TSO Network Update - January 2019

18 z January 2019 In the mid-1940’s two brothers from New Hampshire revolutionized the food industry through developing what they called, “the speedy service system.” What Maurice and Richard McDonald created was a system of success. If consistently used, a system will produce a successful outcome every time. Today, McDonald’s is one of the largest restaurant chains in the world. In the past eight years, Texas State Optical has opened up 50 brand new, independent optometry practices as cold start-ups. We have consistently seen first year sales in excess of $400,000 and it is fairly common that by the time the office reaches its fifth anniversary, sales are in excess of $1,000,000. People often ask me what is the secret to a new, start-up’s success. I’m here to tell you, there is no secret. It is a system. A system that is continually improved and consistently implemented. The system is not in the knowing, it is in the doing. Over the next three issues, I will explain what I believe are the foundational elements of this system. The TSO system consists of a total of seven elements but if you don’t get these three correct, then the other four really don’t matter. This issue will focus on the importance of location. Where you locate your new practice is critical to its success. I am fond of saying that there is not enough advertising dollars available to overcome a bad location. There are three fundamental mistakes I have observed made by optometrists when they are left on their own to select a location for a new office. The price of rent vs. the cost of a bad location One mistake I often see optometrists make is they focus on the price of rent vs. the the true cost of the location. You must think of rent as an advertising expense. Select a great location, and people will quickly find you and flock to your office, pick a bad location and you’ll pay for it year after year over the length of the lease. Find the newest, nicest super-grocer development in a suburban area and secure space that is highly visible to their customers. These grocers spend hundreds of thousands of dollars each week attracting people to shop at their store. I like the idea that each time they visit the grocery store, which these days is at least twice a week, they are driving right by or in front of our location. That is powerful advertising! Not using a commercial realtor Optometrists are trained to provide professional eye care, not locate commercial developments and negotiate leases. Turn this over to someone who is an expert. Often times a good commercial realtor will know of developments that are planned 12 and 18 months out. You on the other hand will only be aware Fundamentals to Building a Successful Practice of space with a “for lease” sign in the window. A commercial realtor cannot only help you find a great location, but will save you money in areas that you will not think about or secure tenant improvement dollars that you do not have the leverage to negotiate. This can be a very important benefit. A realtor will include advantages when it comes to signage, hours of operation and common area maintenance charges. All of these are negotiable but optometrists are not experienced in knowing how to go about working with landlords and property management companies. 1. Leasing too small of a space Time and time again I will visit with optometrists who believe they only need 1,400 to 1,500 square foot for their new office. Often this is driven by a concern over the cost of rent without realizing the consumer’s retail experience expectation. We start at a minimum of 2,500 square feet with at least 1,200 to 1,500 of that in the retail optical dispensary alone! Today’s consumers want choice and selection and you cannot present 800 frames in an attractive and appealing way with only 600 to 800 square foot of optical dispensary. Follow these suggestions when opening a new office or relocating an existing practice and you’ll understand the importance of this first step in the success system. Next issue we’ll talk about another fundamental of our system, inventory management. This column by John D Marvin is published with permission from INVISION magazine.