Here’s where things get much easier for you!
What’s the difference?
A specialist Practice is one in which YOU are the main player – it relies on you being the expert at what you do like being an accountant, a lawyer, consultant, coach, health care professional etc. You do the bulk of the work because that is what you like to do. You employ other people to handle the admin, bookkeeping, marketing and sales when you can afford them. Usually a Practice is “bootstrapped” by the owner: that is, re-investing earned income back into it.
A Practice can feel like a job however if you love direct contact with your clients and seeing first-hand the impact your services provide to them, then it can be extremely satisfying. There are ways to use leverage in a Practice so that you are enjoying doing your highest and best work and someone else is taking care of the rest.
The value of a Practice is that the profit margins are a lot higher than a Business so you have a lot more disposable income. The challenge is not to spend all of that income but use it to invest in income-producing assets to provide for your future.
A business on the other hand is something that appreciates in value, can be run by someone other than you and unlike a Practice can be sold for a profit at a later date. It comes with its own set of challenges like managing people and suppliers and processes and stuff.
Business profit margins are generally lower than a Practice because the overheads are generally higher. It takes more resources to run the machine. In a business you are not usually delivering the technical services – you employ others to do that. The highest and best use of your time would have more to do with employing and training the best people you can find, sales and marketing, financial management and overseeing operations.
There are some cross-overs but, for the moment go with your gut instinct to decide which is the most satisfying and fulfilling structure for you. Which one uses your most valuable talents and skills and which one has the most enjoyment factor for you?
Of course! You can turn a Practice into a Business later but it requires a different skill set and focus.
More on this to come!.