In my last article, I shared with you the costs of opening up a practice cold.
Depending on the type of business you are looking to design, costs to open will vary widely (as I learned from all of your great feedback)! The one thing that remains the same no matter what:
Everyone needs money to get started.
With that, let's go over some viable options to get your project funded:
True Story: The first day I went to my lawyer to discuss the process of opening a business, he flat out asked me if I had a rich uncle. I thought he was joking; he was not.
- Family: The good thing about this type of investor is that you can negotiate a lower interest rate (if you are even paying them back) and set-up a payment plan that makes sense for your business. The obvious con to this is that you are putting family into your business and things can get complicated quickly if everything is not laid out clearly on both ends. If you go this route, make sure you have a lawyer create documents that make the deal legally binding and will protect both parties.
- Mentors/Other Doctors: Have you created a relationship with an older doctor or your mentor that would be interested in possibly opening a satellite site that you would run, but their investment would give them equity?
- This option could also start to delve into you purchasing an existing practice and making it your own. I don't have much experience in this arena, but it is definitely a great option if you are afforded that opportunity!
- Venture Capitalist: I learned that there are people out there with so much money they are looking to invest their money into non-traditional places where they think they'll make their money back quickly. Traditionally these capitalists would invest in medical technology, but if you find the right person and you have an innovative approach to an optometric business that will take off in the right area, this could be a good option. One great site to look at is Angel Investors.
Small Business Administration:
This is a government run operation that helps to fund start-up businesses as well as existing businesses. They also offer endless content on how to start a business, create a business plan/structure, what licenses and permits you'll need, how to deal with finances and taxes, hiring/firing employees, and the list goes on and on! I recommend that you click over to their website and look into all the resources they have.
I personally went to a local SBA Center to talk to someone in person about my options with this resource. They were superhelpful and even gave me useful tips on marketing and networking.
Although this is a great option, the one drawback for me is the SBA takes longer than traditional lenders because of the amount of steps that have to be taken in order to get approved.
This is a new-aged option: get people to donate money to support your venture. You've heard of GoFundMe to raise money for just about anything, but there are business specific sites. Some common ones are:
My one piece of advice is to make sure that you read the fine print of the platform so you know exactly what to expect. Some companies claim a percentage of how much you make, others charge a payment processing fee for any money collected.
This is the most traditional option.
If you need money, you go to the bank for a loan. Well, my firsthand experience was not that easy.
I called every bank in my area from large corporations to smaller hometown ones. Just about all of them told me the same thing: "We do not lend to start-up companies; we only give loans to businesses that have been in business for X amount of years with X amount of profit margins."
To say the least, I was defeated until a very helpful teller at my local Bank of America told me about a special program for physicians called Practice Solutions.
Yup, Bank of America has a program that lends to start-up companies in the healthcare field, as there is less risk in a physician's office vs. a new restaurant, coffee shop, etc...
I can't say enough about Practice Solutions and the team there. They were SO helpful and made this process relatively easy. We met with a local representative that helped organize our initial meeting and application.
Here were a few of the big things that we needed to get started:
- Personal Tax Returns (2 years)
- Application (asked about financials/liabilities/assets, etc…)
- Personal Credit Report
- Registered Business with Tax ID
- Life & Disability Insurance (as collateral)
- Landlord Subordination and Waiver
It took only about a month from when we submitted our application to the approval of our loan!
We set up a project phase of our loan to set up our office and then a line of credit for cash flow once we opened our doors. From there, the ball started rolling!
Our loan interest rate settled at 5.99%
Practice Solutions is dedicated to help your business succeed! To continue making sure you are growing they have you do a monthly “Practice Heartbeart” that gives you a resource to track your expenses, profits, losses, new patients, number of patients seen, etc… They offer you endless support on marketing, networking, and how to improve your business if you are not meeting your targets.
Ultimately, the process of getting funded was a frustrating one. I (naively) thought that this was going to be easy and banks
would be throwing money at me. What I recommend is getting out there and weighing all of your options and see what works best for you!