Would you pay $200K for a practice with no clients?

Looking to buy a practice?  How about great practice for only $200,000?  Everything is new.  Fresh paint, shiny floors, the latest computers, brand new equipment, well stocked drug inventory.  The décor is modern and appealing.  Everything is exactly the way you want it, no compromises.

How much does it gross? Well nothing.  How many clients does it have?  Well...none, since you’re asking.  This is called a startup practice.

But, don’t worry...it does have plenty of expenses.  Let’s see.  There’s rent to pay, telephone bill, utilities, trash service, yellow pages ads, receptionist salary, tech salary, payroll taxes, medical supplies, legal and accounting expenses, etc.  Oh, of course there is a nice loan/lease payment on the money borrowed to buy the equipment and start the practice.  And the working capital loan to cover the business expenses.

 And the best part is you get to work for free!  Oh, you’d like to have some money to spend on personal ‘luxuries’ like food, rent, car payment, student loan payment, clothing.  No problem, just borrow more money to cover your living expenses for 6-12 months while the practice is running in the red.

 Clients?  Don’t worry, clients love to change doctors.  They can’t wait to leave their current doctor and start seeing someone new, asking to transfer their records. Why buy an established practice when you could start your own new practice? You don’t want used equipment do you?  You want to do it ‘your way’ right?

Clients are overrated anyway.  Sure, with an established practice you can make money from the very first day of ownership; and you can plan and budget how much you can expect to make with an established practice.  Sure, you’ll know about how many hours/week you’ll need to work to make a planned income.  Sure, most risk is eliminated.  Yes, you’ll probably make lots more money over a 5-10 year period by buying and existing practice.  Yes, you can often buy an existing practice with less money for down payment than with a startup.

But you won’t have the joys that a startup gives you.  Joys like wondering how to pay the bills, or playing computer solitaire while waiting for a new client to call in during an otherwise unscheduled afternoon, setting up the management systems, finding/hiring/training all the staff, working with architects and construction crews, finding the right location, studying demographic reports, etc.

Startups can be successful.  But don’t underestimate the cost, effort, and increased risk associated with startups.

David Greene is President and founder of Medical Practice Brokers, Inc., the Rocky Mountain region’s largest business brokerage firm specializing in sales of medical related professional practices.  Mr. Greene and the associates at Medical Practice Brokers, Inc. have assisted Sellers and Buyers in the successful transactions and valuations of numerous medical practices including: Medical primary care, Medical primary care and surgical subspecialty, Dental, Chiropractic, Veterinary, and others Mr. Greene is a seminar instructor on Buying and Selling Practices, and has been an invited speaker at universities and professional groups on the subject of practice sales and values.  He is a member of the International Business Brokers Association and holds their prestigious Certified Business Intermediary (CBI) certification.

Medical Practice Brokers, Inc., 15847 Woodmeadow Ct., Colorado Springs, CO 80921
Direct Line: (719) 487-9973    FAX: (719) 487-9974    Email: dave@practicebrokers.com