Being “Solo” Only Works For a While

Are you a solo business practice owner (physician, dentist, chiropractor, attorney, accountant, auto technician, etc.)?

If so, you may have Solo Professional Syndrome. No, of course that’s not a real name for an illness. It’s just how I refer to the situation where you are doing all the work yourself and can’t grow the business or find time to work On the business instead of In the business.

You’ve done everything possible to streamline operations, maximize revenue and increase margins. You may have even outsourced marketing, accounting and payroll to give yourself a few precious extra hours every month. You have proven that you can be successful going it alone. However, you find yourself wondering, “Isn’t there a better way?”

Think about it. You are responsible for every dollar of revenue generated by your business. If you are absent, no revenue comes in. If you are disabled or worse, your practice likely will shut down and you will lose all the value that you have created over your years in the business. Why? Because you have no successor in place.

What if I told you that there is a way to increase your current income without doing all the work yourself? And, at the same time, you would then have time to step back and work On the business instead of In it, reduce your financial risk when you are absent, protect the value that you have created in your practice and provide yourself with a succession plan. Would that interest you?

You may be thinking right now, “Why don’t I just add an associate? That’s what Suzy did on the other side of the city.” That can work….but there are pitfalls that need to be headed off before doing that.

Where will he/she work? Where will I find clients/patients for him/her? I don’t want to eat their salary until their book fills up. How can I be sure he/she won’ t leave after getting all trained up and end up being my competitor? Ugh…I think I will just stick to the problems I already have.

That is an understandable conclusion. But it would be wrong. Let’s get a little creative and figure out how to do it right and provide those benefits mentioned above.

You are right to be concerned about having enough patients/clients to keep the changes from costing you a lot of money. It’s really not reasonable to expect the associate to fill their own book of business. You are hiring them to produce revenue, not make sales calls.

So, to combat those issues, the method I am suggesting is to acquire another solo practice. Preferably, it would be one that is geographically nearby so you can fold it into your existing practice. This will give you a very good chance of keeping that new associate busy.

If this has your interest piqued, let’s discuss where to start.

First and most importantly, you need to make sure that you, personally, are ready to lead another professional. How are your supervisory skills? Do you explain things in a manner that someone else can easily pick them up? Perhaps you need some training. Go and get it!

Second, assess your financial situation. How much cash do you have on-hand? How much can you afford to spend on another business? Talk to your banker about loans, if necessary. Check with your accountant with respect to tax issues. Talk to your attorney about the employment document that codifies a compensation plan that we will cover in just a moment.

Third, start looking for acquisition targets. This may take some time. There aren’t always businesses for sale. Take your time and get it right. This is the beginning of your exit strategy and intended to give you more near-term freedom and strategic thinking time (working On the business).

OK, so getting the acquisition done will take care of the near-term revenue growth and work/life/time balance issues. It does not, however, address how to extract the value you have created in your practice when you decide to retire.

If you hire the right associate, he/she will also be a part of that solution. A really good associate will, most likely, want to own their own business one day. You should make sure it is your business that they acquire to make that dream a reality. Build a compensation plan for them that rewards performance with equity in the business.

As part of that compensation program, you make it clear that there is a specific process for him/her to succeed you when you decide to retire. In fact, it should be documented that they must succeed you and buy the practice. Failure to actually purchase the business from you at the agreed upon time will cause them to forfeit the performance rewards. That is how you will extract the value you have created. It is virtually guaranteed.

It will take some extra work up front and test your coping skills during the early months after the transition. But if you hire the right person and set your business and compensation plan up the right way, you will reap the benefits.

Realizations of New Business Owners

The US and, probably, the world are filled with millions of people who dream of owning their own business.  However, when it comes to finally taking the plunge and doing it, a much smaller group of people actually make the move.  This is not a judgement on those who don’t.  It’s not for everyone.  Personally, it took me a long time (over 25 years) and the loss of a job to get me off the sidelines.  Inertia was my roadblock; that and the fact that I didn’t really know what I wanted to do.  For many, they have the same issue.  For others it is the lack of financing or the realization that their dream or idea is not capable of being scaled to the point of providing a living for them.  Still others just decide it is not worth the risk.  All of those are OK.  For those of you that are about ready to take that leap, here are some thoughts that may push you one way or the other.  These come from the experiences of first year business owners.

