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Are we mad to set up a new business in the current economic climate?

(34 Posts)
hattyyellow Mon 21-Jul-08 11:11:45

DH and I are currently both self-employed and both work part-time and share the child care for the rest of the week.

He works privately as a physio. He's been offered the chance to take on a new contract at a new health clinic, whose USP is that they have lots of relationships with local companies.

The companies either subsidise or completely cover their employees treatment costs at the centre - as a nice perk to their staff or for those staff who have very physical jobs (ie builders) to keep them fit for work/get them back to work.

This could work really well, providing a steady stream of patients.

But we're both really worried that if he takes it on and financial climate/recession fears come true, that the first thing the corporate clients will cut back on is perks like subsidising a physio.

The area he's planning to set up in already has a number of health clinics - so he could struggle without corporate clients and just trying to attract private clients who live/work locally - particulary if local residents are also feeling the pinch and letting go luxuries such as seeing a physio/preferring to wait for an NHS referral.

The contract ties him in for 3 years and he'd need to be there most of the week and keep paying the rent whatever happened. I'm also due with another baby in December so he would be starting work a few months before we went down to one income for at least 4-5 months.

Any thoughts very much welcomed - he has to decide very soon and we're just going round and round in demented circles!

WideWebWitch Mon 21-Jul-08 11:15:51

can he reduce the contract or make sure there's a get out clause? although it is a perk it[s also good bus sense to offer physio if you want your employees fit and back at work and productive so I wouldn't see that as a huge risk.

hattyyellow Mon 21-Jul-08 11:23:18

Thanks Waterwitch.

No, no get out clause at all or negotation on the contract(apart from if he dies!). He has to either take it as it is or walk away...<bites nails nervously thinking about it>

I keep reading in the papers about building firms being really hard hit at the moment - but you're right they will always need to keep their staff working.

It's more the companies whose staff are less physical who I worry would pull out first..

WideWebWitch Mon 21-Jul-08 11:25:48

but surey they won't find anyone else who'll sign for 3 years in this climate? i thibk he should haggle for shorter deal or break clause or walk away. esp if a large prop of work involves building work.

hattyyellow Mon 21-Jul-08 11:49:46

They've got someone else waiting in the wings who wants the work - so they've given DH until end of July to decide...so I think any negotation would result in them just taking the person who agrees to their terms..

The centre is new and the other treatment rooms have been largely filled (acupuncture etc) so there's obviously people braver than us who've taken the plunge already!

WideWebWitch Mon 21-Jul-08 14:48:17

Maybe the other person won't agree to their terms?

I think you should do some projections actually, what's the worst case? best case? middle ground? What are your back up plans?

Carmenere Mon 21-Jul-08 14:51:06

Is your dp registered with Bupa, can he see insurance paitents too iyswim?

WarmFuzzy Mon 21-Jul-08 14:59:57

Hunt down the other person and if they share your reservations, persuade them to go in with your DH on a half-time basis - and let him keep his current business running!

hattyyellow Mon 21-Jul-08 15:00:11

Yup, he's registered with BUPA, PPP etc so that'll help.

He's done lots of detailed projections - problem is it's a new clinic so it's really a leap of faith..the clinic has "corporate relationships" but they obviously haven't approached each one individually re whether they'd like a physio to do a corporate deal with.

So projections are a bit "if we were lucky and this many companies said yes and they sent this many people per week we'd make loads" ranging to "but if lots of the companies said no, or their staff decided not to take up the subsidised treatmnent as they were too broke to pay the rest at the moment" we'd be just breaking even/losing money at first.

For DH to do it, he would have to be there at least half the week (rent is full time only) and we'd be relying on my maternity allowance for 4-5 months and his income from his other practice (2-2.5 days per week and slowly building but not yet earning huge amounts). So not much of a back up plan apart from use savings if we need to (not our preferred option as we don't have much) and then I'd go back to work as much as I could after the baby was born.

Thank you for your patience! I'm actually glad we have to decide soon as it's driving us both mad trying to decide!

hattyyellow Mon 21-Jul-08 15:01:33

Warmfuzzy I'd love to know who the other person is! If DH could find someone to go in with - it would definitely halve the risk - but he can't find anyone locally who isn't working full time/wants to take the risk of a new practice. I think his industry are a competitive lot as well and don't want to share their profits!

Carmenere Mon 21-Jul-08 15:03:35

Where abouts in the country are you hatty?

hattyyellow Mon 21-Jul-08 15:05:16

Yorkshire - are you a physio too?!

