2023 Spells Opportunity! January 3, 2023
The new year is now upon us. As one get’s older, the calendar seems to flip at an ever-increasing rate. What happened to 2022?
This past year has been a year of challenges for many. Front and center are a seeming dearth of employees. Where’d they all go? Many clients have reported challenges with both finding, and retaining, staff…and recruiting optometrists. For 2023, predictions are that the employment situation will soften a bit, but with 26% of employees primarily working from home, more than 4 times that which did so prior to the pandemic, the employment landscape has changed…dramatically. The options for workers are many…and with the cost of daycare, many of your typical candidates are opting to stay home…and work from there. Challenged on the people front, for decades, our team has been assisting clients with reviews of compensation systems, contracts, incentives and retention strategies. We can help.
After a decade of inflation at less than 3%, price increases have become a real concern for optometry. With inflation hovering over 7%, and, for many, vision plan penetration exceeding 50% of revenue, the proverbial profit squeeze is real. In simple terms, 2022 has seen a decline in profitability largely because you cannot raise fees for vision plan patients. Additionally, of considerable concern is that your financial control systems are archaic and do NOT provide you with the timely and accurate information you need to make good financial decisions. That’s why we’ve recently announced an alliance with Allied Financial Partners, a full-service accounting firm with whom we’re working to deliver the very best control systems for our clients. As a wise man once said to me, “if you look at numbers long enough, they’ll start talking to you.” It’s time to make sure that you’re receiving accurate data…understanding the language.
Now, despite challenges, the coming years are not a gloom and doom period for optometry. Demand for eyecare is at historically elevated levels, largely brought on by the changes in the ways we use our vision. In so many respects, we can thank Steve Jobs and the iPhone for the increase in demand for eyecare. Combine this systemic demand with expansions in scope and increasing success with specialties like dry eye, myopia control and binocular vision solutions, and the future for optometry is bright. Indeed, over the next decade, the eyecare market is expected to grow by an annual compound rate of 6.5%…that’s an almost doubling of the market in the next ten years!
Let’s look at four factors that add up to opportunity.
One-we have an ever more complex optometry business environment. Optometry is not an easy business…it’s no carwash or laundry. Indeed, with its unique combination
of healthcare and retail, the business of optometry is particularly challenging. It’s not for the meek.
Two-Add to this the ravages of inflation, and what we see is that many practices, especially smaller ones…struggle with profitability. Indeed, most optometrists don’t own a business…they own their job.
The third factor that looms large is that baby boomers are aging. Based on national averages, over 20% of optometrists are of this generation. These individuals now range in age from 58 to 76. Many are solo practitioners who do not have a realistic succession plan.
Lastly, owners of larger, multi-location practices now have an exit opportunity that didn’t exist a decade ago. Now I’m not advocating that you all sell out to Private Equity backed consolidators. But I am saying is that those who build multi-location optometry businesses have an exit opportunity not historically readily available. Acquiring smaller, solo practices owned by baby-boomers is an opportunity that is open to many. Perhaps it’s time to look at an expansion strategy that will turn your practice into a thriving business…one that pays dividends beyond your personal production?
Opportunity is knocking. Cleinman Performance Partners has unprecedented experience in building larger, highly profitable and valuable practices throughout North America. If you’d like to explore how you might catch the wave of market growth while increasing your wealth, give us a call for a no-obligation exploration
Did you know that numbers talk? What do you hear when you listen to yours? If you use cash accounting in your optometry practice, then your numbers are saying, ‘Beware, we’re not accurate!’ Al warns of cash accounting pitfalls that can potentially lead to financial issues and he leaves you with advice moving forward.
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