How To Buy Or Start An Optometry Practice
Find out how to start an optometry practice by buying an existing practice or starting from scratch
How much does starting an opticians practice really cost and what steps are involved? Discover the opportunities, challenges and costs associated with setting up a new practice or acquiring an existing one and become a successful owner with the support of finance experts Rangewell.
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Note: In the UK, we collectively refer to most optometrists and ophthalmologists as opticians, so this article will help anyone who wants to run an eye-related healthcare facility regardless of your background.
An optician's practice can be a thriving business. Your turnover will depend on the number of customers you see, the level of service you provide, the frames you sell and, crucially, the research you put into running your practice. With an established business attracting regular clientele, a turnover into millions should be within reach.
But not every optician reaches that level - even in prosperous towns in the south of England. As an independent optician, your ability to give a personal service will mean you can compete against the big chains and the franchises, and enjoy that level of business – but you will need to prepare ahead and then invest to do so.
Planning involves researching your intended location, local competition, customer demographics and even deciding what level of involvement you will have with the NHS. Some private optometrists take lots of public healthcare contracts, whilst others focus on private individuals.
You will need to invest in everything from premises in the right location to the latest equipment in your consulting room. You will need a fashionable interior with the latest frames on display, and sales tools like video and smart mirrors to provide the sort of experience customers are now demanding.
As specialists in finance for the healthcare sector, we help optometrists start their own practices up and down the UK by securing the finance you need to get your business started. Get in touch using the box below or continue reading for a full guide to setting up an optometrist.
Optometrist vs optician vs ophthalmologist
There are three types of ‘optician’ in the UK, but most people simply group all of them into the term ‘optician’. These are:
- Optometrist: an optometrist is a trained eye care professional that can examine eyes for visual defects and will carry out eye checks. Sometimes known as an ophthalmic optician.
- Ophthalmologist: a doctor or surgeon specifically trained in the care of eyes and eye-related conditions. Can carry out all the duties of an optometrist but is a qualified doctor whereas an optometrist is not.
- Optician: an optician is not an eye doctor, instead dealing with the fitting and selling of glasses and contact lenses to help correct vision problems.
As you may be able to glean from the information above, despite the UK collectively naming most eye care practices as ‘opticians’, they are generally staffed by at least one optometrist or even an ophthalmologist in order to be able to prescribe certain levels of care.
With that in mind, consider your own experience and how that may impact your ability to get started. If you’re not fully qualified as an optometrist, you’ll need to appoint a senior member of staff to help convince finance lenders that your business can be viable.
Warm vs cold start
When starting an optometrist or optician, you’re faced with two options. A ‘cold start’ is when you launch a business from scratch and need to build up a list of patients on your own. A ‘warm’ start refers to buying an existing practice and taking over ownership, acquiring their customers and also their employees.
Both have advantages and disadvantages, so it’s important that you have an idea of what you want to do ahead of applying for finance. In general, buying an existing business is a more streamlined process than starting from scratch – but it does carry its own issues around existing employee contracts, improving performance, ensuring legal compliance is followed throughout etc.
We’ll discuss buying a practice later in this guide, but regardless or whether you choose a cold or warm start, the following pieces of information are vital to your chances of success.
Consider your involvement with the NHS
When opening a private practice, you may choose to contract services to the NHS as part of your business plan. The NHS works side-by-side with many different clinical providers and especially in the optical sector. If you’re a dispensing or ophthalmic optician, your clients will be in three different categories:
- Private clients
- NHS clients
- Part-funded clients who receive some NHS funding and pay the rest privately
You can choose to be entirely private, but this may represent a significant loss in earning potential when compared to a practice that offers some services to NHS-funded clients. The NIHS offers funding for a variety of services you may offer, including eye tests, prescriptions for spectacles or contact lenses and certain treatments.
As you plan the set-up or purchase of your optometry practice, deciding how much you want to work with the NHS will be important. If you do want to pursue more public-funded work, you’ll need to contact NHS England early to start the process.
Doing the right research
The main topics that crop up when asking how to start an optometry practice are that of how to know which area is going to be right for you and how to equip the facility with the right tools. Doing some research into these topics ahead of time will help you leap ahead of your competitors and get off to a good start.
