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Chapter 1: Who is Raymond and what does his chiropractic business look like?
So hey Alex, my name is Raymond Kooner. I own ChiroFirst of Washington. So we're a chain of chiropractic clinics in the greater Seattle area. So just a little bit about my business. We currently have six brick and mortar locations in the greater Seattle area. Trailing 12 months revenue, 5.2 million. EBITDA of around roughly 1.2 million. And our net profit is about 23%.
Do you buy those or do you open up organic? So far, I've bought all of them. Oh, really? Okay. Yeah. But I think moving forward, we're going to change our strategy a little bit. Yeah. So who do you help specifically? So our key demographic that we help is 35 to 65-year-old men and women that have some kind of condition that we can help with, whether it's pain, discomfort, or loss of movement.
Chapter 2: What demographics does Raymond's chiropractic clinic serve?
So you're kind of like income level or anything like that?
Yeah, they need to be employed. Insurance or cash? We're about 75% insurance. Oh, interesting. Okay, got it. So how do you help them? So the way we help them is when someone comes into our office, we'll design a custom treatment plan for them. That might be over a period of 60 to 90 days. It might include chiropractic, rehab, and spinal decompression.
So spinal decompression kind of differentiates us from a lot of our competitors because it's a niche service that we offer for people that have disc related injuries.
Is that like stretching people out kind of thing?
Yeah, exactly. Cool. Well, how do you make money? So basically on the front end, we offer a free consultation. So then when the patient comes in, our packages can range from $2,400 to $3,600 over a 60 to 90 day period. We're primarily a reoccurring revenue model. And roughly one out of every seven of our patients, they come in for a larger case value.
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Chapter 3: How does Raymond acquire new patients?
So like a car accident or a work injury might be worth up to $10,000. Okay. What's advertising? How do you find them? So for paid advertising, the two means of advertising are, number one is Facebook ads. So we spend about a thousand bucks per location on that. The second one is Google ads. So we're spending roughly 500 to a thousand per month on each location. Okay. So what's sales velocity?
How many do you sell per month? On average, we're getting about 35 leads per month. And out of the 35, we have 28 that show. Okay, that's pretty good. And so we have a show rate of about 80%. That's great. And our closing rate is about 71%. So total sales probably roughly around 20. Cool. Solid numbers. Okay. So what's the goal? My three year goal is to try to get to $5 million EBITDA.
I want to try to build a business that can run individually, but then I also want to entertain selling to institutional buyer. Okay. So this is very much up your alley what we talk about.
Okay, so that's the goal. So what's staying in the way? What's the problem?
So if I were to prioritize my constraints, what I think they are, number one, I would say is probably lead flow. I think that we could do better in that department. It's not consistent. When I had one location, it was really easy to predict that and to change the outcome pretty quickly. But as we've scaled, I'm having a tougher and tougher time, you know, scale the marketing, right?
So I would say that's like a big one for us. Second one would be like our sales infrastructure. Because we are 75% insurance-based, there's so many different plans out there, right? So when the patient comes in, we have to determine what kind of insurance they have by verifying it and then make a customized plan based off of that.
So if there's a way to streamline that into one day, I think it would be much more effective for us. When I personally practiced, I was able to do it in one day, but I'm having a tough time training my doctors to be able to do that. Number three, scaling issues. So just centralizing the marketing has been a challenge for us. Limited employee pool, right?
So right now we're not expanding, but when we do expand, it's harder to find a doctor obviously than a regular person.
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Chapter 4: What are the challenges Raymond faces in scaling his business?
Because you're buying it from another person who's leaving, correct?
Yeah, and then I've got to put one of my guys in there. So the hiring pool is a lot smaller for me than it would be for other people. But that's not an issue right now. I don't think it's a pressing issue for us until we start expanding. Yeah, got it.
Okay, and then people operations?
People operations, so obviously when I had one location, it was really easy to control the standard, right? But as we expand, it's harder and harder to have that same standard. So let's see the numbers. So going over the numbers again, so top line revenue, 5.2 million last 12 months, profit 1.2, net margin is about 23%. Our CAC is about 700. Our lifetime value is 3,400.
So that's 4.8 to 1 LTV to CAC ratio. Marketing spend, we're spending about 1,500 to 2,000 per location right now. The short rate's 80%, close rate's 71%, and our annual ad spend on marketing is about 110,000. Huh, okay.
Do you have anything broken out between channels? Between Facebook and Google?
I do. Okay, sweet. So this is our Facebook data. I was able to put together like our 12-month numbers for all the clinics for AFPEN. And then for as far as the challenge that we have is because we're insurance-based, we don't get paid for like 30, 60, 90 days after. So I had to go back and I picked Q2 for three clinics. So these are the numbers for those three clinics in quarter two.
Okay, so why is Kent so much better? Yeah, I don't know. That's what I want to replicate. That's where we don't have consistency. Is that your first location? That's our number one, yeah. It's not our first location. It's our third location, but it's probably our number one right now. Is the dock there different than the other docks? Is he good at sales? He's good, but he's about the same.
