Optical supplies

I'm trying to keep a running tally of how much everything will cost in each 'department' of the practice. Here is my current list for what the optical will need:

1. Pupilometer
2. Job Trays
3. Hot Air Frame Warmer
4. Tool Rack
5. Quick Fix Pro/Smart System Pro (nosepads, screws, etc) for repairs
   
6. Optical Tags (from ArchCrown) to label frame prices
7. PAL Identifier
   
8. ErgoPro plier kit
   

This is far from comprehensive, so I'll keep adding to it.

Accountants

Well I promised a while ago that I would post my accountants fees. Here they are for you to dissect:

Individual Tax Return - $225-375
LLC Return - $350-425
Sales Tax - $50/quarter
Quickbooks Initial Setup - $300 estimated
Quickbooks Support - $50/hour. Mid year trip and year end trip for 2-3 hours, each.

So, I can estimate to spend about $800-1200 yearly on accounting.

Vendors

Perhaps the most important aspect of your office, is what you'll be equipping it with. This is what enables you to see patients. Rightly so, we have decided to invest in high quality equipment and start with one lane.

If I can find these pieces used (or their equivalents).. then I'll get that instead of purchasing new. Grand Total: $97,000

1. Exam Lane: Marco Deluxe Stand, Marco 1280 Encore Exam Chair, Marco G2 Slit Lamp ($10,500)
2. Acuity Panel: 20" iMac ($2900)
3. Autorefractor: Topcon KR-8900 ($10,500)
4. NCT: Reichert AT550. I may decide not to get one, and stick with just GAT. ($2,500 used)
5. Lensmeter: Topcon CL-200 (still considering a manual lensmeter). ($3,000)
6. Retinal Camera: Canon CR-1 ($23,000)
7. Visual Field: Humphrey 750 or Octopus 3 series ($14,000)
8. Edger: National Optronics 7E Edger & tracer. If we decide to purchase one, it will be new. All the older OD's have cautioned me on purchasing a used model. This is a risky tactical move; however, my competition does not offer same day service, and second I also want to keep my cost of goods low, although for a startup you wont be busy enough for this to matter much. ($27,500)
9. EMR: OfficeMate ($2,200) They are running a deferred license fee promotion.
10. Anterior Segment Camera: Canon Point/Shoot camera + adapter + EyeFi card ($900)

Vendor Choices:

1. VSI a good source for used equipment
   
2. Lombart
   
3. Cal Coast
4. Universal Ophthalmic
   
5. There are more, so I will continue to add to the list
   

Blueprints

As promised, here is a rough sketch of our remodeled interior. We had to work within the confines of the existing structure. If you are looking for design ideas, contractors, or planners:

Eyedesigns Ask for Dave Pursel. They have great frame boards. They will design your floorplan and also sell optical cabinetry/furniture. Admittedly, expensive. Somewhere in the neighborhood of $60 square foot.
Magic Designs Speak with Cy Furman!
Fashion Optical Good ideas
Barbara Wright She is a planner/designer. I highly recommend her book, which I managed to read and take notes on while in OD school.

In the end, we ended up going with a local general contractor. We met him during a tradeshow (our annual state optometric convention) and had seen the work/projects he had done for several OD's we knew.

Look at SeeMyPractice for pictures of other doctors offices.

To do list

I've decided to create a basic laundry list of what we'll need to do over the next 11 months to get this show on the road, I'll add more as I go along:

1. Decide which equipment to purchase and vendors to use
   
2. Develop a marketing plan, so we can get in the black fast!!
   
3. Decide which frames to use in the optical. We are targeting roughly 600 frames
   
4. Create office forms

If you're reading this blog and wondering where you can "borrow" money from to start your practice. We asked for $330,000 and got it (remember: it never hurts to ask for more money. We likely wont use all of it and are trying to stay lean with our startup). Here are some options:

• http://www.matsco.com (0% down, based off your credit, and will usually need 2 years of experience). Read the fine print for a pre-payment penalty.
  
• A local bank. I went into a local bank and asked to speak to the Vice President of Commercial lending.. I introduced myself, had a business plan and tried to win him over. He was all for it! This is the way I went.
  
