Summary of "Helping A Chiro Scale Past 6 Locations | Ep 837" on The Game with Alex Hormozi

In Episode 837 of "The Game with Alex Hormozi," host Alex Hormozi sits down with Raymond Kuner, the owner of Chiro First of Washington—a thriving chain of six chiropractic clinics in the greater Seattle area. The episode delves deep into Raymond's journey from running a single clinic to scaling a multi-location enterprise, highlighting the challenges and strategies employed to achieve significant growth.

1. Introduction to Chiro First of Washington

[00:01 - 00:48]

Raymond Kuner introduces his business, Chiro First of Washington, outlining its current status:

• Locations: Six brick-and-mortar clinics in the Seattle area.
• Financials:
  • Revenue: $5.2 million over the trailing 12 months.
  • EBITDA: Approximately $1.2 million.
  • Net Profit Margin: 23%.

Raymond:

"We currently have six brick and mortar locations in the greater Seattle area trailing 12 months. Revenue 5.2 million, EBITDA around roughly 1.2 million. And our net profit is about 23%."
[00:08]

2. Acquisition Strategy and Future Plans

[00:29 - 00:36]

Raymond shares his approach to expanding the clinic chain:

• Current Strategy: All existing locations were acquired rather than individually opened.
• Future Plans: Considering a shift in strategy to adapt to scaling challenges.

Alex:

"Do you buy those or do you open up organ?"
[00:29]

Raymond:

"So far I've bought all of them. But I think moving forward we're going to change our strategy a little bit."
[00:32]

3. Target Demographic and Services Offered

[00:36 - 01:25]

• Demographic: Individuals aged 35 to 65 experiencing pain, discomfort, or loss of movement.
• Income Level: Primarily employed individuals, with 75% utilizing insurance.
• Services:
  • Custom Treatment Plans: Spanning 60 to 90 days.
  • Specialized Treatments: Chiropractic rehab and spinal decompression—a niche service for disc-related injuries.

Raymond:

"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."
[00:39]

Raymond:

"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."
[01:00]

4. Revenue Model and Financial Metrics

[01:25 - 02:24]

Raymond elaborates on how Chiro First generates revenue:

• Consultations: Free initial consultations.
• Packages: Ranging from $2,400 to $3,600 over 60 to 90 days.
• Recurring Revenue: Emphasis on long-term patient retention.
• High-Value Cases: Approximately 1 in 7 patients incur costs up to $10,000 from incidents like car accidents or work injuries.

Raymond:

"We're primarily a recurring revenue model and roughly one out of every seven of our patients, they come in for a larger case value. So like a car accident or a work injury might be worth up to $10,000."
[01:25]

5. Marketing Strategies: Facebook and Google Ads

[02:24 - 07:00]

Raymond discusses the marketing channels employed:

• Facebook Ads: Allocates about $1,000 per location monthly.
• Google Ads: Spends roughly $500 to $1,000 per location monthly.
• Lead Generation:
  • Leads per Month: Approximately 35.
  • Show Rate: 80%, resulting in about 28 show-ups.
  • Closing Rate: 71%, translating to roughly 20 sales per month.
• Financial Goals: Aiming to reach $5 million EBITDA within three years, with considerations for selling to institutional buyers.

Raymond:

"So for paid advertising, the two means of advertising are Facebook ads and Google Ads. We're spending about a thousand bucks per location on Facebook and roughly 500 to 1,000 per month on Google for each location."
[01:53]

Raymond:

"Our closing rate is about 71%, so total sales probably roughly around 20."
[02:19]

6. Challenges in Scaling the Business

[07:00 - 03:48]

Raymond identifies key obstacles hindering further growth:

1. Lead Flow Consistency: Difficulty maintaining a steady influx of leads as the number of locations increases.
2. Sales Infrastructure Complexity: The complexity of handling 75% insurance-based patients with varied coverage plans.
3. Scaling Operations: Challenges in decentralizing marketing efforts and expanding the employee pool, particularly in hiring qualified doctors.
4. Maintaining Standards: Ensuring consistent operational standards across all locations becomes increasingly difficult with growth.

Raymond:

"Number one, I would say is probably lead flow. I think that we could do better in that department. It's not consistent."
[02:44]

Raymond:

"Second one would be like our sales infrastructure because we are 75% insurance based. There's so many different plans out there."
[03:00]

7. Performance Analysis of Different Locations

[07:00 - 12:25]

Raymond provides a breakdown of the performance across his clinics:

• Top Performers: Kent and Everett achieve over 40% net margins, generating about $1.5 million annually each.
• Middle Performers: Capitol Hill and Bellevue.
• Lower Performers: Auburn and Federal Way, both newer locations (Auburn: ~1 year; Federal Way: ~14 months) currently averaging roughly $500K in revenue annually.

Raymond:

"Our two top performers right now are Kent and Everett, and in the middle are Capitol Hill and Bellevue."
[12:06]

Raymond:

"Our two lower, lowest performing are Auburn and Federal Way."
[12:06]

8. Detailed Sales Process Walkthrough

[07:48 - 19:15]

Raymond outlines the comprehensive sales process employed in his clinics:

1. Initial Contact:

   • Patients either click an ad (Facebook or Google) leading to a free consultation offer.
   • Google Ads: Directs to a centralized call center where representatives handle discovery calls and schedule appointments.
   • Facebook Ads: Redirects to an online scheduler via GoHighLevel.

2. Appointment Scheduling:

   • Aiming to get patients in the same day or next day to capitalize on their immediate need.

