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Buying a massage clinic
I would like some input on a situation. I've been negotiating to purchase a small Massage Clinic from someone who is retiring (retiring from ownership but will continue to do massages at the clinic as long as possible, he is currently 70 years old). They currently have 3 full time and one part-time massage therapist and then a few that only do one or two massages a week. I started there in April to begin building a clientele base. We're getting close to signing the deal but I have so many concerns that I feel like I'm about to walk away. And one of my main concerns is how I am not being given any clients from this Clinic (sounds strange doesn't it, you would think the current owner would do all he could to help me build a strong clientele base). Since April I believe I've been given two or three new clients I've retained two of them plus gotten referrals from those two. And I believe I've been given about two or three existing clients there weren't seeing any particular therapist regularly. We get about 10 or 12 new clients per month but they're not being scheduled with me. I have given them availability of a full day, plus one evening, plus at least one morning and a weekend morning per week. Last week I was scheduled with no clients. I started addressing this over a month ago and asking why I wasn't being scheduled with new clients and I was given the answer that I didn't have as much availability as some of the other therapists. There's really only one that has regular availability during the week. She got all but a couple of the new clients last month. I cannot understand that. And if this was my Clinic that I was trying to sell and had a very motivated buyer, I would facilitate him getting clients and building up a client base there. Which is why I can't understand why the current owner is not doing that and he is risking losing me is a motivated buyer. I would appreciate some input? I'm scratching my head asking myself what the heck am I buying if I'm not getting clients from this place.
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Replies to This Discussion
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Permalink Reply by Gordon J. Wallis on
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Uhm, if you end up the owner. Don’t you get a percentage of all the massage work being done in the clinic? And the busier the other Therapists are, the more income you make, right? And if you plan on working as a massage therapist yourself. Sounds like you are. If everyone else in the clinic is busy and booked up, that means the new clients have to go to you. Seems like a busy clinic would be the concern?
Anyway, I’m not a good business guy. I have a feeling others can answer your question in a more qualified way. I guess I don’t understand your concern or complaint about your own personal clientele not being given too you?
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Permalink Reply by Pat on
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It would be great if the therapist (that they continue giving the new clients to) actually retained clients. But she doesn't have a good track record retaining regular clients. She has a few, but that's one of the things I was told about her in particular. But that's another reason it doesn't make sense to me, why would you give all your new clients to somebody that has a hard time retaining regular clients. So yeah it would be great if she continued to retain them and kept busy and then yes I would get the new clients and everybody would be busy, that's just not the case. Where as if I saw the new clients, I don't want to too my own horn, but I'd probably have a better chance of retaining them. In response to your question about would I get a percentage of all sessions (as the owner) yes, that is true but I can't live on the net profit alone from the business.... It's only about $30,000 a year. The current owner pays a very generous commission rate unheard of in the industry, at about 65%. I've been told it's unsustainable. However I know if I changed it for the current full-time therapists, they would take the option to buy out their clients. Because it's another thing the current owner made very generous, he allows them to purchase their client list by just paying him for two full sessions per client. So basically they can pay him about $160 for each client they take with them. And one is already communicated that she likes having that option. So I also have to think that she's got an eye on the door. I am just starting to think there's way too much risk with this business. I appreciate your comments.
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Thank you, I really do appreciate your response. It is beginning to feel like too complicated, too many factors that would need adjusting. And I already have a feeling that if I do anything that would be perceived as negative compared to what they currently have, at least one of the full-time therapist is going to hit the door and take clients with her. And while yes she would be responsible for paying me a certain amount per client, it would be about one-third of what the clinic makes if she stayed. And now the latest thing I am uncovering is I'm unsure whether his current therapists should be classified as independent contractors or employees. In certain states they are cracking down on this issue especially California. We're in Illinois but Illinois is broke too so I'm wondering what it would take for them to start coming after massage clinics and begin investigating the worker classification. There's a lot of money that could be due if we were penalized and had to pay back taxes. I'm talking thousands and thousands worst-case is up to about $30,000. And while he does do many things that are on track with independent contractor classification, he sets the rates he provides the sheets, towels and tables. They buy their lotion that's about it. They are in charge of their schedule so they determine their hours and when they want time off. But we have a receptionist that does a lot of the scheduling. And the massages need to be done at the clinic location so they cannot choose where they're done, with the exception of they can choose the particular room because we all use the 6 available rooms. So I wonder if there's enough going on that it risks being reclassified as an employer-employee relationship. I asked him if he ever got a legal opinion and how he has them classified and he said no. He just researched the material years and years ago when he first set things up. Which concerns me because the law keeps changing.
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You are right on with all your comments, Pueppi Texas. And by the way my degree is in accounting which is the only reason I have been considering the deal because I feel my years in accounting would have prepared me with a good solid base of business experience for me to take on this venture. I am currently trying to get a legal opinion on whether the therapists should be categorized as independent contractors or employees, under the current circumstances. And once I get an answer on that question, I will have a better sense of the risk that is in play. And then I will be strengthening the indemnity side of the purchase agreement... if I decide to go forward. I like your idea of the preemptive offer for the one therapist that might be considering buying out her clients at least sometime in the future. I was thinking along those same lines, and offered her to rent space because I think it would help her get a feel for whether going out on her own is really what she wants. So it could work to lessen her risk as well as not leave me quite as exposed. Thank you so much for your feedback, I appreciate it very much.
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