• A good introductory article
  

Oh, stay tuned for photos of the building and blueprints that we sent to the contractor!

WE OWN IT!!!

Woohoo!! I drove up July 15, 2009 to the title company's office and officially closed on our first building!! What a tremendous adrenaline rush it was. Seeing as how it was my first deal, I would say everything went pretty smoothly. The truism in commercial real estate is that you make your money when you buy the property for as cheap as possible & also at the closing table.

Deal Highlights:

• Total purchase price: $290,007.50 on our HUD settlement statement. $286,000 was the building price + $4007.50 for settlement charges. An HUD statement is a formal document which shows where money changes hands. I also received the appraisal report back from the bank shortly a week after the purchase, which valued the property at $295,000. Which means, I have built in equity right off the bat.
• Amount I was responsible for: $50,076.69
• Capitalization Rate: 8.03%
• Cash on Cash Return: 15.3%
  

I also made my first payment to the bank today ($1367 is the monthly note/payment, for the next 30 years). I also received my first rent check from our tenant that occupies the building for $5000.00.. they are set to leave at the end of October. So this rental income is an added bonus. The building however, will be vacant until our finish-out starts in March 2010.

Which brings me to the next subject: Buildout!!

• Our contractor has given us an estimate of the remodelling job. It was priced at $90,000 for a high quality finish out. I sent him blue prints of the property, they came and looked at it last month, and last week I also sent them pictures of my favorite offices/with comments that I would like to incorporate in our own.

In the meantime, after getting my feet wet with real estate, I purchased a few books on commercial/residential property investing because I've really enjoyed this experience. Things have been busy.

Closing date, and HVAC!

Good news: The bank also informed us this week that we can shoot for July 13 as a closing date!

The only major flaw with the building as discovered by the inspection was the HVAC system. Well, I'm an optometrist.. not a handyman. So I had to figure out roughly what this would cost me. I called one A/C company and really played dumb and had him come out to the property and give me a bid. He quoted me $9500 to replace my split system units.

Well I used this information to help leverage my position. I then sent this bid over to the seller/broker and said that this added expense would be tough for us. To make this a win-win situation, I asked for a credit-at-closing in exchange for closing on the building quickly. Suprisingly, the seller agreed.

So when I close on the building for 286,000.. I will also recieve a credit for $7000.

1st attorney bill

I also received my attorney bill yesterday. Guess how much? $2116.50!!! That was for reviewing the purchase contract (10 pages), email correspondence, changes to the contract, etc. He billed me for a total of 8 hours--okay, whatever. I spent a total of 45 minutes on the phone with him.

Well today, my attorney emailed me and asked me whether he wanted me to also let him review the title commitment. I'm a little gun shy of running to him with questions, expecting another stiff bill. Luckily, I had a patient of mine (title/escrow officer) look over everything for me and tell me it was clean.

I have nothing against my real estate attorney, he is good at what he does.. but I really don't see how he spent 8 hours of work on this. I'm not in the best mood right now.

Loan comitment!

Woohoo!! Good news. We've got a commitment letter from both banks: the local bank to fund our building purchase, and an optometric lender for the practice.

Our practice (PLLC) will lease from our building corporation (LLC).. there are several advantages to keeping the two separate, I'll go over those another day.

Timeline of events so far:

• May 30-we found our building
  
• June 4-incorporated LLC with the State
• June 12-executed contract on the building with attorney
  
• June 12-local bank gives us commitment letter for building
• June 17-hired inspector to evaluate property
  
• June 25-practice lender gives us commitment
  

Our loan

We intend on purchasing the building now and holding it, simply because the location is GREAT! The building was actually owned by an ophthalmologist 10 years ago, so remodelling it will be easier (hopefully). We dont plan on occupying the space until we've finished our contract with the seniordoc, set to expire next July. BUT, this gives us plenty of time to get everything in order.

1. I actually applied with two different SBA lenders (7a loan) to finance us for the building purchase and the practice loan. I made them compete with each other to get the best possible rate. They agreed to finance us over 25 years with Prime+2.25% as our rate. Total size of loan: $588,000
2. Then I applied with a local bank (for the building), and an optometric lending company (for the practice loan). This would be the best option for us, and would keep our business local. Total size of loan: $660,000