organization, marketing, etc.
While it’s commendable to dream big, buying above your skillset is a recipe for disaster. Learning the ropes of a small clinic is difficult enough, and even experienced owners need time to understand a new practice. When you’re still honing your management skills, taking on a large operation only increases the risk of burnout and failure.
4. What Can I Afford?
As high-quality candidates come in, we provide a thorough vetting and interview process to ensure a great match
On the flip side, you want to buy a clinic large and stable enough to support your personal and professional goals.
Many buyers are tempted to buy a fixer-upper. Every practice and market has unique requirements for success. While struggling practices can be acquired at bargain prices, it takes a lot of effort and expertise to turn one around. It usually takes an experienced eye to know what needs changing. Just like a fixer-upper home, expect the turn-around process to require twice as much time and money as you first thought.
It’s best to buy a clinic that supports a professional income right from the start. This is not unrealistic, even for young doctors with a typical SBA loan. If the clinic you buy has a strong net income, you’ll get a jump on your payments and come out ahead in the long run.
After ten years of ownership, most doctors will want to own a home, have student debt paid, and have savings in the bank. Look for a practice that will support those goals. From purchase, most buyers can expect 5% growth in the first few years (or up to 10% with smart marketing), followed by 2-3% annually as your time becomes more valuable to you than your money.
5. Do I Have the Time?
Finding a practice that checks all the boxes takes work. A lot of work.
The practice acquisition process usually requires 50-100 hours from the buyer. To secure a loan, expect another 100 hours. Any missteps, false starts, or wrong turns will add time and expense.
Be ready for the demands of the process and set aside the necessary time. Consider it an investment in your future — the time you put in now will determine the course of your professional and financial destiny.
The most challenging aspect is that you don’t know what you don’t know. Prepare as best you can, but be ready for unexpected bumps in the road. Don’t let them discourage you.
Where possible, connect with experts who understand the acquisition process. Qualified guidance can provide a welcome shortcut through some of the red tape.
Bonus: Do I Know Myself?
Although the rewards of ownership are considerable, buying a chiropractic practice isn’t for everyone. Before you start down the road, take a moment to be honest about your needs, values, and preferences.
To be a successful clinic owner, you can’t be paralyzed by risk. You’ll need to turn times of change into times of opportunity. People skills are a must — well-run clinics depend on good employees, and you’ll need to find and retain the right people. You need strong motivation and a sense of pride in your work, but you also need to set boundaries and prevent burnout. A good owner needs to recognize their strengths but be ready to ask for help when they need it.
If clinic ownership isn’t up your alley, that’s okay. Some doctors prefer the security and stability of associate positions. Others would instead focus on patient care rather than marketing and management.
On the other hand, if entrepreneurship is an exciting prospect for you, don’t let the uncertainty stop you from buying a practice. There will always be risk involved, but facing that risk opens up many opportunities.
In addition to the financial rewards, clinic owners gain the intangible satisfaction of captaining their ship. As an owner, you take responsibility for your career and practice’s direction, stability, and growth. Your employees, patients, and loved ones depend on you. When it comes time for you to move on, all of your hard work comes back to you in the accrued value of your clinic.
So if you can honestly answer the questions above in the affirmative, then there’s no reason to fear buying a practice. Be honest with yourself, treat your peers with courtesy and respect, and seek help from qualified experts when you need it. Good luck as you embark on this exciting adventure!
Crystal Misenheimer is the leading expert in chiropractic practice sales. The first and only chiropractic broker to earn the coveted Certified Business Intermediary (CBI) designation from the International Business Brokers Association (IBBA), Crystal sets the gold standard in expertise, quality, and service. As Lead Broker at Progressive Practice Sales, Crystal has an unparalleled track record of successful sales. Along with an established network for nationwide representation, Crystal brings a wealth of experience, sharp negotiating skills, and a thorough understanding of marketplace trends. A former clinic owner herself, she is uniquely qualified to provide comprehensive support on the many complexities of clinic valuations and practice sales. Crystal has been recognized with the IBBA’s prestigious Chairman’s Circle and Deal Maker Awards. She was also named an Industry Expert by Business Brokerage Press, the leading trade journal for business brokers. You can find her regularly featured on Chiropractic Economics, NCMIC educational programs, and other industry podcasts, blogs, and periodicals.
Chiro Match Makers has the process of hiring DC’s and CA’s down to a science. Here are 4 ways we can help you today!
1. Download our coveted DC Interview Guide before your next interview
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2. Download CA Hiring Success Roadmap
Building your A+ team is the difference between having the ability to scale or not. If done right, it can be a path to freedom and increased profit. If done wrong, it can be one of the most-costly mistakes you ever make. Go here to get your copy of the CA Hiring Success Roadmap.
3. Explore the best way to leverage a Locum in your practice.
Grab a copy of our Benefits to Hiring a Locum Guide that will be the best time you’ve spent in buying back your time freedom.
4. Connect with us!
If you’d like to connect with us for a brainstorming session just click here to access our schedule link and find a time that’s best for you. We’d love to learn more about your practice and help you reach your goals!
