Starting a practice cold is no easy task. It takes immense amounts of work, analytical skills and a driven mind.
Dr. Sam Johansen OD knows a thing or two about starting a practice cold. With two successful growing practices under his belt (in Greenwood, SC and Newberry, SC) and a third underway, Dr. Johansen exemplifies how hard working entrepreneurship mixed with faith and a fearless attitude can result in an ever growing network of business.
I had the pleasure of being classmates with Dr. Johansen back at Southern College of Optometry and recently I got to pick his brain a bit. Here is a transcription of our interview:
Dr. Neufeld: Hi Sam, thanks for answering my questions.
Dr. Johansen: Glad to help! Hopefully it will benefit someone!
Dr. Neufeld: What made you decide to open cold (as opposed to being an employee, utilizing a sublease or purchasing an existing practice)?
Dr. Johansen: I was introduced to optometry when I got a job in optical in a private practice. Ever since then I knew I wanted to own my own practice. I enjoy optical and patient care. I wanted to be able to control the whole experience. In subleasing, the optometrist loses any control of what goes on in optical (patient satisfaction depends just as much on frame and lens selection as it does on the prescription), and does not have full control of the schedule. I like the freedom and control that come from owning a private practice.
After I graduated from Southern College of Optometry in 2015, I actually tried to buy an existing practice multiple times but it never worked out. I have looked at 5 or 6 practices since I graduated, and most of the time the selling price was way too high (above 70% of the gross without financials to back the value). After several attempts at buying an existing practice I got frustrated with it and decided to start my own practice.
Looking back, I am glad I did because my practice would not be what it is today if I did it any other way. However, my road to ownership was a little different than most. I started with a lease in a newly opened Walmart in my home town for a year. A few months into that lease I picked up another nearby Walmart lease to help pay the bills. Leasing in Walmart gave me time to focus on managing the clinical processes and billing and coding.
After a year of leasing in Walmart I stepped out of the first Walmart lease and started my own practice a few miles away. Then a year later I stepped out of the other Walmart location and started my own practice there as well. Both practices are growing quickly, and I am very happy with my decisions. I am in the process of my third cold start in a large city nearby.
Struggle and Hardship Experience
Dr. Neufeld: If you had to pinpoint the toughest initial struggle/roadblock, what would it be?
Dr. Johansen: The hardest part was in the first year to year and a half. Every employee that I hired had zero experience in optometry, so I had to train them all from the ground up. From front desk, to pre-testing, to optical, insurance, billing, etc...
I remember days where it seemed like all I did was answer my employees questions. I also went through about 5 employees before I find a good fit for optical. There wasn't any one particular part that was more difficult really. It was just the shear volume of everything that had to be done, and things that I still had to learn myself.
Dr. Neufeld: How did you obtain funding and loans to get started?
Dr. Johansen: My first loan was through Wells Fargo. I developed a business plan with projections and start up costs and went through all of the hoops for the application process.
Dr. Neufeld: Do you lease or own your building? How did you find your building? If you built it out, how did you go about creating a blueprint for it?
Dr. Johansen: I currently lease both buildings and am in the process of buying one. I tried to find locations close enough to the busy parts of town to be convenient. I tried to balance accessibility with affordability for my budget.
Dr. Neufeld: How did you handle staffing?
Dr. Johansen: Staffing has been a learning curve. As previously mentioned, none of my current staff had previous experience so I had to train them all.
Initially, in retrospect, we were overstaffed. However, over time as I have cross-trained my staff and they have each become more efficient in their own jobs we have decreased the staff number. I currently run on 2-3 staff most days and 4 staff for very busy days.
Carving out a Niche
Dr. Neufeld: A big part of success in cold starts is to carve out a niche. What is your niche market and how did you carve it out?
Dr. Johansen: We focus on going above and beyond in customer service and patient care. We over treatment options and products that no one else around us does (from dry eyes, to sclerals and CRT lenses, to myopia control, to niche frames and lens options).
I have developed a reputation for a high quality, thorough exam, and unique products that are high quality. I also speak fluent Spanish. As soon as Hispanics learn that the doctor speaks Spanish they come running our way.
Dr. Neufeld: How did you measure competition and how are you dealing with it?
Dr. Johansen: I did a lot of research on how to determine how many optometrists a given area can sustain. I ran the numbers, checked the dentist vs optometrist ratio and went for it. Before opening I walked into all other local optometrist offices and tried to get an idea of what their culture was.
What kind of frames they sell, how good is their customer service, what are their prices, and what kinds of services do they offer? All of the practices in my area were the same pretty much so it was not hard to offer something different.
Advice and Closing Thoughts
Dr. Neufeld: What is the top way (or top two if you can't choose one) that you have grown your practice and obtained new patients?
Dr. Johansen: The most important thing we have done other than the obvious (offer excellent customer service and products) is to control our cost of goods. You have to be creative, and always looking for the best price without skimping on quality. This may seem like a strange answer, but when you start a practice, if you can't pay yourself it is awfully hard to stay open. Many focus on the gross revenue and forget that the net is more important.
The second thing that really helped us grow was being involved in the community (Church, Lions Club, BNI, Chamber etc..) and handing out business cards to anyone I saw wearing glasses.
Dr. Neufeld: What is your advice to any young ODs looking to start cold?
Dr. Johansen: Go for it! Be careful, and educated. Evaluate the opportunity from every angle, think about it and pray about it. Once you have looked at everything you can think of and prayed about it, if it still feels like a good opportunity then go forward.
Make sure you have experience in optical. That is huge! If you are motivated, hungry, and creative then you will do fine. In the long run you will have a much higher ROI than buying an existing practice.
Dr. Neufeld: How long did it take to become profitable? Also, did you ever work side gigs, or were you all-in on your cold start?
Dr. Johansen: That depends on your definition of profitable. I was able to pay myself from the first month on. The first two years I made less than an average associate, this year I should make about the same as an associate, and 2020 I should make a lot more than the average associate. My side gig was Walmart for the first year and then my second cold start after that.
Dr. Neufeld: Anything else you would like to add? Especially from the personal or philosophical side?
Dr. Johansen: Put God first in everything you do and don't be afraid to be different. We have seen many miracles and great success from following this. My practices are different from all of the surrounding practices in every department, that is why patients come to see me. I have a picture of Jesus healing the blind in the exam room, and we try to say a prayer as an office everyday.
I follow my heart, and do what I love. Also, don't fall into the insurance trap. We started out taking all insurances for about 6-8 months and then I got fed up with getting ripped off and said no more. We take all medical insurances, but we only take vision insurances that make sense. Last year we were not taking Eyemed, VSP, Davis Vision, or Spectera (70% of people in my area have 1 of these) and we grew 40%. We also don't work with Marchon, Luxottica, or Essilor.
We don't need them.If a cold start can function without them, then certainly an established practice can.
Learn more about Dr. Johansen and his practice: Johansen Precision Eyecare