Buying a physical therapy practice can be a lucrative investment and an excellent career opportunity for a physical therapist looking to make it on their own. However, regardless of the financial decisions you have made in your life, acquiring a private practice is a significant undertaking and is likely going to be stressful. The stress of the transaction and inexperience of buyers makes it easy to make any number of mistakes along the way, and any one of those errors could set you back, both financially and in opening your clinic. To help new owners avoid these pitfalls, we’ve gathered and explained some of the most common physical therapy practice mistakes buyers must avoid during their acquisition and ownership transition.
Underestimating Your Buying Power & Working Capital Needs
When we represent a buyer, the first question we ask is “what is your buying power?” If you cannot answer that question, then you are not ready to buy a physical therapy practice. Not only do you need to understand the investment required to purchase a practice (namely, the initial down payment), but you must also consider working capital needs for running the practice post-closing. Working with a knowledgeable lender who understands what you will need to cover the operational costs of the business once you acquire it is of utmost importance and can either set you up for success or stress. Once you understand your buying power, and the need to run a business of a certain size post-closing, then you will be ready to look at opportunities in earnest.
Outdated Equipment
When buying a physical therapy practice, much of the value will be attributed to Goodwill, which means that the equipment is simply included in the price. The equipment may range from tables and chairs to practice management software. If you do not ensure that all of the equipment is up to date, you will find yourself paying out of pocket for upgrades and replacements later, which can quickly add up and eat into your working capital. Make sure to inspect the equipment that will come with the purchase so you can determine what you will need to replace and what the costs will be, and then factor that into your working capital needs.
Making Too Many Changes Too Soon
After purchasing a physical therapy practice, you will likely find things you want to change. That is natural. It is your business, and you should be able to run it in the manner you see fit. However, changing too much too quickly is one of the most common PT practice mistakes new owners make. Too many drastic and disorienting changes to the business could alienate existing clients, as well as staff members. Consider reading The First 90 Days. When taking over the business, you will want to first observe, analyze, and then implement changes. Proceed with caution when making changes and try to make them as gradually as possible.
Failing to Work With a Business Broker When Buying a Physical Therapy Practice
Acquiring a physical therapy practice is a big step, and there are many mistakes you may make along the way. While you may be an expert in physical therapy, you may not know the ins and outs of buying a private practice, but that’s where we can help. At Private Practice Transitions, our certified Washington business brokers will ensure you do not make errors that will hurt you now or in the future, and will guide you through every step of the transaction. Call us today at (253) 509-9224 or contact us online to learn more about how we can help you with this exciting purchase.
