Your Craig’s List Ad …

Scott has placed an ad on Craigs List:

WANTED: A very successfully run healthcare practice, specializing in spinal rehabilitation, exercise, massage therapy as well as other holistic services such as nutritional advice and expertise. Professionally run to the highest of clinical standards with a well-trained, goal-oriented staff, necessary equipment and supplies. Low monthly overhead, time-proven practice and business design system already in place, extremely high cash-flow and yearly profit margins, ongoing community marketing programs in place, all in a state and local community that harbors terrific heath insurance coverage for these services. Totally turn-key, fully developed business design, everything from new employee training techniques, to patient marketing, to patient scheduling, to treatment programs and proven care systems are all in place and can be duplicated, expanded upon and repeated in additional clinic ventures and startups time and again. The commercial property that the clinic resides in may also be purchased in addition to the business at reasonably assessed property value and additional rents may be collected by adjoining business that resides in the same building, once building is purchased.

Now, this isn’t a real ad, and Scott didn’t really place it, you see he has a dilemma and is trying to solve it right here.

Let me bring you up to date … … Scott is a doctor – living on a beautiful country estate with his young family (and, a couple of horses!); his savings ethic is an inspiration (Scott saves around 50% of his reasonably high salary).

Now, Scott is a partner in his small medical practice (one that specializes in non-traditional forms of healing, even though Scott and his partner are qualified medical doctors) and he has wonderful altruistic dreams of one day being able to spend the bulk of his time helping the underprivileged in the US and overseas to receive the highest quality medical care that he can offer.

For Scott, this means eventually putting his practice on ‘autopilot’ so that he can:

(a) bring in more ‘pro bono’ patients (as many as he can handle without the practice going broke!), and

(b) take extended periods off to travel to 3rd world countries dispensing his unique brand of medical assistance.

Scott’s worked out that he needs around $4,000,000 in 8 to 10 years, and then he should be able to implement his plan.

The good news is that Scott’s partner is set to hand him 100% of the medical practice in 30 months time (Scott’s only ‘investment’ is the work that he puts in between now and then) …

… this, along with Scott’s aggressive savings-and-frugality-strategy should put Scott smack on target in 8.5 years! Scott’s dilemma is:

1. Should he just stay the course, and trust everything to work out … worst case: work for another few years, if some of his assumptions should prove incorrect?

2. Should Scott buy his partner out now (he’s guessing that it would cost him $200k), which would free him up to open up a second (or even third and fourth) practice now?

Should Scott take the ‘safe road’ to his Number and maybe make it, or should he high-gear onto the aggressive path to his Number and scoot right on past it?

We won’t solve Scott’s problem here, that’s the purpose of the Spotlight post that I have just placed on the 7 Millionaires … In Training! site, and I encourage you to read that post and follow (better yet, contribute to) the comments …

… but, I want to demonstrate yet another use for your Number, here:

[AJC: Buy your New Improved Number here! You can wash dishes with it, ride horses with it, tune your car’s engine with it … but, wait! There’s more … if you buy your Number today, we’ll even throw in an aggressive Date and a FREE set of steak knives! Yes, your Number is the chamois for all occasions 😛 ]

You see, the usual filter for business and investment decisions is:

1. Risk – what is the risk profile of the various investment alternatives in front of you? What is your ‘appetite’ for risk? And,

2. Reward – what is the expected return of the various investment alternatives in front of you?

Choose the investment alternative that provides the greatest return, yet meets your risk profile.

But, I want to throw up an alternative filter:

a) Which of the various investment alternatives available will guarantee that you meet your investment goals; in the case, the ultimate test is its ability to achieve your Number by your Date?

b) Then find the lowest risk alternative that AT LEAST gets you there.

So, that is the message that I delivered to Scott:

If your current strategy (i.e. wait 30 months for the practice to be given to you, free and clear) can get you to your Number even after you run some ‘likely case’ and ‘worst’ case scenarios around the various investment returns (Scott also requires some RE and stock investments to achieve his Number) then why would you do anything else?

But, if it’s reasonably possible that you’ll fall short – unless EVERYTHING goes right, and, if delaying your Date is not an acceptable alternative – then, in my opinion, Scott has no choice:

He has to run the numbers around buying out his partner, and see where that takes him!

I’m keen to find out what happens, how about you?

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12 thoughts on “Your Craig’s List Ad …

  1. AJC/Scott,

    How will buying out the partner early lead to opening up additional practices?

    Wouldn’t the lack of a partner lead to more time speant practicing?

  2. @ My Journy – We are actually business partners, in the sense that we both own the office that I practice in. We don’t practice together, i’m a solo practitioner.

