Turn Aspiration Into Reality: The Big 3 Steps to Finance Practice Ownership

Many associate optometrists see owning an independent practice as the ultimate professional milestone. For just as many, it also feels perpetually out of reach, delayed by student loans, lifestyle inflation, unclear financial planning and limited access to capital.

But every year, optometrists make the leap from employee to owner. What separates those who succeed from those who remain associates for decades? It often comes down to deliberate financial management and the commitment to act, not just luck or timing.

INTEREST IS NOT COMMITMENT

There is a big difference between interest and commitment. Many ODs are interested in practice ownership and its rewards. Only a fraction is fully committed to making it happen.

If you are ready to commit, focus on three financial steps to bring ownership within reach.

STEP 1: GET HONEST ABOUT YOUR FINANCIAL PICTURE

The first ownership hurdle is not a bank—it is your own finances. Before you can convince a lender to back your new practice, you need a clear understanding of your personal financial situation.

Monitor these metrics:

• Monthly cash flow: What does it take to maintain your essential lifestyle? Essentials mean just that—only what you need to keep life moving, not vacations or splurges. If you want something you’ve never had before—ownership—you must do things you’ve never done before, like aggressively managing cash flow and building reserves.
• Net worth: Add up your assets (cash, investments, retirement accounts) and liabilities (student loans, car loans, credit cards) to see where you stand. This may not be critical for bank underwriting, but it brings needed clarity and can influence your income goals. To increase net worth, increase assets and lower liabilities. If your cash flow is devoted solely to supporting your lifestyle, your path to financial independence will be a difficult one.
• Debt-to-income ratio: Lenders care about this key number. The lower your debt-to-income ratio, the stronger your credit profile and the less risky you appear to a bank.

The goal is awareness, not perfection. If you’re spending $8,000 a month and only saving $500, building the liquidity banks require will take time.

One question prospective owners ask is whether it’s better to save cash or aggressively pay down student loans before seeking a loan. The answer is almost always to save cash. Paying loans improves your net worth but does little for your debt-to-income ratio or monthly obligations. Cash on hand means more to underwriters than a lower loan balance. In practice ownership, cash is king.

STEP 2: CREATE A PRACTICE-READINESS SAVINGS PLAN

A typical cold start requires $350,000 to $500,000 in total capital. While a practice loan covers most of this, you’ll need $50,000 to $100,000 in personal liquidity for:

• Preapproval requirements (lenders want to see your “skin in the game”)
• Initial working capital or rent deposits not covered by loans
• Your living expenses in the first six to 12 months

Reverse-engineer your target and set a monthly savings goal. For instance, if you want $75,000 in three years, save about $2,100 per month. Use separate “buckets,” including:

• $40,000 for your capital injection or down payment
• $25,000 as a personal runway cushion, over and above current savings
• $10,000 for transition costs

Any unused startup cash can serve as an emergency fund once your practice is running.

STEP 3: UNDERSTAND YOUR LENDING OPTIONS

When you apply for financing, you have three typical options:

1. Conventional banks (SBA-backed or not)
2. Optometry-focused lenders
3. Seller financing (if you’re buying an existing practice)

To improve your chances of loan approval:

• Maintain a credit score of 700 or higher
• Keep 10% to 20% of the total project cost as liquid assets
• Stay current on student loan payments
• Prepare a simple business plan with revenue projections, fixed costs, ramp-up timeline and a pro forma profit and loss statement

PLAN YOUR WAY TO PRACTICE OWNERSHIP

The biggest myth is that ownership is only for those with perfect finances or a trust fund. Most owners start with debt, modest savings and a plan.

If practice ownership is your goal, take these next steps:

• Run your current cash flow numbers
• Set an ownership target date
• Speak with a practice lender about prequalification
• Open a separate “Ownership Fund” savings account
• Network with current owners and brokers

For some, ownership is not a matter of if but when. The sooner you take command of your finances the sooner you’ll be opening the doors to a practice of your own.

For more from Adam Cmejla,CFP® on finance, read “Building Your Practice Backward with Help From the Most Important Number in Your Business” here.

Read more Professional Development stories on Independent Strong here.