Starting with the end in mind.
By Ann Wendel, PT, ATC, CMTPT
“What Are Your Goals?”
As physical therapists, we ask this question of our patients every day. In our initial interview with a new patient, we want to know what activities our patient wants to do when he or she has completed their course of care. We then work backward from the end game to develop short- and long-term goals, which provide feedback along the way about whether we are on track to meet that final long-term goal. We are expert problem solvers and excel at gathering objective data to measure our progress.
While we are skilled at applying this framework as clinicians, we are often not very adept at applying the same thought process to our businesses. In my conversations with private practice owners, I find that many owners are so overwhelmed with the day-to-day operations of their business that they forget to develop a plan for the end game. Many practice owners continue to treat patients while attempting to run the practice, and are so busy working in their business that they forget to work on their business. Without a road map to the destination, private practice owners are at risk of feeling constantly overwhelmed and anxious instead of confidently working toward their goals.
Jamey Schrier is a great example of a physical therapist with a long-term goal and a plan to reach it. Jamey recently sold his two-location private practice in order to focus on his true passion—coaching business owners. As an aside, I have known Jamey for 28 years. We met as freshmen at the University of Delaware in our undergraduate program. Even then, Jamey and I both had a vision for where we wanted to go in our professional careers. It was my absolute pleasure to sit down and talk with Jamey recently about the road map he created for himself to reach the goal of selling his practice. The innovative thought process he utilized will be helpful for private practice owners at any stage of the game. It is never too early (or too late) to start thinking about succession planning.
The Vision Was Not Always Clear
Jamey explained that in 2001 he started his private practice, Schrier Physical Therapy, with the goal of providing excellent care to his community. He started as a one-location clinic and handled a full caseload in addition to running the practice. He recalled that three years into owning the practice, he began to feel constantly worried and anxious about the business. As his practice became more successful and he hired staff therapists and administrative staff, he began to feel more and more overwhelmed. He worked six days a week and did everything from scheduling appointments to managing the accounting for the practice. He felt that his energy was constantly being sapped by what he refers to as low-energy activities, tasks that he did not like to do and was not good at performing. Even though he had a front office coordinator, he found himself continuing to answer the phones and schedule patients because he wanted it done a certain way. In a state of complete frustration and anxiety about the lack of time he had to do the meaningful activities he wanted to do, he sat down and asked himself some hard questions.
Jamey realized that the core of the reason that he was trying to do everything was that he did not trust his staff to do their jobs. This included everything from not trusting that his office coordinator could properly recruit new patients on the phone to not trusting that his therapists could provide excellent care to his patients. He realized that he was not leading his team in a way that would empower them to build the practice, and that he needed to make some changes. He asked himself two very important questions:
“What would need to happen for me to be comfortable allowing my staff to perform their jobs without my interference?”
“What type of training would my staff need to empower them rather than devalue them?”
These questions led Jamey to begin the process of systematizing and automating his practice, which was the key factor in making his practice attractive to potential buyers in the future. Jamey finally understood that creating systems for his practice would begin to automate the day-to-day operations, giving him the freedom to pursue the goals that would allow the business to thrive, as well as freeing up time to pursue his other interests.
Developing a Road Map to Reach the Destination
Over the next nine years, Jamey developed systems for his practice. He explained that as the owner of a small business, you can either be self-employed (a job that pays your bills but requires you to be present every single day) or you can create a business (where the owner can leave for two weeks and the business is not affected). He shared that the difference between being self-employed and having a business is the systems you put into place and the people you bring onto the team.
As he began to develop systems for the way the phone was to be answered and the scheduling was to be done, he was able to successfully train his staff and then trust that they could be effective in their jobs. Taking these small steps in the beginning allowed Jamey to see that he could begin to take himself out of the day-to-day operations of the practice. He then made a list of all the tasks he did not like to do; these included tasks like bookkeeping and accounting. He shared that he normally did these tasks on the weekend, which caused him to miss family activities. He also shared that since he was not very good at these tasks (because they drained his energy), his books were always off every month, which increased his stress exponentially. He made the decision to hire a bookkeeper and looked at that as an investment in his business.
We discussed the importance of viewing hiring decisions like these as an investment, rather than just a cost to your practice. Jamey explained that many practice owners are hesitant to invest in their practice because they are not clear on what they want. Even as practice owners get clarity on what they want, they do not always know how to get there. Jamey explained that if an owner at least knows what they do not want, then they can figure out what they do want, and reverse-engineer from the goal to develop the steps to get there. This process sometimes involves working with a business coach, as it is difficult to solve your own problems with your own thinking.
