Insights From Our Editors

Top Reasons Practices Fail

By Mark Wright, OD, FCOVD,
and Carole Burns, OD, FCOVD

August 29, 2018

There are common reasons businesses fail. What are the top signs that you may be setting your practice up for failure?

Here are the 10 reasons given in the article “10 Reasons Why 7 Out of 10 Businesses Fail Within 10 Years,” and how they relate to an optometry practice.

Failure to Deliver Real Value
Most people buy value over price. The question is, have you taught your staff and your doctors how to communicate value and not just price?

Failure to Connect With the Target Audience
Your practice management software can create a report that shows you the demographics of your practice. The value of looking at the demographics of your own practice is the moment you know the make-up of your practice is the moment you see the holes in your practice demographics. What patient target groups are you missing? What connections with those missing patient target groups do you need to make?

Failure to Optimize Conversations
Without conversation optimization, your doctors and staff are just wasting time. Scripting helps conversation optimization. There are only a finite number of excuses people give for not following your treatment plan. Identify these excuses and create a script for overcoming them.

Failure to Create an Effective Sales Funnel
Think of a sales funnel as a step-by-step process that takes someone from awareness to purchase. This is one of the most effective tools that you can have in your practice. The image below helps visualize the sales funnel.

You can bring a lot of people into the top of the funnel with awareness that a certain visual problem exists through marketing, and even your examination, but have you worked out with your doctors and staff specifically how to bring people through the steps of interest and decision to the most important step of purchase?

Lack of Authenticity and Transparency
We’ve noticed a trend with Millennials that they want the frame and lens selection to be transparent. They do not like to be surprised at the total price at the end of the frame and lens selection process. They want to be aware of what is happening to the total price as the process is happening in real time. How have you changed how you handle the frame and lens selection process to include more transparency?

Unable to Compete Against Market Leaders
Competition is always difficult. Your pockets are not deep enough to compete with the big box stores on price, so you need to be more creative. The article “4 Ways Small Businesses Can Compete Against the Major Competitors” gives these suggestions:

• Niche down
• Pick your angle and flaunt it
• Jaw dropping products and services
• Customer service and relationship should be your sidekick

Have you implemented these four suggestions in your practice?

Inability to Control Expenses
If your practice is below $5 million gross revenue collected, then you need to be utilizing a buying group or an alliance to help you control expenses. Select the group that matches your prescribing habits the most closely. You also need to examine staff productivity. Watch overtime and people “riding the clock.” Take control of your overhead by instituting a purchase order system. The bottom line is – have you taken control of your expenses?

Lack of Strategic & Effective Leadership
Every practice owner should be spending a minimum of one half-day per week on practice strategy. Most owners spend their time on crisis management–the “fire” of the day and how we put it out. But, crisis management is not strategic management. Strategic management is about handling these three areas:

• Future planning
• Risk management
• Fiscal planning

Failure to Build an Employee “Tribe”
What is your practice culture? Did your practice culture happen because it was planned or did it just evolve? It takes thought, effort and ongoing work to create and sustain the best practice culture.

Failure to Create the Proper Business Systems
Here is a list of some of the business systems your practice should have:

• Customer relationship management (CRM) systems
• Financial audits
• Financial tracking procedures
• Hiring, Managing, Disciplining and Firing
• Preparing the office to see patients
• Marketing
• Quality control

Make sure these 10 areas are not problems in your practice, but instead are being managed well.

References
https://www.entrepreneur.com/article/287450

https://www.entrepreneur.com/article/299522

 

A few other articles that might interest you:

Digital Eye Fatigue: Top Ways to Educate Patients & Sell Products

How to Do a Practice Valuation

4 Questions to Ask Before Choosing an Alliance

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