Dr. Kling, center, with his associates: Kat Ordonez, OD, (left of Dr. Kling as you look at photo) and Andrea Meagher, OD. Dr. Kling says there’s great value to having a practice that can run without you.
Building a practice that doesn’t need you
Mick Kling, OD
August 21, 2024
According to a recent AOA Survey, the average optometry practice in the U.S. generates around $850,000 in annual revenue per provider.
This makes sense when you consider most practices are owned by a single OD who provides all of the clinical care in the practice.
Because many ODs have a difficult time delegating, there becomes a limit to the amount of productivity that a single practice owner can achieve.
I believe one well-utilized OD should be capable of producing $1,000,000 in practice revenue on five days a week of clinical care. This assumes 10 comprehensive exams per day, generating $400 in revenue per exam.
Since most ODs have a difficult time delegating administrative tasks, that leaves about four clinical days of patient care each week, with one day per week spent performing administrative tasks.
Using the above assumptions of productivity, you can see why many practices plateau at around $800,000 in practice revenue.
By carrying the burden of both clinical care and administrative tasks, many OD owners limit their capacity and ability to scale their practices, never achieving the arbitrary holy grail of $1,000,000 in annual revenue.
Unfortunately, most ODs don’t own a business, they own a job. That is, while their practice provides a great income, the business itself often generates little profit after compensating the owner for the time spent in the practice.
If you are in this situation, consider what happens when you take a two-week vacation. Practice revenue declines while your bills continue to pile up.
Your team will still expect to be paid, and your landlord will expect the rent check. A two-week loss of patient revenue has a painful impact on our bottom line and personal pocketbook. Worse yet, what would happen if you became ill or took an extended absence from your practice?
Could your business survive 30 days, a full business cycle, without you? If not, you’ve created a business that is too dependent on you. The more time you give to your business, the more reliant your business will be on you.
With this in mind, your goal should be to begin to build a business, one that doesn’t need you. One that can survive forever without your involvement or influence.
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A Systems Based Approach
In the early years of practice ownership, it’s easy to build your business around key employees. You may feel relieved just to find someone who shows up on time, can be trusted and is happy to do some of the tasks you don’t enjoy doing.
Building a business that doesn’t need you, however, requires a change in strategy and emphasis on building around systems and not people. Without a systems-focused approach, these key employees store critical knowledge about your business (often inside their heads).
And once these key employees leave your business, as almost all employees do, the core knowledge of your business goes with them. That’s why creating a business solely around key people only creates a new set of problems.
When your business becomes overly dependent on people, and not reliant on systems for sustainability, you set yourself and your business up for failure. Systems, on the other hand, don’t replace people; they empower them to create consistency.
The Five Stages of a Business
Building a business that doesn’t need you won’t happen overnight. In fact, it takes most business owners many years to create a self-sustaining business capable of surviving without the day-to-day involvement of the owner. It may be helpful to consider where you are on the journey, and where you are headed.
Most businesses go through five stages to ultimately achieve self-reliance and sustainability.
In the early start-up of Stage 1 you are simply planning and preparing for your first days of business.
As you evolve past your opening day, you move into Stage 2, the early phase of survival, as you’re just trying to figure things out.
As you continue to gain confidence, you next enter Stage 3, the middle phase, where some systems are being created and documented, and certain key employees are taking more of the responsibility from you.
As you enter Stage 4, you are becoming more reliant on your team members for support.
Stage 5, our ultimate goal, is when you have created a self-sustaining business capable of surviving without you.
Why Scale to a Stage 5?
Scaling to Stage 5 allows you to continue enjoying all the things you love about your business. It also gives you options! It gives you the ability to decide if and when you’re ready to sell and pass your legacy on to the next generation.
It allows you to take vacations when you want, be more generous and enjoy a more passive income. It creates a more stable company and provides greater control over your financial future by increasing the value of your business and your net worth.
It gives you the freedom to explore other ventures and personal interests, while providing security and new opportunities for your team, contributing to a stronger, more resilient organization.
Conclusion
Building a business that doesn’t need you may seem threatening at first, however, it should be empowering. It allows you to scale beyond your own limitations and individual capacity.
Operating your business with systems, instead of depending on key employees, empowers you and your team, giving you the flexibility to choose your level of involvement, thus freeing you to enjoy more of the rewards of practice ownership.
M
ick Kling, OD, is the president of Impact Leadership and the founder and CEO of Invision Optometry in San Diego, Calif. Dr. Kling is also the Practice Management and Transition Advisor for Vision Source. To contact him: dr.kling@invisioncare.com