Talent and Determination Only Take You So Far

In many cases, having a particular talent like repairing cars, building houses, making cupcakes or fitness training drive us into our own business.  Then, we put our heart and soul (i.e., time) into making it grow and become profitable.  However, none of us can do everything in the business.  Where to turn?  The answers are closer than you think.  We all know people.  They all know other people.  Somewhere in that network are resources that you can tap into for help with areas that are not your strength.  First, identify those weaknesses (yes, I said it) and then ask for help.  The second was my toughest step.  As it turned out, a lot of people were mentors to me, but they didn’t really know it.  I got little tips from a lot of places instead of leaning on one person.

You Will Need to Adapt to The Market

If you were wise, you wrote a business plan before you started your business.  It’s been written that nobody plans to fail; they just fail to plan.  That said, business plans cannot be something you write once and toss in a drawer never to be seen again.  They must be reviewed and adjusted based on the market place; primarily feedback you receive from your customers.  Should you do everything they recommend/request?  Heck no.  The customer is always right…..except when they are not.  You should, however, take ever suggestion into consideration.  Examine the cost and ROI of each idea.  In the end some will make good business sense.  Some will not.  That is up to you to decide.  No business stays the same over time.  The longer you are in business, the more you will need to adjust.  Change products.  Change marketing methods.  Change personnel.   Improvise, adapt and overcome.  That is the secret to longevity for your business.

Do NOT Sell Yourself Short

This might be the biggest single mistake that entrepreneurs make.  They don’t charge enough for their products and services.  When I bought my business, part of my business plan was to compete on service and quality.  That, necessarily, precluded me from competing on price.  We let hundreds of jobs go due to pricing over the years.  That was a strategic choice and we stood by it day in and day out.  Charge a fair price for what you do; fair to you and fair to your clients.  We weren’t the most expensive and we weren’t the cheapest.  Find your price point where you aren’t working at full tilt just to break even.  Know your market value.  Know your costs.  Price accordingly.  It’s equal parts science and art.  You will need to adapt from time to time based on the market (do your best not to go downward).

You Will Never Work So Hard in Your Life and Love It

I’ve had a few people tell me, “It must be great to own your own business.  You can take time off whenever you want!”  All I can do is laugh and tell them the truth:  I’ve never worked so many hours in my life.  To which they just stare at me with their jaws wide open.  The other part of that statement is that I never had any trouble getting up and going to work.  It was a labor of love.  Every entrepreneur that I have known or worked for felt the same way.  In many ways the business defined them.  Vacations will be few and far between for a while.  If you and your significant other can handle that, dive in.  If not, it may be best to continue being an employee for someone else.  Either way is OK.  Just know what you are signing up for.

Work Life Balance Can Be Hard to Find

As I mentioned above, your business can be a labor of love.  The risk in that is that other parts of your life may suffer.  Are you married?  Do you have kids that are busy with activities year around?  Can they handle your not being present (physically or mentally)? Often times, this is the tipping point between hanging up your own shingle or holding off.  When is your family ready?  Even when you all collectively decide you are ready, there has to be balance.  Just like you wrote a business plan, I suggest writing a “Work/Life Balance Plan.”  Commit to certain vacations and other events that are inviolable.  Maybe you like to volunteer at your church or other organization.  Find a way to NOT give that up.  These things complete you and refresh your mind.  For me, the time was not right until our children were grown and out of the house.  My wife was busy with here career, too.  We agreed that vacation was not an option, it was a requirement.  Our church and our relationship had to be on equal footing with the business (in fact, they came slightly ahead of the business in reality).  Find your balance.  Find your success.

Be Persistent

To be direct, there will be struggles.  How you handle them will determine your level of success and longevity.  Stick-to-it-iv-ness has helped many a business owner when talent wasn’t enough.  Let me repeat:  there will be struggles.  You may even fail and have to start over.  If you want it it badly enough and believe in what you are doing, keep pressing forward.  When you hit the bumps, be willing to work/suffer through them.  Lead your people, if you have any, and show them you are confident that the business will get through the issues.  Make the changes that are needed.  Persistence can overcome a lot.

