Written by: Dr. Michael GormanDictators have no succession plans—they know that someday their people will rise up and replace them with another dictator. There’s a lesson here for optometrists—don’t be a dictator in your office. It’s bad for office morale and won’t help you find a successor.
History has shown that theocracies and democracies have succession rules, but their procedures may not help identify a new leader who is as good or better than the last leader. The lesson here is that succession plans should not be based on who is the most pious person or the most popular, but who is the most qualified and has the potential to ensure the practice will continue to grow and succeed once you’ve moved on.Let’s be honest, there are flaws in all succession plans and no one plan is a good fit for everyone. Here’s what worked for me when I began to contemplate retirement and the future of my practice, Family Vision Center, without me at the helm. We applied a set of building blocks, that when applied properly, will increase the chances of a long lasting success for your practice, making succession rather painless and easy to implement. My building blocks to succession have the following five components.

Age
No one can predict the ideal age when you should begin to develop a succession plan. Common sense and my own experience says the average optometrist should begin around age 50, but it becomes more pressing to have a plan in place around age 65. Never start this endeavor without the advice of a lawyer, accountant and/or financial advisor. Those who begin a succession plan early, approximately 5 to 10 years before retirement, stand a better chance of passing the business on to their optometrist(s) /non-optometrist(s) / family member.

I suggest purchasing life insurance, especially between 45 to 50 years of age, to protect your practice debt and family obligations. Term insurance is the cheapest form of coverage. Also try to have a disability policy with a short waiting period to receive benefits. If your policy has a 6- month waiting period, statistics indicate you are most likely not returning to practice and all those years of premium payments are wasted.

Gross Practice Income
Different practice incomes command different priorities on how to spend that income. Which one is more important—gross vs. net— is usually presented as the chicken vs. egg question. I will always take gross over net. Net profits have too many options that can be manipulated by a good accountant while fewer options can be applied to gross income.

The larger the practice income the greater the number of priorities you have to make. A practice grossing $1 million doesn’t have as many priorities on spending as an office grossing $4 million. Remodeling, equipment purchases, hiring techs and even buying the building are priorities of larger grossing practices. This holds true for group practicing optometrists where sharing fixed cost is a smaller part of their gross as compared to a single practitioner.

Larger practices are faced with implementing more delegated duties—marketing officer, human resource manager, CFO, sales manager. Also, I have observed that larger practices offer more services than smaller practices. Many have on-premises optical services, including surfacing and edging. Dry eye treatment, low vision evaluation, vision therapy and special testing ( ie. OCT imaging) are more frequently found in larger practices. These services not only provide outstanding value to patients, they also result in increased practice revenue.

Annual budgets are critical. It often takes three to four annual budgets to get a handle on what you spend your money on. There are many off-the-shelf software programs (QuickBooks) that will help you develop your practice analysis. Based on your practice size and gross income you can be aggressive in your practice priorities to make the practice grow through improvements in advance medical technologies or optical machinery.

Finally, create a reserve fund, with after tax dollars to bankroll future needs as well as unexpected changes such as purchasing the building you are in or moving to a larger one. That’s what we did at our practice.

– See more at: http://www.visionmonday.com/insights/first-person/article/building-blocks-to-succession-passing-on-the-leadership-reins-of-your-practice/#sthash.7Fa7RAGv.dpuf

He received his undergraduate degree from UCONN and his doctorate from New England College of Optometry in Boston. He currently serves as president of Connecticut Visual Health Center which provides continuing education for optometrists in Connecticut.

His passion for providing continuing education is second only to his passion for excellence in patient care. Dr. Gorman said, “I love group practice, sharing therapies and patient outcomes of challenging cases to all the doctors at Family Vision Center. I believe this enhances each doctor’s experience and leads to better care for our patients.”