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Establish a business survival plan before hard times hit
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by Agustin L. Gonzalez, OD, FAAO
Not everyone is comfortable with the turbulent times of Wall Street and their investments. With some financial experts predicting a slow-down in the economy, today just might be a good time to plan for a rainy day.
An often-overlooked practice management tip is to plan for hard times while you have the resources and set time to prepare for a worst-case scenario.
Wall Street experts know that predicting the future is difficult, but good planning can better shield your office. Here are some suggestions to plan for adversity.
Calculate expenses, cash flow
Working harder is never a good business plan; rather having a plan and using key metrics as a compass in your practice is a good first step. If you have been in business for a few years, you can easily calculate your fixed expenses and average cash flow. You can use this data to project earnings and expenses.
Plan ahead for how a change in earnings or cash flow would impact your business. Identify essential overhead items and prioritize what cuts or sequence of changes would be done. Be sure you have a good idea of your “survival numbers” and draft a plan that would be able to sustain your business.
Protect your assets
In a downturn in the economy you must implement strategies to protect the assets you have. This is important, because it is now that you have the resources and legal right to do so. Having comprehensive insurance and legal structure to cover both personal and professional assets is a safe way to stay out of harm’s way.
I would suggest seeking professional help that would revisit your disability insurance, personal liability and umbrella insurance, business liability and malpractice coverage, and any required business life insurance.
Cut costs
When you spend less, you save more, so if you think bad weather is coming, consider changes in cost savings and revisit any significant investment that will not produce immediate income.
During a recession, the key to survival can be as simple as having cash reserves available to sustain key fixed expenses. If the cash flow is affected it is important to have a plan and understand how long you would be able to meet any current business or personal overhead.
Identify leakage
During hard economic times everyone wants to make sure they keep as much of their hard-earned money as they can. Try to identify money leakage in your practice. Look at billing and collections practices and see what expenses can be reduced.
When cash flow and earnings are restricted it is important to keep more of every dollar earned. Take a good look at the high and low profit services you provide in your practice and look at potential new revenue opportunities. Consider fitting scleral lenses, myopia control or establishing a specialty dry eye clinic.
Market your services
Optometry is a competitive space, so market your services. Make it easy for patients to find you and for other providers to work with you. Your optometry office is a service business and, as such, has to compete with the best by delivering value while framed in an atmosphere of superior care.
Most optometrists do not ask for referrals from current patients, and you are missing the boat! Ask for referrals from your patient base. Do not wait to be on a sinking ship to get a life line.
Seek advice
Finally, do not pretend to be the expert. Seek advice on these issues by obtaining professional advice from your accountant, insurance broker or even outside consultants. Remember, not everyone is comfortable with the turbulent times, but having a good plan for a rainy day will always help you navigate stormy weather.
For more information:
Agustin L. Gonzalez, OD, FAAO, ABCMO, practices at Eye and Vision’s North Texas Center for Dry Eye and Ocular Surface Disease. He also founded a dry eye clinic in the North Texas area and has a special interest in cornea and external disease. Gonzalez is a member of the Primary Care Optometry News Editorial Board. He can be reached at: gonzalez.agu@gmail.com.
Disclosure: Gonzalez reports no relevant financial disclosures.