Cost Considerations of Starting an Optometry Practice

Starting an optometry practice is a substantial financial endeavor with several key cost component considerations. A business plan, financial analyses and a market/demographic/location assessment are essential tools to hone in on the exact cost of your start up practice. Your initial cash outlay or capital expenditures should be differentiated from ongoing operational cash flow expenses. Williams Group’s expert consultants will guide and advise on all of the projections and decisions needed to achieve a fully-funded start-up practice that fits your budget.

Initial Planning and Research

1. Market Research: While diving into the financial aspects of your project, you’ll need to define your mode and scope of practice along with the market and the demographics to support your vision. Costs for conducting surveys are part of the initial cash expense.
2. Business Plan: Developing a solid business plan is crucial. Having an experienced consultant to guide and simplify the process saves time and effort which has big payoffs.  You will avoid muddling through process, inaccuracies with the timeline, and missteps with financial calculations and projections. With professional help, the time you save will be worth the investment when you open sooner. Costs for developing a business plan, financial analyses/ projections are part of the initial cash expense.

Startup Costs

1. Occupancy Cost: The cost of leasing or purchasing space varies widely by location. In metropolitan areas, leasing can be a high-ticket expense. For a smaller community, it will be less, but determining a fair market value as well as terms, conditions and concessions of the lease will be paramount. You will need to pay a deposit and initial rent which will be another upfront expense. Williams Group will provide the expert guidance you need to avoid costly long-term missteps.
2. Renovations and Furnishings: Depending on the condition of the space, renovations are a considerable expense and need to include the cost of an architect and contractor. Optical frame boards, furnishings, such as desks, chairs, and reception room furniture, along with office equipment, need to be considered as a cash outlay.
3. Optometric Equipment: Essential equipment like a chair/stand, phoropter, slit lamp, BIO, autorefractors/auto-keratometers, perimetry analyzers, tonometers, as well as special testing instrumentation like a retinal camera, OCT, dry eye management technologies, or even an Optos can is a major consideration. Additional diagnostic equipment and technology may be in your budget.
4. Technology and Software: Investing in Electronic Health Records (EHR) systems, practice management software, and other IT infrastructure are upfront and monthly ongoing costs.
5. Frame Inventory:  Stocking an initial inventory of frames can be a significant investment. Your business plan will drive your selections.

Professional Legal Fees/ Tax Advisory Fees

1. Legal Fees: Setting up a legal structure, drafting contracts, and other legal work is imperative part of business law. Our consultants provide the direction you need for your business decision ahead.
2. Tax Advisory: Considering professional guidance for the tax status for your business entity should not be overlooked and is essential to minimize your business and personal tax burden. Williams Group can provide the expert guidance you need.

Marketing and Branding

1. Initial Marketing: Establishing your practice’s presence through marketing materials, website development, and initial advertising campaigns are an imperative step and cash outlay. Additional strategies to attract new patients are key to achieving a thriving, successful business.
2. Brand Development: Costs for designing a logo, business cards, and external signage should not be overlooked and add to the start-up cost.

Operational Cash Flow Expenses

Beyond the initial startup costs, be prepared for ongoing operational costs such as salaries, rent, utilities, inventory replenishment, and marketing. These recurring expenses will need to be managed to maintain a profitable practice.

1. Salaries: Hiring staff, such as an optician, optometric technicians, receptionists, is an operational cost. Initial salaries differ annually, depending on your location and the number of employees.
2. Benefits: Including health insurance and other benefits could add an additional 20-30% on top of salaries.
3. Insurance: Professional liability insurance, property insurance, and worker’s compensation will need to be considered to the annual budget.
4. Utilities: Expect to spend on monthly utilities such as electricity, water, and internet add up too.
5. Licensing: Ensure you are up-to-date with local, state, and federal regulations.
6. Miscellaneous: Other costs like office supplies, cleaning services, and unexpected expenses can also accumulate, so having a cash buffer is wise.

Total Startup Costs

Overall, starting an optometry practice involves careful planning and investment. It requires best practice processes, procedures and protocols. With the right strategy, professional guidance and execution, owning your own practice can be a rewarding endeavor, both professionally and financially.

Download our Cost Considerations to Starting an Optometry Practice White Paper for insights!

Learn more about start-up practice consulting or schedule a call to discuss starting your optometry practice with Tammi Sufficool, MBA.