Podcast Transcription - Where to Look for Eye-Watering Growth in 2024
Hello and welcome to another episode of the Business of Hearing podcast, and I'm going to say it at the beginning: this episode probably is not right for you. This episode is only, and I'll say that even louder, only for people who want huge growth. And I'm not saying that as a gimmicky marketing thing. It’s just that what I'm talking about is not “Do this marketing trick” or “These are the ways you can get a 10 percent, 15 percent uplift in these areas.” If you're an entrepreneur first and a hearing care professional second then I think you'll enjoy today's episode. If you just want to grow a nice practice, then this probably isn't the best use of your 15 to 20 minutes, so I suppose the warning’s there. Enjoy.
Welcome to the Business of Hearing podcast with me, Oli Luke, the podcast for entrepreneurial private practice hearing care clinic leaders, the ones who set benchmarks of excellence, build wildly successful businesses, grow their impact, and navigate the choppy waters to spearhead the future of private practice hearing care. Thank you so much for joining us. Pour yourself a cup of tea and let's get stuck into this week's episode.
So welcome along to another episode and, look, I'll be really direct with you now. If you want very, very slow, gradual growth, this probably isn't the episode for you. But if you consider yourself to be an entrepreneur or business owner first and a hearing care professional second, then you're in the right place, my friend, because I want to talk today about probably the biggest opportunity for growth. And it's not “Do this marketing thing.” It's not “The Baby Boomers are coming.” This is a little different. So I will repeat: if you want slow and gradual growth, go and jump back to some other episodes. Go and listen to some old episodes, and eagerly await the next one. If you're putting yourself as the entrepreneur and business owner first and the hearing care professional second, and you want to build a big, big business, then I've got some exciting thoughts to share with you.
Now, ever since I became an old man, I reached a stage in my life where the quiet life is definitely the way of life. And I am 32, right? So I'm not super old. I'm not super young. I'm starting to realize I'm not super young. I'm getting the grays. I'm getting back pain. I can't really drink alcohol without feeling horrendous the next day. I don't have the energy I used to have. Maybe I'm just a fast-aging young man, but what I've discovered is I have a part of the week that I adore, and that part of the week is Saturday evenings.
Now Saturday evenings, kids go to bed, my wife typically goes to bed early and I say, look, I'm staying up a little later tonight, I'm having a bit of me time. Now, this isn't anything dodgy, just to warn you, but what I absolutely adore doing—and I don't advocate that you do this—I adore sitting there, having a few glasses of whiskey, watching something on the telly, and then having a little moment to reflect when all that noise and stress and pressure that we typically have as business owners just disappears slightly. This isn't health advice—please do not follow me for health advice. But those little points of reflection on a Saturday evening where I go, “Okay, let me just assess this. Like, this isn't working the way I need it to be, the way the team’s structured in this area, this member of staff, blah, blah”—you get it, the things that we end up torturing ourselves with as business owners. I go through all of them and just have little points of reflection. Things that are going well, things where I can give myself a pat on the back, and similarly things where I need a kick up the ass.
And I was having a bit of a thought on the Saturday that's just gone and it was around, okay, if I were a practice owner right now, a listener to this podcast, and I was super ambitious, I wanted big growth. I did not just want a nice little lifestyle business. I wanted, like, let me build the biggest thing ever, create generational wealth so that my grandchildren will feel the impact of my work. What would I do? How would I build the biggest practice possible? And my mind went to one place and that's what I want to talk about with you today.
Now, let me give you some context on this. Every day, as we know, there are 10,000 people retiring in the US, and 19 percent of them are business owners. Now, this presents a big, big opportunity. Now, we are, I believe, going through probably one of the biggest eras of opportunity that we have as a generation. The biggest transition of wealth that has ever happened will be happening over the next 10 years, and that is because Baby Boomers are retiring, and naturally they hold 70 percent of the disposable income and 75 percent of all property wealth in the US right now. They need to transition that pretty quickly, because all of a sudden they're going to end up in a situation where they're going to be accidentally old, right?
And, naturally, this is happening with the movement of inheritance to their children. Yet the big thing that is at risk, given that there are 1900 business owners every day reaching the age of 65, is the businesses that they own. Here's the problem: the majority of millennials, Gen Z kids, etc, are not particularly interested in taking over mum’s, dad’s, grandma’s, grandfather's business, right? Even if it's generating millions of dollars, they're more interested in tech, online, YouTube, etc.
