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John Marvin

Maintaining a High Performance Inventory

Take this path to big dividends and large profits.

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IT’S NOT UNCOMMON for optometry practices to manage their frame inventory using a stock ordering system. This means that opticians sell the frames off the board leaving a need for replacing an empty space. If they have undisplayed frames, they will take the “under-stock” and put it in the empty space. This process continues until the frame rep visits to place a replenishment order.

It is also not uncommon for frame stock to “creep” into inventories that lack variety and fluctuate in value over time.

It is estimated that at least 50 percent of most private practice inventories turn one or less times a year (a turn is a sale). Only about 25 to 30 percent turn more than three times a year.

If a private optometry office has an inventory of 1,000 frames, then only about 250 to 300 are turning enough to generate profits. Another 50 percent hardly turn at all. This happens year after year.

Many optometry dispensaries have too many frames because they carry too many brands from too many manufacturers. A brand should have a minimum of 40 pieces to be properly merchandised. If you like a brand, then make a commitment to it.

Don’t purchase 18 pieces to “see how it will sell.” This is often done and when repeated over many months results in having 30 or 40 brands in inventory.

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Limiting your number of manufacturers has several benefits. One is that you’re now important to that manufacturer; purchasing three or four brands each with 40 pieces gives you power. You’ll be able to negotiate unconventional exchange provisions, free shipping, better pricing (because you’re purchasing more). Selecting the right vendors is an important decision and should not be done casually.

You’ll want to know the sales representative but also their management. Make sure they have a large enough portfolio of brands that you can select more than one to display. Discuss up front your expectations on exchange policies, pricing and close out opportunities. It is your business and they should accommodate you, not force you to work on their terms.

An effective display and presentation of inventory should look like this:

  • A total of 800 frames in inventory
  • A total of 20 brands, each with 40 pieces
  • The 20 brands should be from no more than three or four manufacturers if possible

This inventory is a “display only” and opticians place an order for the frame the day it is sold. If the office finishes in-office, the frame is shipped directly to the office. If it will be finished at a lab, then the frame is drop shipped directly to the lab.

Using a computerized inventory enables an office to produce a daily, weekly and monthly report of the highest selling frames they carry. By not selling “off the board” these high selling frames are available every day for patients and customers to purchase.

When your sales reps visit the office, the report of their brands will show which frames should be exchanged due of lack of sales which continually optimizes the appeal of the frame inventory.

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Using this approach increases the turn rate of a large portion of your inventory and doesn’t limit profit generated thanks to the ever-increasing customer appeal of your frame display.

If a brand consistently doesn’t perform, replace it all together with another brand, preferably one from the same manufacturer. If that’s not feasible, replace it with a brand from one of your other manufacturers.

By ordering frames each day from fewer manufacturers, they’ll gladly provide free shipping because they’re shipping several at once.

You will also receive smaller invoices more frequently which are much easier to manage from a cash flow perspective. Large orders placed by frame representative to restock openings in the display create large invoices they expect to be promptly paid.

This approach to managing your inventory creates a high performing optical paying you big dividends and large profits.

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John D. Marvin has more than 25 years of experience in the ophthalmic and optometric practice industry. He is the president of Texas State Optical and writes about marketing, management and education at the practiceprinciples.net blog. You can email him at jdmarvin@tso.com.

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John Marvin

Begin Your Business with the End in Mind

Few doctors understand that the day you open is the day you start planning to sell.

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THERE IS AN OFT quoted question from Alice in Lewis Carroll’s classic, Alice’s Adventures In Wonderland. She asks the Cheshire Cat, “Would you tell me, please, which way I ought to go from here?” “That depends a good deal on where you want to get to,” says the Cat. “I don’t much care where,” responds Alice. The cat replies, “Then it doesn’t matter which way you go.” Far too many optometrists and optical owners seem to subscribe to this approach to their careers.

I have known many optometrists who spend 40 years owning a private practice who wish to sell and retire. However, they are often faced with the sad reality that they have followed Alice’s approach. Whether it be a vacation, a wedding, or a career, planning is critical to getting where you want to go.

Last month’s issue was about beginnings — starting a new business — something I’m familiar with having helped almost 70 young optometrists build a new practice. Everyone knows you don’t successfully open a new practice without the proper planning … but few doctors understand that the day you open is the day you start planning to sell. A successful ending requires just as much planning as a successful beginning.

Stephen Covey famously said in his book, The 7 Habits Of Highly Effective People, “…begin with the end in mind.” Start with a clear understanding of your destination. If you have not clearly defined what you want to achieve at the end of your career, then likely you won’t like how it ends. To start, ask yourself: “If I were a young optometrist, what kind of practice would I be excited to own?”

Having worked with hundreds of young, entrepreneurial optometrists, I can suggest the following:

A Great Location

It’s likely that over the forty years you own your practice, your neighborhood and community will change. It’s possible it will improve, but more likely it will change for the worse. Our society is in constant motion, new developments are built and people move. Evaluating whether you should relocate is of utmost importance. A prospective buyer will want growth potential.

An Updated Space

If you’ve been in practice for over 25 years and have not remodeled your office, it will be very hard to appeal to a young optometrist. Retail and clinical space design has changed significantly in the past decade. Visit best in class retail businesses to see how they are designed; note how they merchandise their products and approach customer service. Keep your practice competitive with others that appeal to customers. What do customers and patients experience when in your business?

Modern Equipment

Today’s refractive and diagnostic equipment is light years from what was purchased ten or twenty years ago. Today’s digital phoroptor and digital preliminary testing equipment enables doctors to provide a higher quality of care that patients have come to expect. Advances in digital imaging allow doctors to identify and manage pathology which previously had gone unnoticed. This is what will be expected by anyone interested in buying your practice.

