As a business owner, you want to grow revenue, increase profits, boost your market share, and help more patients. Expanding the business might seem the logical next step to achieve your goals, but are you ready to make that move?
With so much at stake when considering a business expansion, there are five questions to consider before launching a new location.
Are My KPI’s on track?
From the number of patient referrals received per month to the total amount of revenue pulled in each year, every business has its own gauge of success. Before opening a new location it’s important that your practice’s key performance indicators are on target for at least two years.
In addition, it’s crucial to have duplicable processes that have been vetted and are successful at your current location.
Audigy’s operations and finance experts can tell if you’re ready to expand. They can review your KPIs and financials. Most important, they will help you determine whether you have the correct people on your team to help the expansion succeed.
Do I have the right team in place?
Speaking of “correct people”: Expansion requires a solid team in your corner. You want the right folks in place who can run your locations, stresses Perrott, and that means it can’t just be you.
If you’re “‘key-person-dependent’ such that the business requires you to be present each day, then it’s not yet time to open an additional office. Fortify your systems, processes, leadership, and communication skills to provide the guidance and direction your team needs.
Until you’ve successfully progressed to owner-manager, by which you can consistently achieve desired outcomes through delegation — without having to be involved in the day-to-day — you should not consider expanding. There’s still potential in your existing four walls.
It’s also important that your team knows and is on board to help facilitate your three- to five-year goals. Include key staff who have the licensure that allows them to be part owner or who have the skills you need to expand. Talk to office personnel who may be interested in managing multiple locations as well as providers who are interested in equity earn-in, for example, or equity purchase.
Is the new opportunity well-scoped?
Audigy’s business-development experts can help you determine if there’s a desirable market to expand into. You want to look at the current market size, the growth rate of the 65-plus population over the next two to five years, and you want to see how competitive that market is right now.
Planning, especially, is essential. If considering an expansion, you need to have a detailed plan for your existing location and your new location. This isn’t simply a budget but should also include training for your people and a step-by-step guide for marketing and operations in setting up the new location.
Are finances secured for the new location?
Expansion is costly, so make sure your financials are in order. Will you self-finance this new location? Are you taking out a loan? It’s never too soon to plan, and that includes figuring out the money side of things as early as possible.
It’s also crucial to have six months of operating reserves in place. When expanding, you need to be sure you can cover any potential losses not only at your current location but at the new one, too.
For practice finance tips, read our 5 Steps to Keep Your Practice Financially Health
Has the new locations business structure been identified?
When it comes to settling on a business structure — LLC, corporation, limited partnership, something else? — include your attorney and certified public accountant in that discussion.
What type of entity will the new location be? Will it have its own tax identification? Will it be part of your existing business entity? Every option has pros and cons.
Also, will you acquire an existing office or start a location from the ground up? Many Audigy members have successfully expanded their businesses — some by buying other practices.
Do you want a bigger piece of your market? Count on Audigy. From working closely with your legal team and CPA to assisting with acquisitions, valuations, location scoping, market-share analysis, and more, we’ll help you every step of the way. Learn more by reaching out to Audigy now.