StudentDC Interactive

Some of you may be wrapping up (pun intended) a term, while others may be looking forward eagerly to a term break over the holidays.  Me too. 

Use the time on break wisely by preparing.  Sure, enjoy the time with your friends and family and get some rest.  But also think about doing some of these small projects you can do to get ready for practice. 

This first end-0f=year project relates to checking your credit.  If you haven’t checked your credit in a year, you should do that.  Go to www.annualcreditreport.com to see your credit report.  If you are close to graduation, get the reports from all three credit reporting agencies (Experian, Equifax, and Transunion) and pay the extra to get the 3 FICO scores.  If you’re not close to graduation, get one of the reports and see if there’s anything negative.  If you need to get something taken off, follow the dispute process outlined on the credit reporting bureau’s website and keep working on it until the issue is resolved (this might take many months).

If you have a low credit score, work on improving it.  Here is a great video about the 5 things you can do to improve your credit rating, from Miranda Marquit at AllBusiness.com

http://www.allbusiness.com/personal-finance/4968821-1.html

For more information about credit scores and how they affect your ability to get bank financing, go to the Financial Preparation section of StudentDC.com

There is a little-known section of the IRS Code that gives small businesses a break on equipment purchases. It’s called Section 179. Here is how it works:

If you buy equipment for your practice, up to $500,000 this year, you could deduct a portion of the cost, up to $125,000 on your taxes. Here is more detail on what equipment can qualify, from Crest Capital:

“Tangible Goods financed by Equipment Loans or by most types of Equipment Leases (Non-Tax or Capital Leases) qualify for this deduction. Examples of Non-Tax (Capital) Leases include a $1 Purchase Lease, an Equipment Finance Agreement (EFA), and a 10% Purchase Upon Termination (PUT) Lease.”

The “catch,” if there is one, is that the total cost of the equipment you want to expense can’t be more than your total taxable income. To see how this deduction might affect your new practice, click on this link for a deduction calculator:

http://www.crestcapital.com/tax_deduction_calculator

For more information on this and other tax questions for your small business, check out my favorite tax link: www.taxgirl.com.

And of course check with your tax advisor. This is one of those things you can’t make a New Year’s resolution about. You just need to do it now.

I talked with a DC yesterday who was let go from his associate position. Like any other job, it can come to an end that quickly. He is working on options, one of which would be to go into business for himself but very cheaply, by providing services to people from their homes. Here are some considerations we discussed:

1. He’ll have to get his own provider status with Medicare (855I as a sole proprietor).

2. He will have to take cash or checks, since it’s difficult to carry around a POS (point of sale) machine to run credit and debit cards.  I suggested he get an invoice form from a local office supply store (duplicate), so he could keep track of patient receipts and bills.

3. He will have to check with the city to see if he needs a business license. We talked about his ability to work from his home, but he is in a development with protective covenants and they probably won’t let him. He also would have to get a zoning variance to work from home. I’ll talk more about this later, if you’re interested.

4. He needs to keep track of his mileage, since he’s using his car primarily to see patients. He should keep a notebook in his car and note mileage at the beginning and the end of each day. If he wants to be really exact, he could subtract personal miles, but I wouldn’t worry too much about this.

5.  He’s going to get a portable table to take with him.

6.  He needs to keep track of all expenses for his startup, so he can use these to file his taxes.

What else does he need?  What would you do if you were in this situation?  (By the way, he doesn’t have a non-compete to deal with, so he can go anywhere.)

I was asked that question this week and it took me by surprise. I am so used to thinking about concepts like USP and different types of practices and patients, that I never really thought there was a “typical” or “average” chiropractic patient. Then I checked Chiropractic Economics online and I found an interesting article describing this very person.

The author, Daniel Gonzalez, describes the typical person seeking health information online:

• The typical “health seeker” is female.
• She is between the ages of 30 and 49.
• The top three topics she and other health seekers search are information about disease and conditions (60 percent), medical treatments and procedures (47 percent) vitamins, minerals and supplements (44 percent).

So is this the typical chiropractic patient? Well, maybe. At least, she is the person most aggressively seeking health information, including chiropractic care. The concept here is called “target market.” Here is a good article by Dennis Perman that explains this concept: read down to see the section on “ideal patient.”

If you try to target middle-aged women, that’s what you will get in your practice. Is that who you want? Sure, if you want a family practice, it is known that women buy chiropractic, so target them. But if you want a sports practice, you should look at a different target market.

As a prospective chiropractor, I would think it would be more valuable for you to look at the specific market for your services. What kind of patient do you want in your practice? If you know the answer to this question, you’ll know better how to find that person, either online or in your local community.

