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Putting The Plan Together!


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Open 1 clinic, 2 clinics, or 3+ clinics? What would YOU do? These are non-trivial questions: make the wrong move and you can defeat any chance that you had to reach your Number.  So, how NOT to leave this critical decision to chance? Well, Scott ‘benefited’ from his turn ‘under the spotlight‘ so, we already have some insight as to where he is heading with all of this.

Now, you can read Scott’s latest thinking … what do you think? And, can you help Scott ‘only’ get 12% compounded on his money?

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Ok, now that i’ve laid it all on the table about my plans and strategy to get to my number of 4 million in 9 years, I’ll just summarize a few things.

First, I’ve realized that opening clinic after clinic after clinic in multiple succession is not necessarily an optimum plan to get me to my number faster. Running the numbers on opening 3 clinics as fast as reasonably possible does not produce a higher number within 9 years than opening 2. The reason being, is that takes capital, to the tune of around 100 grand to get an office up and running and cashflowing positive, not to mention it takes valuable time and a big drop in salary while it’s developing.

If i’m moving things along at warp speed, I can cashflow positive an office in 6-8 months, but looking at the numbers, this sudden drop of 100k to open an office, coupled with the fact that I have to hire a new associate PRIOR to starting up the next office, spend at least 6 months minimum training them to run an office by themselves before I can turn them loose on their own at my old office and they can be reasonably capable, pay them a fair salary during this training period (while they aren’t producing a dime of income and actually dropping the clinic performance, due to patient lack of trust in a new doc a well as my focus being so much on the new doc and less on running the practice), continuing to pay them and increasing salary while i’m at the “new” office building(this drops my salary from the previous office dramatically and remember, i’m not making anything on the new one until it cashflows positive) etc…etc…

NOW, if my goal was to work for 12,15, or even 20 yrs, you would see that NUMBER double and even triple on the backend. Once you own 3 clinics and they all have well trained docs, all cashflowing very well and everyone is happy, it’s easy to have cashflow to the tune of 50k per month to invest. This builds quite a Number very fast, but this process takes a few years before the plane even gets off the runway. It’s a helluva 15-20 years plan for major wealth, just not a good 7-10 year plan.

Now double checking, triple checking and quadruple checking my math says that if I can achieve a 12% gain on my cashflow, while keeping my lifestyle the same, I can accumulate 3.2 million in roughly 9 years by continuing out my contract over these next 29 or so months, then getting an associate asap and moving on with the next clinic startup and just sticking with 2 clinics. At that time, I can sell both clinics for roughly 300k each and when adding those funds to my other assets (home equity at that time, rental property equity, etc…) that will put me right around 4 million in 9 years.

Now, I have to make sure I can produce 12% per compounding with this cashflow…..the next question is, how do I get this rate of growth on my money? Stock market coming out of a recession? Continuing to add rental properties and hopefully great foreclosure buys to my portfolio? Steadily purchasing tax lien certificates in states with a high return rate? Buying the commercial properties that these 2 offices reside in? A combination of all the above?

Also, just for kicks, I ran the numbers on just owning the one clinic the entire 9 years and not even opening a second office, keeping our lifestyle the same and investing all the cashflow. Interestingly, it produces very close to 3 million in those 9 years if I can get that same 12% return. Now think about that one for a minute. 2 clinics “only” produces 200-300k more over that 9 years (plus the 300k value of the second clinic itself if it were to be sold, so I guess i’m looking at more like a 500-600k difference in the end at 9 years) so you can see from the above example, the multiple clinic ownership REALLY needs time to take off and produce meaningful results. Definitely not a get rich, really quick plan, but more of a “get REALLY rich in 20 yrs” plan.

Any suggestions?

Best ways to almost guarantee at least a 12% return on your money?

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[…] a tool to use whenever you are presented with two financial alternatives … for example, Scott who is deciding how many clinics to open: 1, 2, or 3+ [Hint: only one of these is the right answer, […]

Scott, nice plan, I was hoping you were going to go this route and not load up on debt. This plan sounds like it has a solid foundation to work on, I like that.
If your talking about 20 years down the road, you may be able to obtain 12% with some dividend stocks over a long period of time, if they have the right growth rate, like JNJ, or even check out PEP right now. Their not paying much right now, but with a 10%+ growth rate, things will change in a few years.
I would also mix those in with some good REITs that own real property, I personally would prefer residential because it seems less risky to me, I mean people have to have a place to sleep at night, right?
congrats though Scott, looks like it will only be a matter of time from here.

Thanks Josh, i’ll check those stocks out!

As I mentioned on my blog, Scott, I think that you and I were both surprised how 2 (and, possibly even just one) clinic could do the job; maybe you had a better view of this, but it seems counter intuitive.

But, as you suggest in your post, this is largely due to the time it takes to get momentum up in a new clinic, not to mention paying off the debt that you will be accumulating …

… but, if you didn’t have a Date in mind, you would most likely be going all-out to open as many clinics as possible: rich but burnt out in 15 or 20 years (the only reason that you would otherwise stop).

Whenever you get tempted to ‘chase the dollars’, sit back; rethink your Life’s Purpose and bookmark these posts and see how you are avoiding the rat race of being either overly fearful or too greedy. Well done!

Now, since this isn’t a motivational blog, but a practical ‘experiment’ in getting rich(er) quick(er), here’s my suggestions:

1. Open your clinics and use the time that you have available to train the additional staff that you will need to move to the second clinic … if necessary, pay them off the books so it doesn’t impact your partner (not sure that you would want to share your plans with him … it can only make him think twice about your current arrangement).

2. Speaking of which, this is a great time to re-check with an attorney that your exit contract with him is ‘rock solid’ or you will need to go to Plan B: buy him out early. And, of course, pepper your conversations with him along the lines of “I’ll miss you when you’re gone in X months, Buddy, but I’m sure we’ll still catch up for drinks” 😉

3. Your investing plan should be in this order: (a) your current clinic => (b) your new clinic => (c) the real-estate that sits under each clinic => (d) other real-estate investments (I agree with Josh: nothing wrong with going residential RE here, as long as it’s cashflow positive and you have great property managers … you don’t need the hassles! It can also spread your risks of vacancies if you have, say, a number of apartments or a multi-tenancy or three) => (e) buy/hold stocks with what you have left over (in the medical/pharma industries, of course).

If this ‘plan’ doesn’t get you to your Number (don’t forget you will probably keep everything else after you sell (a) and (b)) and deliver a 12%+ return on your (d) and (e) investments, without breaking a sweat, I’ll be a monkey’s uncle 🙂

That’s awesome Adrian, i’ve been sitting here putting my plan in the order that I feel that I need take action and came up with pretty much the same steps in the same order that you did.

It’s only matter of time! Now I have nothing to do, but display patience….*sigh*

Just saw this Quote of the Day on Investopedia, Scott, and immediately thought of your latest comment:

“You do things when the opportunities come along. I’ve had periods in my life when I’ve had a bundle of ideas come along, and I’ve had long dry spells. If I get an idea next week, I’ll do something. If not, I won’t do a damn thing.”
– Warren Buffett

Scott, I recently read the first story from a new site called http://fearlessstories.com/ It’s a site started by one of Seth Godin’s new MBA graduates, anyway it’s a great story and advice from this world renown photography. His main point was to enjoy the moment your in right now to the fullest extent. I got a lot out of it, I’ll try to forward it to you

@ Adrian – That’s got to be good advice, coming from the man. 😉

@ Josh – Thanks for the link, I’ll read it for sure!