Opening Practice Cold Budget

[doofy]

Could anyone give me an estimation, or thoughts on the amount of money needed to finance opening a practice cold? I understand there's a lot of factors, especially in terms of location, etc. so there could be an extremely wide range.

But in terms of equipment, what's the bare minimum?

Any thoughts are appreciated. 👍

(Oh, does SDN delete old inactive users?)

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[rpames]

The common number tossed around is about $150-175k. But, as you mentioned, there are a ton of factors.

 

[doofy]

Of the 150-175k, how much would I need in solid cash to obtain loans and/or other financing options, etc.?

Any ideas?

 

[eyeguy03]

I think it is in the upwards of 200K but that is in a metropolitan market. More rural will have less costs.

There are so many factors that can alter numbers one way or the other. You will need all of it in a checking account to finance your options. Start pricing out equipment now and research your area.

Some equipment you can lease, but furniture, supplies, office supplies, you have to pay up front for.

Frames - some companies have 30/60/90 day billing where they break up your bill into 3 equal payments. This is going to be your biggest expense. Some frames you can purchase for 2.95 if you buy 100 of them. Hey, it fills board space. VSP has altair frames you can have on consignment - you don't pay for them until they sell. Start small - no more than 300 frames to start. TRUST ME. Once reps know you have opened - they look at you like fresh meat and every one has frames that are "awesome" or "I sell this frame all the time". Be cautious and buy frames for a varied patient base and not just what you like.

KRG O.D. FINALLY!!!

 

[orangezero]

Does your school have any practice management courses? As hard as it is, paying attention in there instead of just the classes that have to do with the boards will pay off down the road. At the very least, take good notes.

There are so many factors that go in to this that its hard to give a good estimate.

Just as an example, I'm looking to start my own practice right now and it will probably be under $50k. But its a unique situation. You don't have to spend $20k on frame boards and desks that match. You don't have to buy all new equipment. You don't have to rent 3x the amount of space you need at first, hoping you will expand in to it. You don't have to have the newest topographer or autorefractor right from day one.

Its my feeling that the above ideas get people into being almost forced in to accepting the lowest of the low vision plans just to eek out a little more cash each day.

If you are in school, spend the time calling up some used equipment reps and getting some quotes on prices. My feeling on what I need for a lane is vastly different than it was when I was in school.

As best you can, spend your time finding out what you like and don't like about slit lamps, etc. and writing the stuff down. Once you are out of school you don't have that much access to equipment anymore unfortunately. And if you are going to be starting out right away, see what extra equipment you can pick up under your student loans at student discounts. Then just eat at home for a few weeks to make up the difference, right? 😀

But the biggest part is spending smart and knowing your market.

 

[rpames]

I completely agree that many people get into trouble by getting a ton of expensive equipment, but 50k? Did you find a building you can rent that you do not have to remodel? I'm in the process of opening an office cold upon graduation so I know the numbers pretty well. We found a place to lease (1000 sq.ft) in a small town, but we have to build out the place. As of know we think it will be about 30k just to put in the walls, electric, and plumbing. The does not include cabinets, paint, fixtures, frame bars, desks, computers, printers, basic equipment, frames, contacts, drugs....

50k seems low for any kind of opening of an OD office, even a "unique" one.

 

[orangezero]

Rural hospital basically giving me the space, already set up like a doctor's office which does help a lot. $100 a month for phone, fax, and internet services. needs carpet, paint, furniture, and some frame displays. But, i'm not buying the super expensive ones 😎 .

I've heard looking for a previous tenant who was a dentist, chiropractor, or physician can save you a bundle on build out.

like I said, very unique. I think this is where optometrists can do well. BUT, most want to live in huge cities where luxotticca seems to be king and walmart takes all the scraps (slight exaggeration). It requires a much different strategy than what I'm dealing with.

IF you spend the time to learn retinoscopy, you don't NEED to have an autorefractor. You don't need an NCT (which patients usually hate anyway). You don't need a topographer. That right there is saving 25k to 35k...

hope that clears things up a bit.

 

[rpames]

I think you are in a good position. Not many people spend the time to find a place like that.

 

[paremyd]

I opened cold in a big city 3 years ago. I spent about 150K to get the doors open. 50K in cash and about 100K in bank loan. I had to put a lien on my house. It was through a small bank through the SBA. Because it was called a low doc loan, it was a breeze to get approved.

Not every situation is the same and sometimes you just have to be persistent and someone might be willing to listen to you. I have been working for 7 years, so my student loans were 1/2 of the original. I had plenty years of tax returns to prove my income was steady.

You can also get financing through Matsco and HSPC if the SBA wont approve you.

 

[doofy]

I opened cold in a big city 3 years ago. I spent about 150K to get the doors open. 50K in cash and about 100K in bank loan. I had to put a lien on my house. It was through a small bank through the SBA. Because it was called a low doc loan, it was a breeze to get approved.

Not every situation is the same and sometimes you just have to be persistent and someone might be willing to listen to you. I have been working for 7 years, so my student loans were 1/2 of the original. I had plenty years of tax returns to prove my income was steady.

You can also get financing through Matsco and HSPC if the SBA wont approve you.

Is it much harder to get a bank loan if I were to open fresh out of school with 100k in student loans?

 

[rpames]

Is it much harder to get a bank loan if I were to open fresh out of school with 100k in student loans?

That is very true. I'm opening an office with my father. He has an established office (open for 34 years) and now we are opening a satellite. So the loan for us is not going to be a problem, I lucked out in regard to this. But a very close friend who has 160k in loans graduated last year and just opened an office MN. It took him 6 mo to get a $165k loan to open. He ended up having to get his father to co-sign the large loan, and also loan him the 20% down. All said and down, he opened, but his good financial support from family. Many times the schools lead you to think that once you get the big DR in front of your name, then bank will just through money at you...not true. They will loan you money, but you need to be in good financial shape.

 

[doofy]

That is very true. I'm opening an office with my father. He has an established office (open for 34 years) and now we are opening a satellite. So the loan for us is not going to be a problem, I lucked out in regard to this. But a very close friend who has 160k in loans graduated last year and just opened an office MN. It took him 6 mo to get a $165k loan to open. He ended up having to get his father to co-sign the large loan, and also loan him the 20% down. All said and down, he opened, but his good financial support from family. Many times the schools lead you to think that once you get the big DR in front of your name, then bank will just through money at you...not true. They will loan you money, but you need to be in good financial shape.

They took him with his father being a co-signer because his father had a large income or a good credit history?

 

[paremyd]

Is it much harder to get a bank loan if I were to open fresh out of school with 100k in student loans?

I'm sure it will be harder, but persistent counts. Your rates might be higher.

But if you have fantastic business plan, someone may listen to you. Just don't give up.

You might have to have a co-signer and some collateral. The other financing companies (Matsco & HPSC) may be willing to loan you money instead of a large bank.