
Clinic Asset Purchasing (Part 1 in a series)
By Bill Hershey | Business Coach
Life Stream Business
When my clinic clients ask, “I’m thinking about buying this new [fill in the blank] equipment, what do you think?”, the response I offer depends on the investment size. For equipment less than $10,000, it’s a bit more simple and straight forward. I just want to hear that my client has a reasonable logic for how they’ll use this equipment with their existing clientele, how it will bring in revenue, and how any associated costs will be covered.
Generally, for equipment over $10,000—and especially as costs approach $100,000 or more, like for a hyperbaric oxygen chamber—I recommend engaging in a basic business planning process. While some clinic owners succeed by relying on intuition alone, I encourage clients to back up their gut instincts with sound business logic. I’ve seen situations where an expensive piece of equipment failed to deliver the hoped-for return on investment (ROI), leaving the clinic financially strained. How do we avoid ending up with a piece of equipment that doesn’t generate enough revenue to cover its financing payments? A little due diligence can go a long way in preventing such unwanted outcomes.
In assessing these equipment purchases, I guide my clients through what some call a “lean” business planning process. Let me clarify: I’m not talking about writing a 50-page business plan destined to collect dust. Business plans like this are generally used when applying for financing or attracting partners, but in this case it would be overkill. Instead, I’m suggesting a simplified framework to outline key considerations before making a significant investment. If you’re the sole owner, you might not need to justify your decision to anyone but yourself. But even a lean business planning approach—a brief outline focused on key points—can provide clarity and help you make informed decisions (and potentially communicate those decisions to others with brevity, if needed).
What’s your vision for the clinic?
Start with the big picture: What’s your overall vision for your clinic? It’s worth stepping back and reflecting on where you want your business to be in 5–10 years. In business, there are two major limiting constraints: time and money. Be intentional and ensure that major investments align with your long-term goals and the lifestyle you want your business to support. Clarifying your mission can be helpful, too. For instance, if your clinic focuses on naturopathic care for chronic disease prevention, buying an aesthetics laser may not be the most aligned strategy for growing your clinic.
What is the competitive market landscape?
While I prefer to view other clinics as colleagues rather than competitors, it’s important to understand your position in the market. Are you the only clinic offering this service, or do others already provide it? Could someone else purchase similar equipment and undercut your pricing? To evaluate your market landscape, list 3–5 clinics offering comparable services. Briefly outline their strengths, and for each one, identify an advantage your clinic has in comparison. How might an equipment purchase further distinguish you from other clinics in your market?
What is the demand from your current patient base?
Do your existing patients need the services this equipment will provide? Are they already familiar with these services, or will you need to educate them? If the equipment addresses issues like incontinence, for example, assess whether you have enough patients dealing with this issue—or if you’ll need to attract new patients in order to hit your sales requirements to cover your costs. Also consider if your current patients are financially capable of buying services or service packages for this new equipment. If you run primarily an insurance practice, would these patients be willing to pay out of pocket for a premium service if insurance won’t cover it?
How will you promote it?
You’ll also need a clear marketing and sales strategy to ensure ROI. For clinics with a strong patient base, email marketing is a powerful, low-cost way to communicate new offerings.
Staying in touch through a monthly or weekly newsletter is generally the first thing I’ll recommend to clients. Before doing anything fancy with digital marketing, do this first! If you decide to brave the frontier of digital marketing— SEO, Google Ads, Facebook Ads, or organic social media—I recommend working with a vetted marketing agency or professional who has demonstrated results with integrative health businesses (feel free to reach out if you’d like a recommendation).
However, don’t underestimate the value of developing and maintaining referral partnerships with other local professionals and businesses. Even in the digital age, word of mouth remains one of the most powerful and effective ways to attract and enroll new patients. Making it a point to meet with 2-4 referral partners per month can be one of the best revenue growth strategies out there. It can be as simple as having coffee or lunch together, being human together and getting a little geeky about what each other are up to in your practices.
Conclusion
By taking the time to consider these elements—your vision, market landscape, patient demand, and marketing strategy—you can make smarter investment decisions and avoid regrets with larger equipment purchases. A lean business planning process doesn’t need to be complicated. Even a simple outline can serve as a roadmap to guide you through the decision-making process. Discussing these key points with a business partner, coach or consultant can also go a long way in making confident investment decisions.
Then of course, there’s the financial considerations, which also weigh heavily in this equation, and are worthy of their own article. In our next episode, I’ll discuss the importance of financial goal setting (i.e. financial forecasting) and understanding cash flow so that you can see what it will take to get a return on investment (and in what time frame) with your equipment purchase. In the meantime, feel free to check out my free Integral Business Type Self-Assessment Quiz: www.lifestreambusiness.com/assessment
This quiz will give you high-level, personalized recommendations on business models, financial strategies, and marketing strategies based on your Business-Personality Type.
Meet Bill, Founder of Life Stream Business
I founded Life Stream Business Services to provide strategy, coaching, accounting and bookkeeping services for integrative health practitioners who want to organize their finances and proactively grow their business, without sacrificing their values (or going broke).
I practice, study, and write about business growth and personal growth, thereby helping many of my clients grow past what they thought was possible in their business.
My work with clients applies methods of strategic business development, Somatic Experiencing, Integral Coaching, financial advisory and customized business growth models specifically geared toward Integrative Health clinics and solo-practices.
- Vision-expansive
- Trauma-informed
- Emotionally-attuned
- Financially-literate
- Dharma-inclined