This story begins as many great ones do, over eggs and coffee.
Even after months of working on a start-up, encountering one obstacle after another, I would still argue that the hardest step was getting started. This is because, no matter how many pieces of advice you receive, advisors you speak to, or books you read, there is still not going to be an easy step-by-step instruction manual for how to set up YOUR perfect office. Unfortunately there are plenty of consultants who are willing to charge you exorbitant fees to relieve you of this stress. However, I've seen quotes as high as $50,000 for the consultant alone which doesn't include any of the expenses involved in actually building and opening your office. If you're rich, then maybe this is a convenient way to go about your start-up, but odds are, if you're already a wealthy business owner opening another location or something to that effect, then you're probably not as clueless as us poor new doctors.
As I mentioned, in my last post, I've planned to go into greater detail about the various steps (at least the ones that we went through) of starting a practice. This brings me back to the point. How do you start a start-up? Here's where our story actually begins...
In June of 2016, I had just spent approximately 9 months working on a negotiation to purchase an existing practice. For several months, things had been getting tense, and I had been nervous for a while that things weren't going according to plan. It was June when I finally faced the facts and resolved to move in another direction. For about a month or two, I was in a place of personal confusion and frustration, wanting so badly to have a plan and feel settled in my career.
I found myself at brunch with my future partner, discussing my frustrations and listening to hers. "I still think about just starting from scratch," I said.
"So, let's do it!" she replied immediately. It wasn't an empty offer. She and her husband had also been having a lot of conversations about what direction their careers would take, and she was 100% ready to make the kind of commitment it takes to go on a start-up journey with nothing but a good friend and bunch of dreams about the future. Conversations like this happen all the time and usually end with a lot of "that would be cool" or "we should really think about that," but this time, the timing was right, and we were both all in. Not only were we going to become practice owners for the first time, this would also be our first venture into starting a new business and into partnership. No biggie... We'll figure it out.
Generally speaking the first step of a start-up is location selection. Even that can feel like a formidable obstacle. You know that you will be making a huge commitment to this location and the community. Not only do you want to pick a place you love, you're also hoping to find a market that's not overly saturated. There are two distinct approaches to location selection. There are those doctors who suggest that you choose your dream location and just start-up there even if there's a lot of competition. If you're unhappy where you're working and living, they would argue, then what's the point of going somewhere just to be more profitable? The opposing point of view is that you should do some demographic research and set-up in a location where the "numbers" (population growth, income, education levels, competition, etc.) make sense. It may not be your dream location, but wouldn't you love working somewhere where you're more likely to have quick success and thus less stress?
After a couple weeks of discussion about what to do first and where we thought we'd like to set up, we were ready to take the first step. We took a combination approach to location selection. (We're painfully moderate in nearly all things... ) We had an idea of where we wanted to live and work, and we also purchased a demographic study. Our study cost about $600 for a general overview of several different areas surrounding the city and a recommendation as to which was best. Surely there would have been more favorable locations if we'd wandered farther from our dream locations, but we found an area that was, shall we say, "good enough?" The same company that we hired, Dentagraphics, is able to provide more extensive demographic research to take a more in-depth look at specific locations once you've narrowed down your search, but as you'll see later, we didn't feel the need to go any deeper on this.
At first, I was a little bit reluctant to spend the $600. Now, in retrospect, this seems hilarious. Starting an office, you're going to rack up a ton of expenses, and you'll have to be prepared to pay for some of these out of pocket. Once you've secured and closed on your bank loan, you can reimburse yourself for the money you've spent (and pay it back to the bank with interest... so... do what you want), but in the immediate short-term, just get comfortable with watching your bank account NOT look awesome.
I was also worried that paying for the demographic report wouldn't be worthwhile. We were already familiar with the area, and we felt confident that it would be a good place to start-up. Afterall, we knew more about the competition in the area than this demographic company could possibly tell us. We're watching new construction going on in the area all the time. What more did we need to hear? Well, in reality, having the report ended up giving me a lot more confidence when it came time to move from Step 1 to Step 2, and that peace of mind was worthwhile. In addition, (I will discuss this more later), we ended up securing a loan through a local bank rather than through Bank of America or Wells Fargo (the more popular choices), and having a demographic report to bolster our business plan gave us extra credibility with lenders.
To summarize, the demographic report was probably worth it. Could we have gone without? Probably. But if I had to do it over again, I would still start there. (There will be plenty of times during the start-up process when having a little extra confidence comes in handy.)
So finally, with demographic report in hand, we were ready to embark on Start-Up Step 2: The Circle of Impossibility. In my next post I'll discuss finding our realtor, and the search for our physical location - a surprisingly comical and complicated process.