Look into the area
When setting up an optometrist or optician, the first thing you should do is look into the local area you’re considering. Not only is this important to assess potential clientele – it’s also crucial that you assess practical factors such as public transport links, parking availability and local demographics.
NHS England has some data you can request around regional eye tests per 10,000 people, which will give you some indication into demand in an area. Consider how this data, combined with age ranges in a demographic, will impact success – areas full of young people may be less prone to eye problems than those with an ageing population.
Assess the competition
When looking into an area, you need to consider existing competitors. How do they operate? What services do they offer? What sort of reputation do they have? These are all broad questions that may give you some direction into steering your own business in a direction your competitors are missing.
However, because we are discussing the optical sector, it’s important that you focus on specific questions relevant to your industry such as:
- Does a competitor offer sight tests?
- What prices and fees do they offer?
- Do they offer home visits?
- What special offers or discounts are apparent on their glasses and frames?
- Is the competitor part of a chain?
Once you’ve analysed competitors, you can plan your own business more strategically. If any of the local competition looks appealing, you could also consider approaching them to buy the business rather than setting up your own optometrist practice.
Plan your services
Based on your research into the local area and competitors, you can plan out what services you are going to provide. Common options include:
- Sight tests for private and NHS patients
- Enhanced sight tests
- Home visits
- Examination and treatment plans for patients with vision or eye problems
- Exams and treatment for occupational-related eye issues
More specialist options that can lead to higher profits, providing you have the capacity to deliver them, include:
- Spectacle repairs
- Contact lens fitting
- Evaluation and assessment prior to laser eye surgery (in most cases, optometrists do not offer the surgery themselves. You may be able to set up a referral relationship with a laser clinic to improve your potential profits).
Building a business plan
Business plans are vital to your success as they are used not only to plan out your business’ approach and future growth – but also to submit to lenders to help attract better finance offers. Creating a good business plan is therefore something you can’t take lightly – though you’ll already have a lot of the information you need to hand if you’ve done the research we suggested above.
In general, a business plan must include:
- Executive summary: discusses the main features of the plan and acts as a one-page overview. This should be placed at the front of the plan but written last so you’ve got all the information you need.
- Business information and goals: discuss your business’s background and your proposed goals.
- Employee plan: list your own background and experience and then list how you’re going to fill your employee roster with the skilled professionals you’ll need. Consider how salaries and benefits may affect profitability.
- Market summary: assess local competitors, the area and the optometry market at large to demonstrate the ways in which your business can fill gaps or capture clients in an underserved location.
- Financial projections: work with an accountant or business professional to create financial projections that help showcase the expected turnover of your business. You’ll need to carefully calculate your costs and weigh them against turnover to determine profitability.
Once you’ve completed your business plan, or if you’re unsure where to start, contact our team here at Rangewell and we can help you create a plan that will impress lenders and improve your chances of securing finance.
Buying an Optometrist
Once you’re ready to get started, you need to choose between buying an existing practice or starting your own from scratch. Buying may be perceived as a more straightforward route, but it carries plenty of pitfalls that can be ruinously expensive if you fail to spot them.
To buy an optometrist, you’ll either have to approach the existing owner direct or solicit an agent. Alternatively, you may find a listing on the open market. From there, you’ll need to research the practice and perform due diligence to ensure the value matches the asking price. Some opportunities may have inflated asking prices due to high levels of stock in frames, lenses and other accessories.
Lenders will do their own due diligence too and they will only offer funds to match the value they determine – so you may be left in an awkward position if you agree to a price before you have lender support.
We’d recommend working with a specialist commercial solicitor when undertaking any business acquisition– especially in the healthcare sector. Considering most optometry practices deal with the NHS, you’ll need to ascertain what contracts are already in place, how they will transfer to you and how you will continue to fulfil them.
How to start an optometry practice from scratch
To start a practice from scratch, you’ll still need to follow all of the steps we’ve covered – but you’ll also need to source a suitable premises and outfit it accordingly. That means deciding between leasing a premises or buying it (which usually comes down to cost), as well as organising a supply chain to deliver frames and other eyecare stock to your premises.
