Questions to ask Yourself before Opening a Profit Center - Be Sure You're Prepared
As physicians, we’ve learned to become efficient operators and we know how to maximize our performance to generate a healthy revenue. Problem is, there is only so much of you and if your only way to scale up is through you, it will lead to exhaustion. And nothing will make you dislike your job more than pure exhaustion.
So now you consider opening a Profit Center – what I define as a successful business that works for you while you’re asleep or away. Great idea. But there are questions you need to ask yourself before you proceed because if you don’t, you will lose sleep and a lot of money.
First question, are you willing to take risks? I believe in the old saying “no risk, no reward”. So you first need to accept that you can’t expect someone else to take your risk and you pick up the reward. If you are still nervous, reassure yourself you’re not going to die. But know that the ultimate responsibility relies on your commitment and doing your due diligence with research.
Ok, so now let’s assume you are willing to take the risk. Now ask why do you want to open a Profit Center? Is it because you want to diversify? As a sole proprietor it is a little scary when there is a large staff and a lot of overhead. So, if diversification is a reason you’d like to open a Profit Center, it’s a good idea.
Another “why” to open a Profit Center might be that you just want to make a profit? If you answer yes to this, remind yourself that money doesn’t solve problems, it becomes a way to keep score in life. But provided your values and your heart are in the right place, it can be fun and rewarding to make more money! For me, it’s a challenge. I love the challenge.
Is there an intangible benefit to opening a Profit Center? 22 years ago, I opened a surgery center. It has not been incredibly profitable center but it provides a huge intangible benefit because of the efficiency it has provided. I can have morning appointments in the practice, head to the surgery center for a facelift, and then be back upstairs to work on my business by afternoon.
Make your own list of what intangible benefits a Profit Center will give you. For instance, if you can take revenue from a Profit Center and shift it into paying down debt in real estate or whatever you need to. In this scenario, you are turning your ordinary income into capital gains which can be favorable treated down the road – another strategic reason for your “why”.
If you are comfortable with your “why” to opening a Profit Center, you now need to be sure your primary practice is in order. Is your accounting absolutely accurate? Is your legal set up correctly? And have you become a student of leadership? You’d be surprised as to how many physicians I’ve mentored cannot say yes to these questions and had to stop before moving forward because if your primary practice is a hot mess, you will not succeed opening a Profit Center. I guarantee this.
If you don’t have good systems in place, a positive culture, and policies that are adhered to so you can leave your practice for a period of time without worry (or late night phone calls) then you only have a job. The problem with a job is that it is not worth anything – no one will want to buy a piece of equity. So, if this is the place you are in then you have work to do before you can open a Profit Center.
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