Real-Life Math
You've just graduated from optometry school and want to set
up a practice. A classmate suggests you open up a joint office in Canada and
share the set-up costs and overhead. But you've also been approached
by an established clinic in the United States that wants to hire you on salary.
What will it be?
On graduation, you owe $50,000 Cdn in student loan
repayments. You want to pay this loan off as quickly as possible. Your monthly
payments will be $1,037.92.
The United States Offer
The
United States clinic is offering you an initial salary of $55,000 US. This
includes your medical insurance and a generous employee benefits package.
All overhead costs are being covered by the clinic.
The Canadian
Offer
In order to establish your own practice, you'll have
to finance all the required equipment and supplies, as well as hire staff
and maintain an overhead.
| Essential equipment and dispensary items: | $43,995 |
| Office equipment and supplies: | $8,000 |
| $51,995 (Cdn) |
The majority of equipment will last the life of the practice. If
you finance the equipment, your payments will be $658.65 per month.
Operating
Expenses
| Cost of goods sold | 26.2% |
| Wages | 25.5% |
| Occupancy cost | 9.0% |
| Financial Expenses | 3.0% |
| General Expenses | 1.9% |
| Other Expenses | 17.6% |
| Net Expenses | 83.2% |
| Net Profit | 16.8% (100 - 83.2%) |
If you decide to go into joint practice with your classmate, the
operating expenses of the office will be shared equally, with each optometrist
being responsible for the purchase of their own equipment and care of their
own patients. Your expenses would be cut in half, but your gross income would
remain the same. Thus, your net profit would be 33.6 percent. An average Canadian
optometrist practice grosses $300,000 Cdn annually.
Use an exchange
rate of 19 percent to convert Canadian funds into United States funds.
Well,
is it the United States or Canada for you?