The most important aspect of starting from scratch is cost – how are you going to fund such an extensive project? In almost every case, potential business owners turn to banks and independent lenders who can offer the finance required to get your business underway.
Provided you’ve done the research and created an appealing business plan, you’ll be more likely to demonstrate the potential of your business so that lenders will offer to finance you. Lenders can support you with a variety of financing options, including business loans for existing businesses, development finance for building a practice from scratch, asset finance for equipment and more.
If you’re planning to start an optometrist from scratch, talk to Rangewell today to see how we can help you find the finance you need to make your dreams a reality. We’ll bring clarity to the financing process and negotiate on your behalf to get the best possible rates.
How much does it cost to open an optometry practice?
Plenty of potential owners ask how much it costs to open an optometry practice – but there’s no clear answer. Costs depend on your business plan, with larger facilities offering a wide range of services costing far more than a small local clinic. As a potential optometry practice owner, you’ll need to weigh costs against potential profits and decide on which approach suits your ambition.
In addition to the equipment you’ll have to buy, the biggest cost is generally premises. You need to find a location which ideally does not have any other opticians nearby - a high street location close to public transport and parking might be ideal.
You will also want a consulting room. The trend seems to be to have more space to allow for the growing amount of equipment you will need. If you are looking around for property, remember you might want to think ahead in case you need to add a second room for a junior to make the most of your business.
You will also need a display area where you can show a wide range of frame styles.
The actual cost will depend on your location and the floorspace you choose, but you could easily spend £50,000 a year to lease suitable property.
Surprisingly, buying might be a cost-effective alternative. You might want to consider buying with a Commercial Mortgage which will give you greater security than renting and let you build up a valuable asset for the future. Buying could also provide an additional income; letting out a flat above the shop could be a rewarding possibility if you buy the building.
But leasing or buying the property will not be the end of your costs.
For a new practice you can expect to pay for a shop fit of between £100,000 and £200,000 dependent upon the size of the premises. Shopfitters specialising in the optician sector exist, and some may offer their own finance plans. At Rangewell, we have found that it may be more cost-effective for you to negotiate a cash price for the work, and to raise the cash required with a loan secured on your premises. Rates can be much better than those provided by suppliers.
You will also need an IT system, costing a minimum of £10,000, and to buy in stock, which may be in the region of £20,000 if you are not able to negotiate credit from suppliers.
The other major expense will be your optical equipment. The minimum you will need to equip of one consultation room and pre-screen area is around £40,000, and you may wish to bring in additional equipment – such as 3D imaging systems which will take the cost far higher.
As an experienced ophthalmologist, you know the equipment you need to give the level of care your customers deserve. Again, suppliers may offer finance which can prove expensive. The solution may be to spread the cost of equipment with Asset Finance. Basic equipment that will go on giving service for years can be financed with Hire Purchase to spread the cost. If your priority is your need to avoid upfront costs, leasing will give you the freedom and flexibility you need.
You will also need to budget for operating costs. You’ll also have staff and overheads to deal with and when your optician's shop is still in its early stages you may have more costs to cover than income.Working Capital Finance is intended to provide cash to pay staff and suppliers during the early weeks and months of opening your business. It is designed to be repaid in the short- to medium-term.
Get help with funding for your opticians
The costs involved in setting up a successful opticians practice may be daunting, and most people will need to borrow the money required.
Many lenders will be keen to lend to the sector, seeing it as a low risk - but first-time business owners may still face some challenges as many lenders are still reluctant to support start-up ventures.
Buying or setting up, the right funding deal and the right lender may make a big difference to your repayments - and hence to the profitability of your business.
At Rangewell, we work with every UK lender and have access to more than 23,000 business finance products - and expert advisors who understand the challenges of setting up and running an optician practice as a business. So whether you are looking for Franchise Loans for opticians, Asset Finance for optician equipment, funding for an opticians' competitor buyout, refurbishing an opticians practice or start-up finance for opticians, we can help you find the funding you need, and to pay less for it. Our services are free - so if you’re looking for financial solutions to set up your optician shop, find out more about what we can do for you.