Thursday, July 12, 2012

Decisions, Decisions

For as long as I can remember clients have said to me, "Wouldn't you like to have your own practice?" to which I've always replied, "No."

It wasn't a fear of the responsibility that caused me to answer in the negative but rather a fear of the financial and moral implications of taking on such a role. I think those people who want to be their own boss take that decision at a far earlier age than I am, I've always regarded myself as a good team player rather than the person who picks the team. That said, after more than twenty years of being a practice manager and reaching the point in my life where the current financial demands are perhaps less demanding than they were, although the prospect of retirement and having to support myself is something that brings me out in a cold sweat, I think the idea of finally taking off the captains armband and putting on the, metaphorical, sheepskin coat of management is something that seems less daunting.

It's with this background in mind that I find myself having to consider the opportunity of a management buyout. The proposal is that three, possibly four of us, raise the finance to buy the practice. From a financial point of view I can't see any downsides. Buying a professional practice is not like buying a car or a television, you don't generally make a one-off payment you agree to buy the goodwill of the practice based on recurring fees over an agreed period having made a payment up front. Even without knowing the exact figures involved it isn't difficult to make an educated guess at what the profit of the practice is and the fees are a matter of record on the computerised fees book which is accessible by everybody, so a decent stab can be made at what it's worth and how much financing a buyout would take out of the net profit. The one big question mark on the financial side is location. At present we occupy a building that is owned by a related party to our practice and there is no rent involved, a commercial rent would take a large chunk out of the profits.

Just as, if not more, important than the financial side is the personal side of things. I've always maintained that it's not important to like the people you work with but you need to respect each other and get on, the purpose being that you work towards and achieve the same professional standards and goals. I know it might sound a little sad to some more, how shall I put it, socially enthusiastic people than me, but the number of people I have worked with over the past thirty five years with whom I would happily share some free time probably number a dozen at most. However the number of people with whom I have had a good mutually beneficial professional relationship during that period would be close to a hundred.

The difference that this management buyout will bring to current relationships is that it will shift considerably because of the financial stakes. I've seen it countless times over the years, whether it's family or friends involved, the best partnerships, in terms of long term viability and profitability are often those where the common interest is the business and nothing else. Friends will fall out, husbands and wives will divorce, but two or more people with a common interest will survive. The big question is can those of us who have worked together as employees take that attitude of mutual respect and co-operation to the next level?

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