Starting a Business

Over the past 7 months, I have had the opportunity to mentor a number of would-be entrepreneurs as they began the trek toward starting their own business.  Each of these situations was different.  Some were truly at the “dream” phase.  They had an idea about a business, but no idea about how to start turning that dream into something more.  Some had businesses underway, but did not know if they were making money (a business that is not profitable is known as a “hobby”).  Still others had begun the process but hit a snag where they needed help to keep going.

Among all these were a few constants.  The biggest one that I have run across is that each was surprised by the capital needed to get up and running.  Either we discovered that together or they already knew that and needed help finding the capital.  My point on this particular topic is a simple one:  If you have a job, keep it.  If you don’t have a job, find one.  Your job is the most direct source of start-up capital available to you.  Sure, it will require you to spend time working on something other than your start-up.  Welcome to entrepreneurship, where your time belongs to your business.  Generating your own capital is a lot easier, for most people, than asking friends and family for an investment or borrowing money.

Commit to being “all in.”  Your time and your money will need to be poured into your dream to make it a reality.  Are you ready to work harder than ever before?  If so, you can be a success.

Marketing Today

I have been in business for a long time.  Over the years, marketing has changed quite a bit.  From TV and radio ads to Yellow Page ads, direct mail, variable data direct mail and now the various forms of internet and social media marketing, it has been difficult to stay on top of what works best.

Having spent over 20 years in the printing industry (and not being in the industry any more), I can tell you that print ads just don’t produce like they used to.  Personalized variable data mailings provided a huge leap in response %.  However, they are so common now that most of us just throw them away too, don’t we?  To be honest, I would not recommend spending much, if any, on print marketing other than business cards (apologies to my friends still in the industry).

Where to spend your ad budgets?  It’s all about the web, my friends.  SEO (search engine optimization) is important but don’t blow your entire budget on that.  There are a lot of simple free, or nearly-free, things that you can do for that.  The key is to make sure, if you own a small business, that you are on the 1st search page when a smart phone searches you nearby.  Don’t worry if you aren’t on the 1st page of a search in LA for your Wisconsin business.  They won’t be a customer anytime soon.

Where you really want to focus is on Facebook.  70% of Facebook users log in every day.  Couple that with all the demographic data that Facebook collects (themselves or via business partners) and you can target your marketing very specifically at reasonable prices.  I have just begun to learn about this and the potential is amazing (if a not a bit scary with respect to the data Facebook has on each of us).  I paid for a service to help me do it the right way.  It was under $500 to learn how to do it.  There are email marketing subscriptions that I will need to purchase, but they are not terribly expensive, either.  Time will tell just how effective this will be, but it seems to make good sense to me to skip paying for ink-on-paper and target my “ideal customers” using all that demographic data.  I expect it to minimize my cost per new client.   Once I work out the kinks on my more established business, I will set out to work on my newer business.  It’s going to be interesting.

A New Tax System

OK, I know this blog is about business.  But the issue of income taxes and the behavior our friends at the IRS impacts your business, my business and the business of our personal lives.  So, here are my thoughts…..

One evening recently, I was about to fall asleep when I awoke instantly wide awake with a new federal income tax structure.  As you read this, please bear in mind that it’s a framework.  The details of which I will leave to more talented bean counters than me.

What was rattling around in my head was something that I truly believe can make a huge impact on our government, our freedoms and our economy.   I propose a TRUE flat tax (not a FAIR tax as some are proposing.  I will let you research the differences).  Before you run away screaming, walk along with me for a bit as I summarize the framework.

Individual Income Taxes – We would all pay a certain % of our gross income.  No deductions (why should the g0vernment tell us that home ownership is better than renting, for example.  The renters get screwed).  We could eliminate the individual tax division of the IRS (or whatever it is called) and replace it with a much smaller,  computer-driven group that verifies our income as reported on our 1/2 page tax return.  The only reason for a return, at all, is to pay taxes on our passive income (our employers will withhold and pay taxes on our earned income).  Now, there is a place for debating an income floor for the truly poor.  However, even if someone can only pay $10 because of low income, they should.

This model would keep the rich from sheltering income and have the low income individuals pay at least a little.  Plus, the government would save $billions with the smaller IRS (yes, the current employees would have to look for jobs, but a lot of us have survived that in our lives, including me).

