Preparing for a Successful Solo Career
Dr. Paul J. Pavlik, August 6, 2020
Give yourself a financial safety net
Consider setting aside money that you think will adequately fund your practice and personal needs for at least six months, but preferably for one year. This safety net can come from dollars you have already set aside personally, from profits from another business, or from adding this amount to the business loan (e.g., bank, SBA, LOC, etc.) you are requesting for starting the practice (i.e., a Line of Credit or LOC).
This safety net should include dollars set aside for business necessities only, not for play money that would fund expensive vacations, new homes, new cars, etc. while you are in your first year of business.
Be sure to develop a business plan (i.e., a BP), in advance, that includes a source of contingency funding while your new practice begins to grow; the lending institutions will have more respect for you as a potential borrower when you show you have considered every scenario, good and bad.
You don’t have to go it alone
No matter how experienced or knowledgeable you consider yourself to be, great comfort can be gained by adding the additional business IQ, which other advisors can offer, to your arsenal. These sources of guidance can include additional education, apprenticing (associating) with doctors who have been successful, and/or seeking out mentors and/or consultants who really know their stuff.
Carefully choose your sources of additional knowledge by asking for testimonials from other dentists who have used these advisors’ services in the past.
Consider sharing your office space with another independent dentist owner. If you have office hours on Monday through Thursday from 8 to 5, allow someone else to use the space Friday and Saturday and Monday through Thursday from 5 to 9. Remember, you are paying for the rent or mortgage 24 – 7.
Strongly consider why potential clients and future customers may want to spend their hard-earned money for your services and/or products. For example, what will you offer that is unique and separates you from the crowd (e.g., niche products and services, better quality, outrageous customer care, speedy service, etc.) Proudly display your name and what your new service and/or product offers. Market your strong points every chance you get.
Approach your former employers, educators, mentors, piers, and vendors (after all, they owe you for the money you spend with them). Find out if they can help you put together a network of contacts that will help you grow your practice.
It’s worth spending money on classy letterhead, business cards, and a web site. You want to inspire confidence. You don’t want to look as if you are just starting out – even if you really are.
Carefully predict your future
Develop a sound business plan that includes a three-year forecast of your anticipated profits and expenses. Anticipating profits and expenses beyond three years is a “shot in the dark,” at best.
Consider every possible source of income. Obviously, income anticipated from products and services rendered to your primary target customer audience will be your main revenue source. Don’t forget, however, to consider other potential revenue sources while your business is establishing a customer base. These other revenue sources could include point-of-sale products (such as informational books/pamphlets that will help guide your customers toward future purchases of your main service/product line), and/or hiring your expertise to outside employers during your free time (such as teaching at a local university or working in a government agency part-time) – this can also help build a future new client base from contacts made at these locations.
When evaluating your new business’s expenses, be sure to include all operational expenses such as:
- Employee salaries and all additional expenses and benefits that may apply to them.
- Supplies including both general office/clerical supplies plus those supplies needed to produce your product or service.
- Outside contracted expenses including subcontractor services, independent contractor services, laboratory services, etc.
- Facility expenses including rent/mortgage, cleaning services, maintenance, new equipment, computer hardware and software, utilities, etc.
- Administrative expenses including legal, accounting, bookkeeping, consulting, telephone, insurance, taxes, etc.
- Paying yourself including your salary, setting aside money for taxes, distributions, medical and disability insurances, continuing education, business meals, business transportation, and other benefits, etc.
- You will also need to consider other expenses such as repayments for business loans (liabilities as shown on the Balance Sheet) and educational loans.
- To be safe, tack on a profit margin. Depending on the industry, a healthy starting point is twenty percent after all expenses (including your compensation and benefits) have been subtracted from revenue.
Remember, you can’t bill out every hour
When you are getting started in business, don’t count on producing revenue for every hour your new venture is open. Unfortunately, you most likely will not have a full load of clients for your products and services until you establish name recognition and a strong customer base.
In order to be as successful as you can be, you will discover that there is more to business than simply selling and producing; you must be involved in every detail of the business. For example, it is reasonable to expect that you will spend 20 percent of your time on administration (writing proposals, preparing budgets, evaluating your financial statements, monitoring, measuring, and analyzing progress, re-forecasting, billing, managing accounts receivables, preparing employee policies, etc.) and another 20 percent of your time on marketing. Remember, however, that these endeavors take away time from your real area of expertise.
You have two choices: (1) you can develop a broad set of skills so that you can manage these projects on your own or, (2) if you want to know what is truly going on with your business finances, but you don’t want to allot time to non money-making tasks, you can decide use your time and efforts for “doing the business of your business” (i.e., spending your time where you have the greatest expertise) and then paying for these ancillary services either by hiring the appropriate employees or outsourcing to experts.
Trust is a good quality, but …
Regardless of your chosen business, statistics show that one of every thirty clients is going to turn out to be a deadbeat. To minimize future problems, make sure you come up with a document that heads off expensive spats by spelling out everyone’s obligations – yours, your clients, and your vendors. The age-old handshakes and verbal agreements may demonstrate that you are a trusting individual, but experience tells us that long-term successful relationships and friendships are better ensured when both parties can refer back to agreements that have been put down in a written document.
You can find standard contracts online, but you will want your attorney to customize them and then, if you renegotiate with your client, make sure that the lawyers sign off on the final documents.
Simply put, there is no such thing as job security when you own a business. What was once a lucrative business can dry up in an instant. Therefore, prepare for the worst of times and enjoy the best of times.
* A special thank you goes out for ideas from Josh Hyatt, Senior Writer for Money Magazine
The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial advisor. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial advisor. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.
Are You Ready to Meet or Exceed Your Goals?
We are here for you. Let us help you succeed in your career!
Learn how you can build and run a sustainable, scalable, profitable, and salable practice.