The question of the day was:  I am ready to start my practice, but I really don’t want to have to pay a CPA.  Can’t I do my taxes myself with good accounting software?

I’m always curious why chiropractors think they can do it all themselves.  You were trained as a chiropractor, not an accountant.  Even if you are starting out your chiropractic practice as a sole proprietorship, you need an accountant, and you REALLY need a CPA.  So what’s the difference?

An accountant or bookkeeper can do your monthly/quarterly accounting and help you with payroll taxes and some other tax filing, but a CPA has to keep up to date with tax issues and is able to go with you to the IRS if you get audited.  If you think taxes aren’t complicated, here is a site that lists federal, state, and local taxes, called “Tanned Feet.” 

By the way, a CPA is not a financial planner, although many can give you tax advice.  A financial planner can help you figure out how to set up pension and profit sharing plans, and 401k’s and all that tax-shelter stuff.
Here is my suggestion:  Find a local CPA who has a bookkeeper on staff, someone who can help you with QuickBooks or other financial software.  At some point when you start to make lots of money, start looking for a financial planner too.

When I’m teaching marketing, I talk often about features vs. benefits. This is a really important concept to remember when you’re creating advertising or talking about your practice. If you talk about your technique, don’t say how wonderful it is, and how great the technology is. Talk about how it will benefit your patients. What will it do for their pain? How will it help them?

As an example, I got some cool new shoes. They are called Z-coils. They have a funny heel that looks like a coiled spring; my daughter says I look like Tigger (in Winnie the Pooh). I got them because they help my knee pain (don’t laugh; you guys will be there too some day). So I’m wearing them and someone asks me, “What’s the technology of those things?” My answer was, “I don’t care. They work.” See what I mean? Technology is a feature; the fact that they work is a benefit.

In a classic story, a young salesman is working his first day in an appliance store. He knows everything about all the appliances, so when an elderly lady comes in and asks about the ice maker in a refrigerator, he gives her a half-hour explanation of how the ice maker works. When he’s done talking, the lady leaves in confusion. The boss rushes over and says, “Why did that lady leave?” The salesman explains that he was just telling her how the icemaker worked. The boss says, “Next time a customer asks how the ice maker works, tell them it works at night.”

Features vs. Benefits.  It is not what you think you are selling; it is what your patients think they are buying.  Seriously, if you get this concept, your marketing will start working.

I received a question from someone who said the bank asked her: What percentage of new grads start into their own practices after graduation? To answer her question, I checked the recent Chiropractic Economics new practitioner profile, based on a survey. There is a lot of useful information in this survey. For example:

• 44.6 percent of the new grads started their own practices, 47.9 percent associated, and only 7.5 percent bought a practice.
• The average age of new DC’s is 29.
• Almost half of associateships (49.1 percent) last fewer than 3 years.
• Most new grads (53.9 percent) spent less than $25,000 to start their practices.
• Slightly less than one-third of new DC’s received help from a management consultant.

The profile also showed changes in the profile from grads in prior years (back to 1950). There were some interesting changes here.

I have to say this question from a bank is a new one; just when I think I’ve heard all the questions, someone comes up with a new one. But I’m sure this wasn’t a “deal breaker” kind of question. Even so, it’s good to be able to show that you have knowledge of the trends in chiropractic, to enhance your credibility with the banker.

If you get a question from a bank that you aren’t sure how to answer, post a comment on this site or email me directly at jean@dcpracticesuccess.com.  

I talked the other day with a new grad who was struggling to figure out where to locate his practice.  He is in a large city in the Midwest, and he was looking at two locations:

1.  One location is on a side street off the “main drag” but still within the area he wanted.  It has limited visibility from the street.  The rent is about $15 a square foot.

2.  The second location is in a highly visible area in the area of a major retail mall.  The office has a large sign on the street, of which he would have a small section.  The rent is over $25 a square foot, including CAM (common area maintenance).

In addition, the first office is 1200 square feet, while the second office is 1700 square feet.  He and his wife will be working together, so he figured the 1700 square feet would be good.

To figure the monthly rent:  Multiply the price per square foot by the number of square feet to get the annual rent, then divide by 12.  So monthly rent on the first office would be  $1500 a month, while the rent on the second would be $3541.

So which would be best for this new DC?  Consider the cost of advertising at the first location, since it’s not so easily visible.  Marketers tell us there is a trade-off between rent and advertising, and this is a classic case of this situation.

Which office should this new DC rent?  Reply by commenting.  Sure, I have an opinion, but that’s all it is.  I would like to hear from you.