As Jamey began to trust his staff more, he empowered them to function at the highest level possible. The systems he put into place standardized operations across the two clinics, while the outsourcing of low-energy activities to qualified employees (both on site and remotely) freed up time to develop the vision for both the practice and Jamey’s other business interests. Jamey explained that he knew he needed to stop treating patients in order to free up time to lead the company. This was a difficult decision at first, because Jamey had built the company’s reputation with referral sources based on his care. He gradually took himself off the schedule as he assured referral sources that his staff was very qualified to continue the level of care he had always provided.
Systems and Organization Make a Practice Attractive to Buyers
Schrier Physical Therapy began to thrive during this time as Jamey put into practice the systems he developed. Additionally, Jamey began to thrive as a businessman as he freed up more energy to put toward his passions. His coaching business grew quickly as he shared his experience with other practice owners. He proudly watched as other owners went from frustrated and burned out to fulfilled and successful. He made the decision that he wanted to sell Schrier Physical Therapy to fully focus on his new goals. Again, he realized that he needed an expert to help him reach this goal, and he hired a company to assist with the process. He explained that a private practice owner must know exactly what they want when they begin to look for a buyer for their practice. He knew that he wanted a purely transactional deal, where he would have no interest in the practice after the sale. As we discussed different options for the sale of a practice, Jamey stated that there is a big difference between wanting to sell your practice and staying onboard to help run it because that is your passion versus being forced to stay onboard because there are no systems in place for the buyer to continue day-to-day operations without disruption.
Jamey shared that being organized and having systems in place made his practice very attractive to potential buyers. He shared that a potential buyer is buying your team, your reputation, your relationships with referral sources, your systems, and your consistency because it would take them one to three years to build that in your neighborhood. Because Jamey was organized in his bookkeeping and had all of his documents in order, he was able to share all of his information quickly with the potential buyer. The due diligence process that normally takes three months took him six weeks to complete. Jamey was able to show the buyer that his systems were in place, that the clinics ran without him on site on a daily basis, that the financials were predictable, and that the business had the potential to continue to grow. The fact that he had taken himself out of the daily operations of the business several years before the sale made the purchase even more attractive. The buyer knew that Jamey could complete the transaction and walk away, leaving a capable team in place to continue running the practice in a profitable manner.
Jamey was able to attract a buyer who was committed to continuing to uphold the quality reputation he had built for his practice. He sold to a small company with experience in owning and operating practices, and the transition allowed his staff to stay onboard. He explained to his staff that the new owner would be able to provide more opportunities for growth for the team, and his team chose to stay with the company. He reassured patients that they would continue to receive the highest quality of care from familiar faces. Having the courage to know what he wanted and the ability to set short- and long-term goals allowed Jamey to complete the transaction and move forward toward his new goals with confidence.
Price Is What You Pay, Value Is What You Get. ~ Warren Buffett
As is the case in all business transactions, a product or service is only worth what a buyer will pay for it. As we have discussed, private practice owners can take concrete steps to maximize the value of their practice for a future sale:
- Start with the end in mind: Know your exit strategy from the start of the business. There are many different options when an owner is ready to sell, and knowing what you want makes it easier to work toward that goal.
- Develop and maintain systems—everything from answering the phone to your intake and evaluation forms should be systematized. This ensures that staff knows exactly what to do and how to do it, and frees the owner from micromanaging on a daily basis.
- Empower your staff by training them in your systems and then allowing them to do their jobs. Involve staff in the development of the systems when possible—they might surprise you with their innovative ideas!
- Delegate tasks that you either dislike or are not good at performing. Technology today allows you to outsource many jobs remotely, which may be much less expensive than you think. This frees up you, the owner, to work on the business rather than in it every day.
- Know what you want and develop a plan to get there. Just as you perform a clinical evaluation and develop goals to reach a good outcome with patients, you need to do the same with your business. Bring in objective assistance in the form of a business coach or mentor when needed.
- A potential buyer is paying for your company culture, systems, staff, and reputation. Focus on these things to make your practice more attractive.
By beginning with the end in mind, private practice owners can create a business that is enjoyable and profitable to run, while preparing for the future.
Ann Wendel, PT, ATC, CMTPT, is a PPS member and owner of Prana Physical Therapy in Alexandria, Virginia. She can be reached at email@example.com.
Jamey Schrier, PT, DPT, is a PPS member and owner of JameySchrier.com. He is based in Rockville, Maryland, and can be reached at Jamey@JameySchrier.com.