Well Merchandised Inventory

One of the most overlooked aspects of a 35 or 40-year-old practice is its inventory. It’s a part of the business many doctors ignore and delegate it to someone on staff. The result is an optical that is overstocked and out of date with only about twenty percent of the frames actually selling over and over. The rest just sit and attract dust. When the practice is sold, the thousands of dollars tied up in old inventory drags down the value of the practice.

Put yourself in the shoes of a young optometrist and think of the kind of practice they would want to own. Write down the qualities of this practice, this is the end that you have in mind. Once you know where you are going, it will be much easier to end up where you’ve planned.

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John Marvin

Success is Only the Tip of the Iceberg

To navigate your own future, you need to look below the surface.

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THERE’S A POPULAR image of an iceberg that you may have seen. The top of the iceberg, the portion above water, is titled success. This portrays what everyone sees about something successful. Underneath the surface is the much larger portion of the iceberg and it is titled hard work, late nights, persistence, rejections, sacrifices, discipline, criticism, doubts, failure, risks. These are the actions, behaviors and decisions your success is actually built upon that few people realize or acknowledge.

Opening a start-up practice is something our organization specializes in. With the experience of opening what will be 70 new offices by year end, I feel qualified to speak on what it takes for a new practice to succeed. It doesn’t include magic, luck or “secrets.” What it takes is everything under the surface of the iceberg. For a young doctor, there are important reasons to embrace what lies beneath the surface.

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Well-known teacher of achievement principles Jim Rohn says, “Success is not something you pursue but rather something you attract by the person you become.” The value of embracing everything that lies beneath the surface is that the process creates experience and experience produces personal growth … that, in turn attracts success.

Without the growth that results from sacrifice, enduring criticism and taking risks, you can’t understand how to produce a successful outcome. Without working Saturdays, late nights, being persistent and experiencing setbacks, you do not know the value of inconvenience nor the pride of accomplishment.

Owning an eyecare business is not for everyone. If you don’t have the passion and deep desire for ownership, to produce your own income, and have control over the patients’ experience, then it is best if you work to help someone else build their practice. To be successful at ownership, you have to have a passion for what you do. If you do not have passion, you’ll quit. Building anything of value and especially building a private practice is hard and requires work. There are constant challenges with staff, managing expenses and dealing with regulations. If you don’t have a love for what you do and understand in your core why you are doing it, you will not be successful.

However, if you do have this passion, know why you work so hard to overcome challenges, and you take full responsibility for the success of your practice, the reward of ownership and the pride of accomplishment is unlike anything experienced by those who work for someone else. That is why they only see the top of the iceberg and not what lies beneath the surface. They attribute your success to luck, to being in the right location at the right time, or something else that demonstrates they do not understand the work that went into the achievement.

I visit often with an optometrist who is interested in opening their own practice and they have become consumed with analyzing demographics, competition in an area, household incomes and other factors they consider critical to their success. While consideration of these items is important, they have failed to consider the most important factor — their own determination and commitment to personal growth.

When you are deciding to start your own practice, you are the captain of the ship. It is your responsibility to navigate your own future, to overcome, endure and grow from what lies beneath the surface.

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John Marvin

All You Have to Do Is Try One More Time

Failure only happens if you give up.

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THOMAS EDISON ONCE SAID, “Our greatest weakness lies in giving up. The most certain way to succeed is always trying just one more time.”

It is completely in our control. All we have to do is try one more time. If that doesn’t work, then try one more time. You create your own new beginning.

We often see failure as final, devastating, humiliating and sometimes even a fatal blow to our dreams. Succumbing to this point of view, or dare I say, belief, is an outward demonstration of weakness. Imagine the NBA without

Michael Jordan. Well there would have not been a Michael Jordan if he had believed that failure was devastating and final. In his own words, MJ said, “I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games.

Twenty-six times I’ve been asked to take the game winning shot and missed. I’ve failed over and over again in my life. And that is why I succeed.”

We see the awards, the recognition and notoriety of successful people like Michael Jordan but don’t realize that for every accomplishment recognized, there are hundreds, if not thousands, of instances of failure.

It is the fear of failure that keeps most people from even trying to accomplish or be successful. Wayne Gretzky, the NHL player nicknamed “The Great One” and considered by many to be the greatest professional hockey player of all time, said, “You miss 100 percent of the shots you don’t take.” The fear of missing a shot robs us of the success we can have.

What makes this so important is that success in whatever we pursue is not something that might happen, but with understanding that all we have to do is not give up, we can make success a certainty.

So, what holds us back? This little word “fear”.

Fear of some things is good. It protects us. We don’t text and drive for fear of accidents. We don’t put ourselves in harmful circumstances. I live in southeast Texas. When the national hurricane center warns of an impending storm, many who live along the coast evacuate for higher ground due to fear of a dangerous storm. These are all rational fears.

Then there is emotional fear. Fear of speaking in front of a crowd or fear of being rejected when asking the Homecoming Queen on a date. These are less rational and more emotional.

The fear of failure is an emotional fear. We are afraid that we will be embarrassed if we say we are going to do something and are not successful. We are afraid of what others might think and we’ll suffer a loss of self-esteem. Our insecurities take prominence in our imagined world.

Fear of failure is the behavioral reaction we have when we fill our minds with all of the bad things that will happen if we simply try. It’s paralyzing. We think, nothing ventured nothing lost. When in reality, nothing ventured is nothing gained.

This mindset is deceiving and limits our own potential. We live our lives defensively while others, who take risks, enjoy achievement and success. Sure, some fail, but failure is only a reality when one gives up and quits trying. Barry Bonds, the MLB player with the record for home runs at 762, struck out 1,539 times, more than twice his number of home runs. Bonds knew that each time at the plate was a new beginning and the only way to fail is to stop trying.

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