3. Patient Show-Up:

   • High show-up rate of 80%, supported by a robust reminder sequence:
     • Reminders: Three text messages followed by two phone calls if unresponsive.

4. Consultation and Treatment:

   • Day 1: Consultation, X-rays, initial light treatment, and scheduling a follow-up for the next day.
   • Day 2: Review of X-rays, verification of insurance, and presentation of a customized treatment and financial plan.

5. Financial Transactions:

   • Insurance Verification: Complex due to multiple insurance plans, requiring a customized approach.
   • Payment Structure: Co-pays are processed, with cash fees around $99 if applicable.

Raymond:

"So we have a two day process. Right. So day one patient comes in, we do a consultation, we take X rays."
[07:48]

Raymond:

"We do three text messages and then we do a phone call the night before to confirm and then we'll do another one like two hours before their appointment."
[09:35]

9. Team Structure and Compensation

[18:02 - 20:37]

Raymond explains the organizational structure across all clinics:

• Team Composition: Each location typically consists of a doctor (manager), a team lead (office manager equivalent), a scheduler, and a rehab technician—keeping the staff minimal with about four employees per location.
• Compensation:
  • Doctors: Base salary of $80,000 annually, with top earners making over $150,000, plus a profit share ranging from 10% to 20%.
• Equity Considerations: Discussion on whether to offer equity or profits interest to incentivize doctors without diluting control or increasing EBITDA costs.

Raymond:

"And then there's just usually a scheduler and a rehab tech. That's it. So I'm trying to, I try to keep it to four employees per location. I like that."
[18:12]

Raymond:

"They can make an extra 50 grand or 40 grand with commissions."
[32:29]

10. Recommendations for Scaling and Operational Excellence

[19:15 - 35:54]

Alex Hormozi provides actionable insights and strategies to overcome Raymond's scaling challenges:

1. Enhancing Lead Flow:

   • Increase Ad Spend: Doubling or tripling current budgets on Google and Facebook Ads to boost lead generation.
   • Optimize Ad Copy: Simplify and make ads more compelling by integrating clear calls-to-action and focusing on core offers.
   • Expand Marketing Channels: Incorporate local SEO targeting long-tail keywords specific to each location.

2. Streamlining Sales Process:

   • Automate Insurance Verification: Collect insurance information upfront during appointment scheduling to reduce on-site processing time.
   • Implement Structured Sales Scripts: Use consistent, visual aids or scripts to ensure uniformity in sales pitches across all locations.
   • Train Staff Effectively: Equip team leads and patient coordinators with standardized scripts and role-playing scenarios to enhance sales closure rates.

3. Operational Improvements:

   • Standardize Procedures Across Clinics: Ensure all locations follow identical operational models to maintain consistency.
   • Implement Profits Interest Instead of Equity: Consider offering a profits interest to doctors to align incentives without the complications of equity distribution.

4. Boosting Efficiency:

   • Use Technology: Integrate scheduling and EHR systems to automate data transfer, reducing manual entry errors and saving time.
   • Decentralize Marketing Efforts: Develop localized marketing strategies tailored to each clinic's specific demographic and market conditions.

Alex:

"I think a big part of it that's not up here is the ops. Because in this type of business it's so operational heavy in terms of operational excellence."
[35:02]

Alex:

"I would recommend improving the sales process by using visual aids and structured scripts to ensure consistency and increase closure rates."
[31:00]

11. Final Recommendations and Next Steps

[36:22 - 35:54]

Alex wraps up the discussion with strategic steps for Raymond to implement over the next six months:

• Pilot Testing: Start by applying new sales and marketing strategies in one underperforming location (e.g., Auburn) to gauge effectiveness before scaling across all clinics.
• Increase Marketing Spend: Leverage high-performing channels like Google Ads while optimizing Facebook Ads based on performance metrics.
• Enhance Sales Training: Develop comprehensive training programs for staff to ensure uniformity and effectiveness in sales techniques.
• Monitor and Adapt: Continuously track performance across all metrics, making data-driven adjustments to strategies as needed.

Alex:

"So I would do these one at a time. So Google Ads, when you probably increase across all of them because you're already doing pretty well on this."
[36:41]

Alex:

"If you want to have to talk in marketer speak for them and just give them our target CPA and say like, listen, I can pay up to this, as long as it's under this, I'm good."
[34:38]

Key Takeaways

• Consistent Lead Generation: Scaling requires maintaining a steady and predictable lead flow, achievable by optimizing and increasing ad spend across effective channels.
• Streamlined Sales Processes: Simplifying and standardizing the sales process can significantly enhance closure rates and overall profitability.
• Operational Excellence: Ensuring consistency in operations and training across all locations is crucial for sustaining growth.
• Incentivizing Staff Effectively: Implementing profit-sharing models can align team incentives with business goals without complicating ownership structures.

Notable Quotes:

• Raymond on Marketing Challenges:

  "When we 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 scale."
  [02:44]

• Alex on Sales Strategy:

  "I always had this rule at least, like with fitness, it's like when someone walks in the door, first thing I want them to do is expand the gap of where they are, where they want to be."
  [24:39]

• Raymond on Team Efficiency:

  "I try to keep it to four employees per location. I like that."
  [18:12]

This episode offers valuable insights into the complexities of scaling a service-based business, emphasizing the importance of consistent marketing, streamlined sales processes, and operational standardization. Raymond's candid discussion with Alex provides actionable strategies for entrepreneurs aiming to replicate his success in the chiropractic industry.