And this presents a huge opportunity, because right now there’s a significant number of businesses that need to sell, and there's a huge shortage of buyers for them. If you consider that only 1.4 percent of businesses are formally marketed for sale and around 30 percent of them actually sell through brokers, we've got this big gap now of businesses between the $1 million to $5 million mark that just have no succession planning in place for somebody to naturally take on the business, and it's a great business with a tired business owner who really needs to retire.
Now, they're going to end up in a little bit of a challenging position, because as soon as they realize that their business is not easy to sell—like, a manufacturer-owned chain wouldn't be interested if it's in the world of hearing care; private equity wouldn't be interested if it's $1 to $5 million, typically—all of a sudden they're looking for a private buyer, and private buyers are hard to find.
The reason I'm sharing this with you is there's a huge opportunity to tap into this transition of wealth right now, because there are a lot of wonderful businesses out there where the owners need to retire and they've got no way out. And they're going to end up in a predicament where they end up working far too late in their career. They've spent the time building the business. From the moment they can retire, they don't really have a huge pension contribution, and much of their wealth is tied into the business. They're going to end up in a really challenging spot when they realize they can't sell their business, and the options are going to be, “Well, do I close my doors, let down my staff, let down my customers? Or do I just work hard for the rest of my life?”
And this presents a big opportunity for entrepreneurial hearing care leaders like you. Because if I were in your shoes right now and I was looking for big, big growth, I'd have my eye on this.
And I think there are two areas to look. Area one is your competitors right now where the owner of that business is at a point where they're going to be retiring in the next five years—or maybe should have retired five years ago. And there are a lot of them, right? There are people who've been in the industry for a long time. They've done it a certain way. They have a database of patients that they've served. Typically, that database is aging, and it's a little bit of an old-school business, but the business owner is tired and needs to retire but they have no way out without having their reputation pulled through the mud by letting down their patients. Given that many of them end up selling lifetime promises to patients, given the structure of the business, it's heartbreaking for them to know the patients to whom they have been honored to deliver service, they’d be letting them down, closing the doors. They are desperate to get out of that business but much of their wealth is tied into that business, which puts them in a very, very difficult predicament.
Now, there's a big opportunity there if you approach those businesses and you've got another practice, you're young, you've got some energy, you've got years ahead of you in the industry. You're set up to be a very safe pair of hands for that practice owner, the seller of their business, because if you can approach them and come up with an agreement where you'll continue to take care of their patients and let them set sail into the distance as part of retirement, it's a big, big opportunity for both them and you.
Now, naturally, the big thought that comes to mind for many of us is, “Well, I don't want to get in a bunch of debt. I don't want to go to the bank. I don't want to have to go through all that mess. I don't want to have to go to a manufacturer and tie this to a unit agreement and put myself into a bunch of debt.” But if this is the situation and you've got a business owner who needs to retire and they haven't got many options, then you hold all the power in that negotiation. And “holding the power in the negotiation”—what does that mean? Well, it means there's a number of different structures that you could come up with in order to help that owner to exit the business and you take over. Whether it's an annuity deal or something else, there's an array of different ways you could potentially do this and leverage money.
But I would say probably one of the easiest things you can do if the business owner is motivated to exit, is desperate for that safe pair of hands and you have a trustworthy reputation in your community, is you should be able to do an agreement where that owner can step out of the business. You'll step in. There's no significant money down on day one. Maybe there's no money down at all, but the agreement is structured over a number of years. It's, “Okay, I am going to give you X percentage of the profit for the next certain number of years,” or it's, “I’m going to pay you $10,000, $15,000 a month for the next 12 years, six years”—depends on the numbers of the business and the valuation of it.
But those kinds of agreements, for somebody who’s keen to retire, to let go of what they've built and give it to somebody who's going to be a safe pair of hands, look after their patients, look after their reputation, but allow them to set sail into the distance with their husband or their wife, and know that for the next eight to 12 years they are going to get paid a monthly fee that is going to allow them to live a nice life and a wonderful retirement? That is a very desirable thought.
Now, you may be thinking, “Well, what happens if you cannot deliver on that promise? What happens if you make that promise and say, ‘I'll pay you now over the next 12 years,’ and they come back and say, ‘Well, what happens if you can't pay me all the business? I'm trusting you to take over the business, etc. You may run the business into the ground.'”
Well, you could build into the promise and the contract that if at any point you default on any of those payments, you give them the entire business back. They get to keep all the payments they've had but they get 100 percent ownership back of the business. So essentially, they're in a win-win position. Wonderful opportunity.
