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Practice Startup Success

Information Advice Encouragement

May 26, 2008                                                                         ISSN 1934-3248

"Choose the life that is most useful, and habit will make it the most agreeable."  - Sir Francis Bacon

In this issue:

Sad Story of Failure.  I saw an article recently about a young DC who started his practice and closed within 3 months.  No patients.  Too many debts, including a hefty lease payment.  Of course, I have an opinion on what went wrong:

TOO LITTLE CAPITAL.  By that, I mean he didn’t get enough working capital to survive and pay his business expenses while he built up his patient base.  Get enough for 6 months to a year.  Assume no income for six months.  How much would it take to pay all your business bills for six months if you had no patients?  That’s how much you need to get from a bank.  Put it aside, spend as little as possible, and work like heck to get patients in the door.  Don’t start your business without it.  Read more on my StudentDCInteractive blog. 

What is an associate?  As some of you know, I get lots of students and grads sending me contracts.  I got another one this week, and it makes me shudder to think how chiropractors make lousy lawyers.  They mix up the terms “employee” and “independent contractor” and “associate.”  Employees and independent contractors are totally different legal entities.  An “associate” is not a legal entity at all.

• An EMPLOYEE is someone who enters into a legal employment relationship with someone else.  An employee must adhere to the rules of the job, and the employer must pay the employee.  The employer must also deduct ½ the employment taxes (Social Security and Medicare) from the employee and must pay the other half. 
   

• An Independent Contractor (IC) is someone who contracts to do work for another but who is NOT an employee.  The independent contractor is free to work in any way he/she wants, as long as the job is done to the other party’s satisfaction.  If you hire someone to clean your office, for example, you don’t tell them how to do it; you just pay them for the job.  IC’s also by definition are independent and may work for others. Notice that the IC is paid by the other party, not the other way around.  Because an IC is not an employee, no employment taxes are deducted or paid.
   

•   The term “Associate” is neither fish nor fowl; it has no legal meaning.  The dictionary definition of “associate” is someone who works alongside someone else, as a partner, colleague, companion, employee, or worker.   

If you get an “Associate” contract, understand that you could be either an employee or an IC.  In cases like the one I saw this week, it’s impossible to figure out.  Please get an attorney and listen to his/her advice. 

Run Background Checks!  Before you hire any new employee, run a background check on this person.  Case in point: A DC wrote me that a new employee, who came highly recommended by a patient, proved almost immediately to be a problem, because she tried to get drugs using the doctor’s name.  The doctor fired her when it became clear what she was doing.  Would a background check have revealed the problem?  It depends on what was included.  Background checks can include:

•  Criminal records (only convictions)

•  Credit checks and records of bankruptcy

• Employment history (usually only dates of employment, position)

•  Driving records (violations)

• Education records (to make sure someone  actually graduated)

There are lots of organizations who will run these background checks for a fee.  Obviously, the more you want to check, the higher the cost. Will they find everything?  Probably not.  Are they better than nothing?  Definitely.  At a minimum:

1.      Require an application.  Require all applicants to fill out an application form which includes a statement that the information is correct.  This way, at least you put them on notice that you will act if you find out the information is false.

 Toastmasters clubs are a great place to

1. Polish your public speaking skills,
2. Talk about chiropractic, and
3. Network with other business people in your community. 

Go to Toastmasters.org, and I’ll bet you find a club nearby.

 

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