Dear Jerry,
What are your thoughts about opening a second practice in a medium size city (500,000 population)?
Our current practice location grosses about $2 million per year and we have an opportunity to purchase a building at a GREAT price about 3 miles away.
I think it is a great location for an upscale boutique, but we are concerned that it may be a little close geographically to our current location.
Thank you,
Dr. Sherman (name changed)
Jerry's thoughts:
Sounds like you have a great practice in your main office!
And yes, this is an absolutely wonderful time to buy real estate at rock bottom prices in many markets. But be careful not to let an attractive investment in real estate cloud your thinking in regards to the best location for an eyecare practice.
My main concern would be the same as yours. Is 3 miles too close for a second office? Particularly in a small city of 500,000.
In my mind, the decision should hinge on how much this second location allows you to break into a new market.
For example: is it near a dynamic new shopping area, intersection or major employer?
Or, is the new office in a growing part of town? Could this one day supplant your main location?
For more ideas, I turned your question over to my good friend Neil Gailmard, OD who consults with many large practices on expansion strategies.
Here are Dr. Gailmard’s thoughts:
Hi Dr Sherman,
I think opening a second office in or around a medium sized city can be a great idea.
But, typically the goal is to reach a new market separate from the first one. Three miles is very close. Obviously, you know this.
Here are the type of questions I would typically ask a client if I were consulting on the matter:
- Would the boutique also offer primary care optometric services – or are you thinking it would be optical sales only? Optical-only concerns me a bit in that it may not bring in the revenue you hope for – retail is VERY different than full scope optometry!
- If the boutique does offer full service care, then it may be too close and you could cannibalize your first practice.
- Do you own the building your existing practice is in? What is the square footage of each location?
- Does the new location have a great deal of foot traffic in a strong boutique shopping area? Is this a high income area?
Please contact me directly if you would like a one on one analysis of this interesting opportunity.
Best regards,
Neil Gailmard, OD, MBA, FAAO
President, Gailmard Consulting
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