Most potential buyers with a sound income are in a position good to buy a new practice, however many avoid taking the leap to secure their financial future. With owning multiple clinics being consistently recognised as the major source of wealth creation for practitioners and a range of investment options for all kinds of budgets and circumstances it is hard to believe why so many shy away from purchasing one or multiple new practices.
Here are some of the key reasons that we regularly see on why potential purchasers avoid buying a new clinic as an investment strategy.
1. Fear of making a bad decision
Usually purchasing a practice deals with large sums of money, so naturally people want to make the best decision. The weight of this can sometimes hold buyers back resulting in “paralysis by analysis”. Too much information, some of it confusing or contradictory can make it very difficult to get to a decision. On top of this negative comments by friends and colleagues can cause a potential buyer to shy away from purchasing a new practice.
The solution: It is important to form a clear purchase strategy from the get-go on how you will make money from practice and when, how much and where you will invest. This will help to objectively analyse all the options and facilitate better decision making.
2. Low borrowing power
A potential buyer may have spoken to their accountant who has told them their serviceability is low or have gone to one bank and told they can only borrow $200,000. But they have not explored all the options and could have many more borrowing options available to them.
The solution: A good accountant can look at individual financial circumstances and opportunities to leverage further. You could consider converting to interest only for your borrowing or consolidating and/or reducing your credit card limits. You can use a mortgage broker to give you a multitude of options to lend money.
3. An unsupportive business partner
We often see in a business relationship that one partner is keen to start investing in a practice or practices but the other is not quite on the same page. The partner may be asking how they are going to afford it, but they do not realise that they could buy a cash flow positive clinic that will put money back into their bank account each month.
The solution: This is where education and research are crucial, as well as having the right financial and investment advice. It is important for both partners to be on the same page and receive sound advice to ease their concerns. This advice will help both parties map what they want to achieve and see the big picture of where the investment strategy can take them.
These are 3 of the main reasons why people avoid purchasing practices even though they are very interested. We see many clinic buyers who overcome these reasons and begin their journey with purchasing a new practice.
Purchasing a new practice (it may be a Physiotherapy, Podiatry, Chiropractic, GP, Osteopathy, Speech Pathology, Occupational Therapy, Psychology, or other type of clinic) offers an excellent vehicle for wealth creation and all markets nationwide are showing signs of great improvement since May 2020 especially (after the initial shock of COVID-19 & then the subsequent recovery). If you are interested in purchasing a new practice contact Healthcare Practice Sales today.