Organization Net Income Taxes – You will note here, that I used the term “organization” instead of “business.”  I will explain in a moment.  Each organization will pay a certain % on the net income of the entity (similar to today).  The difference is that there will be no such thing as a tax-exempt entity.  They have to pay taxes on their NET, too.  Before all the charities have a fit, take a breath and read on.  Charities are supposed to give away their funds (after operating costs), right?  So give it away like you are supposed to.  If your expenses and “giveaways” equal your income (donations), you pay no taxes.  If, as some supposed-charities do, you hoard funds, you pay income taxes on the remaining “net income.”  This includes churches, synagogues and mosques,  too.  As a man of faith, I struggled with this, but I want my church to be missional (which we very much are) and spend on community outreach.  We give offerings to our church to be spent, not kept.  Here is the incentive to do so (in case one is needed)!

This set-up will also obviate the division of the IRS that is causing all the wailing and gnashing of teeth.  There will be no reason for any group to need tax-exempt status, so there won’t be any politically motivated abuse of those applying for it.  How much $$ will that save tax payers?

To monitor this type of entity, the IRS business division would be replaced by the department of organization taxation (or something of that nature).  Admittedly, this division might be larger than  the current similar IRS division because of the broader base.  However, I am hoping that the flat-tax environment will be simpler to enforce and make it no larger, at a minimum.

Naturally, the status quo in congress and all the tax attorneys will scoff (they will need new jobs as a result).  “You can’t do this and we have to be able to deduct that.” ….Open your minds, you fossils!   Will someone likely pay more taxes than they do now?  Of course.   But, we have to make some serious changes in this country.  We are in debt, as a nation, way over our heads and the economy is still fragile.  The tax code seems like the logical place to start (with more restructuring to follow).

What I propose is simpler, which is pretty much always better and cheaper.  It puts the rich and  poor under the same rules (special interests have no footing without deductions), which creates a more cohesive country as opposed to our currently polarized country.     We are the UNITED States of America.  Let’s set up the tax rules to encourage that.

What Does Your Business Stand For

Most business owners/executives are rightly concerned about the customers’ perception of their business.  They work very hard at trying to manage that perception through their marketing program.  The really successful ones have a very clear vision of what their business is about and what it stands for.  From there, they make sure that all communication and customer interaction reflects that vision.  Now, being human, mistakes are made in this endeavor.  The key is to get back on track immediately.

In order to do this in your business, answer this one question:  “What do you stand for?”  Sounds simple, doesn’t it?  It really takes a lot of self examination, especially for a leader of a small business like me.  This is because every step you take has a direct reflection on you.  Plus, if you actually stand for something, there may be potential customers that aren’t comfortable with that and decide not to patronize your business.  It’s tough self-love and can be risky, but critical to identifying what your business stands for.

When I purchased my auto repair business two years ago, I thought long and hard about the experience I wanted to provide for our clients with respect to what I wanted our image to be; what I personally stood for.  Believing firmly that God put me in this place at this time, I believed that the business was my opportunity to do His work through this business.  I made that clear by putting the Christian Fish symbol on our company’s sign and a reference to my faith on our business cards.

Clearly, there will be people that don’t come to our shop because they don’t believe what I believe.  So be it.  That’s their right.  I can look in the mirror and know that we stand for something good and right AND our clients know that.  That gives us a baseline from which to operate and makes it clear What We Stand For.

It Starts With Integrity

The longer I am in business (regardless of the industry), the more I am convinced that the organization’s success starts with the integrity of the Leadership Team.  There has to be boundaries that they will not cross and all the employees need to understand these boundaries.  Hiring the right people becomes even more critical when you add this complication.  Skills are nice and industry experience is good to get.  But if you don’t have rock-solid integrity, nothing else really matters.

It boils down to this:  Integrity leads to trust.  Trust leads to relationships.  Relationships lead to repeat clients.  Repeat clients give word-of-mouth recommendations.   You can’t buy that type of advertising.

This is one of the issues my industry (auto repair) really struggles with.  The generally held belief is that you need to sell every possible service when a client comes in because you don’t know if they will come back to complete the recommended service if you don’t sell it NOW.  It’s a common theme in our trade publications.  I’ll bet you’ve been on the receiving end of a $1,000 up-sell list.  I was before I got into this business

In our business….we know that they will be back.  How?  We take the time to build relationships with them.  I know of other shops that do the same thing with similar results.  The relationships won’t last, though, if they aren’t backed by integrity.

It’s not too late to start making integrity your starting place.