Written over 150 years ago, these famous words still seem appropriate for describing the last decade. It began with the Y2K scare, moved into the Internet boom and bust, then 9-11, the war(s), Hurricane Katrina, the housing boom (and bust), the election of Barack Obama, Lehman Brothers’ failure, and, of course the current Great Recession, plus social media, cell phones, the iPhone, and the iPod. Lots of “firsts,” some of which we hope will never be repeated.
An Uncertain Future What does the next decade have in store for us? Many ideas that are floating around poise uncertainty for private optometrists (and most medical doctors) in the coming decade. From healthcare reforms to fears of “socialized medicine,” the future still is not yet written. Regardless of the outcome, entrepreneurs will always endure and thrive.
No one can foresee what changes, if any, will come from the numerous efforts and reforms edging forward—board certification, insurance changes, licensing changes, etc. One thing is for sure, business (private practice) owners will find a way to endure, succeed, and overcome obstacles. From large cataclysmic events to personal hurdles, we are all faced with challenges in life and business. Who knows what is in store for us in the next decade.
Now’s the Time to Get Your Finances in Order Forecasts for banking and financing predict higher interest rates, inflation, and nominal revenue growth. Planning ahead will help overcome these potential hurdles. Now is the time to review and eliminate those “soft” expenses that you let slide in the past. Become more efficient. Raise fees where appropriate without fear. Examine major expenses like health insurance and rent in an effort to trim costs.
Interest rates are at historical lows and will undoubtedly increase in the next year or so. Inflation will also increase as the economy recovers. To hedge against these factors, practice owners should consider several avenues now. Refinance existing debt into fixed rate loans or loans with interest rate caps. Refinancing into longer term loans will also help improve cash flow by reducing your monthly payments.
Higher Costs, Tighter Credit Inflation will result in higher costs, including your cost of goods. In cases where you know or anticipate significant increases in inventory or supplies, look to make a larger one-time purchase before the price increases. Or negotiate to lock in prices with a vendor for a specific period. For smaller offices that generate less revenue, owners can combine their orders to get a better discount.
While lending is still available for doctors, banks are requesting more detailed information. To improve your chances of obtaining a loan, it’s best to maintain monthly, up-to-date profit and loss records for your practice. Keep tax returns and file on-time. Also, keep your W-2 and 1099 records. Some lenders will not approve loans without current tax returns filed, even if you have filed for an extension. So remember to file your tax returns on time.
More Taxes Starting in 2011 Taxes will also increase in 2011. Starting January 1st, capital gains taxes will increase to 20% plus any state increases. If you are considering selling real estate or a business, you’ll pay a lot more taxes starting in 2011. Additionally, the proposed surtax on incomes over $500,000 will include proceeds from the sale of real estate and businesses; another tax whammy.
We are optimistic about the long-term opportunities of optometry for private practitioners. Over the next ten years there are many proposals and licensure changes that will enhance practice revenue opportunities. In the meantime, for those considering a transition within the next two years, there are numerous considerations for making that transition in 2010.
Alissa Wald, OD, is president of Practice Concepts, a company that provides practice brokerage services and appraisals for sellers and buyers in the eyecare profession. Scott Daniels is a licensed broker with Practice Concepts and provides practice sales services for eyecare professionals. Contact feedback@visioncareventure.com with comments and/or suggestions for future topics.
