By: Jeff Cohen
As a healthcare business lawyer, I’ve seen nearly everything entrepreneurs think might be a good idea. They usually come to me when starting a healthcare business with questions like:
- Do you like an LLC better than an Inc., and if so why;
- Does the Stark Law (or the Anti-Kickback Statute) allow us to do this?;
- Is it ok to allocate ownership and profit distribution differently?;
- Will insurers pay for this?; and
- WWMT? (What Would Medicare Think?).
These are great questions. And they’re off base. In fact, they’re not only off base. They’re also out of order. Here’s one for you–
“If I had an hour to solve a problem and my life depended on it, I would use the first 55 minutes determining the proper questions to ask.” Albert Einstein said that.
I find it important to note that Einstein not only recognized the importance of asking questions, but also asking the right ones. So here’s one that I think is hugely important for entrepreneurs and also often missed: “Who am I making this for? Who is my buyer?”
While most will run after a good idea and usually the promise of terrific cash flow, they both have serious limitations. Good ideas don’t imply strategy, and cash flow is usually more related to creating “forced spending” than it is to creating a business that is strong and saleable.
On a more micro (or personal) level, something author Sam Keen wrote is especially insightful. He said “There are two questions a man must ask himself: The first is ‘Where am I going?’ and the second is ‘Who will go with me?”
It is extremely uncommon for even already successful entrepreneurs to know it’s essential to ask the “first question” first and then to know the answer!
Who Is My Buyer?
Simply put, start here. When you know who your buyer is, you can know (or find out) what they will want you to build and possibly how they’ll want it built. It will drive details like–
- LLC vs. Inc.
- Holding company model (or not)
- Full or partial integration
- The type of integration (vertical or horizontal), and
- The importance of control