    By finishing out the 30 month term and not buying his shares, I am ‘locked-in’ to remain practicing at this office(this is pretty much my repayment for his 50 shares of the business). If I made him a cash offer for his shares, however and if he accepted it. I would be free to hire an associate doctor, train him/her to take over this office as my associate employee doc and I could move on to open clinic #2 theoretically faster than waiting until the 30 month term is up, receiving the rest of the shares of the business so I own it outright, then hiring an associate and moving on to open clinic #2.

    The delima is; do I take on debt and get the ball rolling with this process around 2 years sooner(ie; make him an offer in January and get a bank loan to do so, or do I wait out the time, pile up cash and be ready to sprint out of the gate with multiple offices, in more of a debt-free fashion after a couple of more years of experience and after finishing my contract term?

  3. have you considered the fact that perhaps the other clinic might not take off and earn as much as you hoped in the time frame you had hoped? I mean sure, it might take off, but it might be like the slower race horse,who crosses the finish line, but doesn’t win the prize.This could delay the rest of your plans. But By waiting it out, you can work these things out , and be ready to do your thing once you own this place free and clear.
    I don’t know this is one that will take some great research. Its not one your going to want to rush into.Who do you have in mind to take over this current place? have you begun interviewing anyone? It could take some time to actually locate that person you feel is a perfect fit for your plans.You’ve also got a wife, how does she fell about accelerating the plans you both have worked out?
    Further more, what makes you suddenly want to set up the process? w you’ve already worked out your life’s plan before beginning this process with Adrian right? so why the change now?

  4. I’m not saying its not a good Idea to Tweak our plans form time to time. Just thinking out loud here.

  5. @ Steve – Oh yeah, i’ve certainly considered the second office scenario of it not performing up to peak, but that’s what this journey is all about, taking action, getting out of your comfort zone and taking risks to win financially. The only other option is NOT taking any the action to own multiple businesses and owning one clinic free and clear in 30 months and ‘saving’ my way to 4 million through a diversified mutual fund plan, which is going to be a 30 year career plan and really not what the 7 million in 7 years plan and goal is all about.

    Now waiting it out, taking a little time and funding the second clinic with cash(and possibly repeating a couple of times) and not taking a business loan is really my ultimate hedge against anything going wrong with it I think. Well, that and my experience and knowledge in training others to practice as I am. In my heart, I believe this is the smartest move and really only costs me a year or so in getting to my number, which is perfectly ok with me, doing it a little slower and not taking on any business loan debt along the way.

    Your right, finding the right associate is not easy as i’ve learned by doing this over nearly 5 years for someone else(hiring and training associates for my past employer to put them into HIS new offices, to get HIM to HIS number faster, lol), what I got in return was a great income and invaluable experience in being able to do this for myself now. But, once again, what are my other options if I don’t do this? Gotta take action and go knock stuff over and make things happen with action if you want to get there, right? Things not working out 100% as you planned is the risk you take for things working out 100% as you planned to accomplish your dreams. I think the goal is to MINIMIZE the risk along the way by having knowledge and experience as well as keeping debt under control, which I would be doing I think, if I just did it slower and with the cash i’m saving.

    As far as my wife, she’s 100% on board with me as far as the financially plans and is actually trying to push me along faster, probably faster than even I feel comfortable with! lol.

    She’s actually working through the exercises of finding her life’s purpose and looking at starting or buying a business and getting out of the rat race of a j.o.b., so no worries there, lol.

    Thanks for the comments Steve, I really appreciate having inside from outside the box!

  6. Incidentally, if my wife keeps reading and learning as she has been lately and working through the exercises, she might go past me with her plan and gets us to a far greater number faster than I can make happen, lol.

  7. Why is it all or none? 30 year plan or multi-year plan?

    Scott – Are you able to run various scenarios where you pay him off in 18 months instead of 30 with less risk by hording cash?

  8. My Journey, we’re not saying here that it is all or none . What we’re trying to do is go over every scenario in an effort not to make a mistake that would potentially set you back on your journey to your number. Thats why the discussion here.Kind of like a round table discussion getting ideas.

  9. Certainly, if you’ve gone over the plan and everything seems right and the odds look to be in your favor, then you would jump on the situation. You wouldn’t hold back and risk your current plan not getting you to your number by your set date,if you knew you had other options.

  10. Steve,

    I understand what is going on here, and I apologize if my comment wasn’t clearer, but I was offering a suggestion of hedging one’s bet and hording cash in an effort to minimize the risk associated with the loan.

  11. Actually, My Journey has a pretty good point. 18 Months from now will give me exactly one year left on my contract, but will kind of split the difference between buying his shares this January and waiting it out the entire term.

    If I bought in 18 months, he would obviously take CONSIDERABLY less for his shares for an early exit for me AND I would have way more cash saved up then, possibly even an extra hundred grand. I might even have enough to pay him off with my ‘war chest’ cash AND have enough left in that war chest to get clinic#2 up and running within that year.

    Great discussion and great suggestions folks, thanks!

  12. Pingback: Work backwards to move forwards …- 7million7years

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