I would say that culture of that team is really good. I think that's one thing that stands out.
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Chapter 5: How does Raymond manage his clinic's sales process?
They don't, but that's the thing I'm thinking of adding in so we can get on top of that.
Keep going through it. So they do some sort of discovery. They're currently not doing insurance on the call. Yep. All right. So then they do what?
So then they schedule them the next available time. We try to get them in same day or next day, right away.
What's the sharp rate for the calls? Because the sharp rate that you have here, what you showed me earlier, was really good. But that's because they also just got it. They had a conversation prior to doing that, too. Right. OK. So what's the sharp rate for that other step? So for the call, right?
Because some has clicked a call, but the ones that book onto your calendar, you then call them at the designated time.
Yeah, no, they just schedule. They can schedule online and then they can make, they can confirm.
To show up to the facility?
Yeah, we just take them.
Oh, okay. Yeah.
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Chapter 6: What marketing strategies are effective for Raymond's clinics?
And the first line, I would probably separate the call outs. So it's like, attention to everyone surrounding areas. So instead of saying areas, I would go to like residents or something like, or people, basically combine the two, where it says chronic back pain doesn't have to be a life sentence, attention to everyone surrounding areas. So it'd be like, attention to everyone, like,
Residence with back pain, that combines both lines, punchier, put two asterisks on either side. It's like, okay, that's what it is. And you're putting proof first, and I probably wouldn't here, I'd probably lead with a question, which would be like, are you, so either I would lead with a question that'd be some sort of like more specific pain, or I would lead with the offer.
And then have the proof of why they should believe that I can help them after they've seen the offer. Because like it took us all the way down to actually see what the offer was. And the headline, avoid surgery, try spinal decompression. I would probably just put like the offer there. So it's just like a restatement like,
free spinal treatment, decompress, you know, free spinal decompression, boom, $99 value, whatever, something like, like that's probably what I would, what I would put there. Cause I think it's just like, there's a lot of words. And I think you could probably get, just like I combined the first, the headline and the next sentence into just like attention Everett residents with back pain.
It's like, boom, we got that. And then it's like, and you'd be amazed at how much like just changing, tweaking the headline, probably compressing the copy into a handful of bullets. It's like, do you struggle with boom, boom, boom, boom. And you've probably tried, boom, boom, boom, boom. But there's a better way. This is how we do it. We've helped this many people for a limited time.
We're doing X, Y, and Z. And I think that would probably work well. I cannot guarantee availability as we accommodate 10 vouchers up to our patient schedule. I do like that could probably be compressed. We can only see 10 new patients per week. And scheduling availability is first come, first serve for this treatment. Done.
Do you think it's good to go, because with Facebook, people aren't necessarily going on Facebook and Oh, my back's hurt and I got, like, you know how Google AdWords is like, oh, my back's fucked up, I need to call somebody. I think so.
There's tons of chiropractors who advertise on Facebook. Yeah. Tons.
Yeah.
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Chapter 7: What are the financial metrics of Raymond's clinics?
Got it. So that's it. Like that's the, that's the model. Okay. I'm going to shoot. What do you have to pay the docs?
They make a base of $80,000 a year, but they probably, like our top ones, make over $150,000.
Chapter 8: How can Raymond improve his lead generation and sales process?
Okay, and did they get some sort of like profit share or something like that?
Yeah, I offered, they range between 10 and 20% net profit. Okay, that's good.
I mean, that's usually what I like to have, especially for like a high skill thing. Profit, that makes sense.
Question on that though, like did you recommend getting, like I try to get them equity, because I want them to come along for the ride, or does that cause, I mean, that would increase our EBITDA, obviously, because it wouldn't be payroll that 20% would go under, it would... improve our EBITDA, but then it also gives them ownership or would you not recommend doing that?
Well, if you think about equity, right, you've got you've got cash flow. So like distributions, you've got sale. Like if you sell it, there's value from that. There's risk and then there's control. So that's what equity gets you. Now, they're not gonna get control because you're the one who owns it and you're gonna be making decisions. It doesn't really matter. They probably don't want the risk.
So then it just comes down to them getting paid on a sale and them getting distributions in the meantime. You already have this one. If you want, you could include something called a profits interest. because you probably have LLCs for each of them. And so this would be something that basically functions equity-like, so that if they sold, they would get whatever percentage of the profits interest.
So it'd be like, okay, we're going to say that the business today is worth 500K, And you're going to get, call it 15%, above that goes to you. And then it's also key for them too, because you're like, hey, for us to get above a $500,000 EV for this thing, then we need to have profit for the location at 200 or whatever.
And it's like, hey, but if you get profit per year to 500K, then we're probably looking at something like 4 million. So you're going to get 15% of 4 million, so you have another 600K check. Right. on the database. That way, and I would just draw the same quadrant, which is like, there's four elements, and so I want to make you an owner, and this is how we're going to do it.
The benefit to them is that when you do this, there's no tax implication. Because it's like, if you were to issue them shares, they've got to pay taxes on it.
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