But right now if I were a practice owner, I'd be going, “Okay, where are the independents round here who've got a good reputation, built a business over a number of years, need to retire, and could I come up with agreements to acquire them?” And it could be that you take the database and start siphoning the patients into your main location. If they're local, it may be that you take all their assets and equipment and put a provider there and run it that way. You've got a few options here, but that would probably be one of the easiest ways that you could buy revenue, rather than trying to build it yourself. You just go out to a business that's maybe bigger than you, same size as you, and you acquire that, acquire that revenue, and instantly you get the revenue bump as a result, and you've got minimal risk attached to that apart from doing the work, right?
Another thing that I'd be considering right now—and this is a little ballsy, probably not the right approach for you, I don't know, but let me share it anyway—is, given that there's this huge opportunity right now, and in 10 years this opportunity won't exist —this transition of wealth, the number of Boomers who need to sell their businesses, need to retire, don't have succession planning, don't have an exit plan—you may want to consider looking out of the industry.
Now, I know this sounds strange, it may sound weird, it may feel very uncomfortable, but here's what I'd be considering if I were you. Are there any local businesses that have an older owner who should retire and that has crossover in clients to your patients? So let's hypothetically pick an example. Could it be a retirement-planning company? Could it be some form of local medical company? Could it be even a dog spa or somewhere that cleans dogs, cares for dogs? “Who else has customers similar to yours?” is essentially what I'm getting at, because if you can acquire a business like that—you don't particularly need the industry expertise, depending on what it is, if they've got a core team in place and a management team already—but what you could potentially do as a result is cross sell really well. And, naturally, if they've got thousands of customers who meet similar criteria to yours, and your practice has got thousands of customers who meet similar criteria to the types of customers they want, those cross-sell opportunities could be huge. So I think that's one thing I'd be looking at if I were looking for obnoxious growth right now.
The easiest thing to do is look at your competitors. Who are those older ones? Set up some conversations, find out where they're at, even if it's to let them know that, “Look, if you're ever looking to exit the business, just speak to us first. We know many are exiting to manufacturer-owned chains. I know you and us want to take care of patients correctly, so have a conversation with us at the very least.” And plant that seed.
Or you may bump into some conversations where they're like, “Yeah, I am looking to exit soon, actually in the next 12 months,” and you begin those conversations.
If you really want to go big, consider who are the other businesses in the area. And you could go on websites and find brokers who are selling deals locally, or you could just identify businesses that meet criteria and write to them individually, but that's what I would be considering right now for real, obnoxious growth, if you want it.
Like I said, this episode isn't for everybody. I really do believe this is for the one in 100 who is like, “I want to build a big, big business.” But that is where I see huge opportunity right now for the ones who want big growth.
So I hope that was helpful. If the biggest takeaway you took from this is you should drink more whiskey on a Saturday night, then not a bad takeaway, right?
If the takeaway you've gotten is “Who are my competitors who are at a stage of retirement and who are they going to sell to? Are they going to run themselves out of business, etc.?” then have those conversations. Because there’s so much opportunity, and their options for exit are incredibly slim and you may be an absolute lifesaver for them, to allow them to enjoy the retirement that they've been working so hard to have, and you’ll get an undervalued deal, which means that you can grow your practice, grow your influence, grow your revenue as a result. So hopefully that was helpful. As always, appreciate your ears and I'll speak to you again soon.
And there we have it. But before you head off to skip to the next episode or eagerly wait for next week's, I have three things for you.
First of all, if you've enjoyed what you've heard today and want to learn more about our exclusive Inner Circle to discover how 60-plus clinics are setting benchmarks of excellence in private practice, benefiting from a mastermind of North America's most successful practice owners, and having an industry-leading marketing team driving gold standard implementation, then go to www.orange-gray.com. There's not only a video there detailing how you can win in the next two decades in private practice, but also a downloadable PDF, with no ask for email address or anything like that, that will explain exactly what becoming a member looks like.
Second of all, I strongly feel that private practice is in a very challenging spot right now, where we're the Davids fighting against Goliaths, made up of large groups, manufacturer-owned chains, Costcos and whatever the next heavily funded Whizbang online direct response consumer model will be. I'm a strong believer that a rising tide lifts all boats, and the more private practice can fight back at scale, the bigger impact we’ll make. So please consider a friend, a colleague, or even a Facebook group, a LinkedIn group, etc. where you can spread the word about this podcast.
And third and finally, it may be a little thing, but a five-star review or hitting subscribe to ensure you automatically download all future episodes will help the algorithm to grow the impact of this podcast. And at the very least, it will certainly put a smile on my face when I go and look at the numbers. So I look forward to talking to you again next week.
Thank you for your ears, and I'll speak to you soon.