Carmenere Mon 21-Jul-08 15:07:41

nope but my dp is and is about to start up his own clinic but in surreysmile So basically I hope that it is a good time to set up this type of business!

clumsymum Mon 21-Jul-08 15:10:03

First questions are, is your dh struggling for patients anyway? Does this contract increase his costs as well as his income? If he has to tie in for 3 years, then what are the centre committing to? A business relationship is a 2-way thing, they have to be offering something in return (advertising/marketing help, office support some such thing, and as such they should make a commitment to your DH)

Are you sure about this other person "waiting in the wings who wants the work"? It's a common business ploy, trying to force your hand by suggesting someone else is begging for this "opportunity". You won't be the only ones wondering if this is a good or bad time to take a step into the unknown.

hattyyellow Mon 21-Jul-08 15:12:08

I hope it goes really well for him - Surrey seems to be a thriving market for that kind of treatment, lots of people advertising for new staff, retired affluent potential clients with long-term back problems etc.

Will he be building any corporate deals/relationships into it or mainly private patients?

My mum lives down in Surrey and DH sighs everytime we drive past beautiful clinics right next to Waitrose car parks with lots of expensive cars parked outside - I think he's convinced we would be billionaires if we set up down there! Not quite sure he's figured in comparative higher cost of living etc!

hattyyellow Mon 21-Jul-08 15:19:27

Clumsy I wondered about the other contender as well - but DH convinced that it's true, trusts the guy running it- DH is normally the biggest sceptic I know so I'd be inclined to go with his instincts..

His other practice is in a smaller town but with less competition - it's slowly building (only been going 6 months). He's noticed some drop off of patients/people saying they can't afford to come but still new patients ringing up. It's building gradually rather than phone ringing off hook.

Costs would be rent, share of reception cover, advertising and marketing. He'd also need to furnish the room - treatment plinth, desk and chairs etc. Overall costs are fairly reasonable, rent etc isn't too much - but with me on maternity leave, we couldn't afford for it to be deathly quiet for months - it would have to cover itself at least for that period..

We have been steadily ringing up all the other health centres in the town where the new clinic is to work out how busy other people are/how many free appointments etc...they all seem reasonably busy but obviously can't forecast how busy they will be over the next 3 years.

Clinic have said they will help to promote him and the other people working there in all the companies they speak to - and would cover the costs of general adverts for the clinic.

Carmenere Mon 21-Jul-08 15:22:00

Well I think all the pointers are good for dp, the location and premises are good, unusually there is not a huge amount of competition in the immediate area and he is also a registered osteopath and acupuncturist and there will be pilates there too. So fingers crossed for all of ussmile

hattyyellow Mon 21-Jul-08 15:30:47

Sounds really promising Carmenere - I hope it works out really well .

(I imagine you're breathing a similar sigh of relief to me that our DP's are setting up at different ends of the country and not just down the road!)

Carmenere Mon 21-Jul-08 15:39:23

Er yes actuallysmile i hope it goes really well for you guys and I shall expect updates!

hattyyellow Mon 21-Jul-08 16:07:11

Would be great to hear how you get on as well. Is he starting off full-time or building up gradually?

WestMidsAccounts Tue 22-Jul-08 10:31:56

hatty: would it help if DP formed a limited company and the Ltd Co then signed up to the three-year-rent (give the clinic some blather about accountant recommending it for tax purposes). If the worst comes to the worst, you just fold the company. The clinic may ask for personal guarantees but do not give them.
Meanwhile, keep his existing business going as self-employed so you are OK if it goes pear-shaped.

hattyyellow Tue 22-Jul-08 10:39:25

Westmids that sounds very clever...is it possible to have one business self-employed and one a limited company?

And is it harder to chase up a limited company that has folded for breaking a contract than to chase up a self-employed person?

I do like that idea..thank you!

WestMidsAccounts Tue 22-Jul-08 10:55:42

The whole idea of a limited company is that it has limited liability. You can chase it for money but if there is none there then that is tough. You cannot chase the owners [shareholders] of the company (well you can in certain circumstances but as a generality, not). This is why people ask for personal guarantees - they are asking the shareholders to effectively give away their limited liability.

You can have as many limited companies, sole-traders and partnerships as you fancy!

hattyyellow Tue 22-Jul-08 11:01:55

That's incredibly helpful thank you! I have just left a message for him to call me so I can tell him your clever idea - thank you so much! I really appreciate it - fingers crossed this helps us do it .

WestMidsAccounts Tue 22-Jul-08 11:07:15

grin
Good luck! It doesn't take long or cost much to set up a Ltd Co.

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