Transcript:
[00:00:00.060] – Sam Ridgeway
I did a video about eight months ago talking about the possibility of franchising Viking offices across the United States, and I’ve had an incredible number of responses asking for more information. In fact, I still get one or two inquiries every day asking if Viking has started the franchising process. So I wanted to do a follow up video for anyone interested and share my thoughts about why things have stalled. But first, I want to make it perfectly clear that I haven’t postponed franchising because I don’t like money, nor is the reason, because I don’t want to help as many people as possible.
[00:00:36.060] – Sam Ridgeway
So what’s the real reason? Well, I think the answer just might surprise you. So unless you’re independently wealthy, the decision to start a business should be based upon potential profitability, because if you’re not looking to make money, you don’t have a business anyway, you have a hobby. Therefore, let’s start off with the fact that Viking is an extremely profitable company and the number of people would benefit from hormone therapy continues to grow at an alarming rate.
[00:01:12.260] – Sam Ridgeway
So demand is at an all time high. Understanding that, let’s dive into the numbers and other variables we’ll use to make an informed decision, a decision about whether a Viking franchise is a financially sound investment opportunity or something that will eventually drain your bank account because your spouse to divorce you and leave you wishing you had never heard my name. Variable number one is startup costs. Full disclosure, I spent one hundred and fifty thousand dollars in cash to get the resources necessary to start Viking.
[00:01:44.510] – Sam Ridgeway
Obviously you would have to spend the same. This get you a medical director, connections with pharmacies, access to medical software, training for yourself and your employees, advice on marketing strategies, and a host of other things. I can promise you this industry seems deceptively easy on the surface, but behind the magic curtain, it’s a bitch. And if you don’t have someone helping you navigate this minefield of bureaucracy, it’s just a matter of time before you are one more casualty sprawled out along the entrepreneurial highway that thought they could do it on their own.
[00:02:18.410] – Sam Ridgeway
So let’s keep going with initial expenses. The brick and mortar storefront office, the one I’m in right now, cost me around eighty thousand dollars to build out to outfit with the appropriate supplies, furniture, testing equipment and that isn’t even factoring in employee salaries. I also had to commit to a five year lease at three thousand dollars a month. Now, why do you need a brick and mortar office? Because it lends credibility. It shows people you’re invested in the industry and you have skin in this game.
[00:02:45.680] – Sam Ridgeway
You’re not just some fly by night organization that’s here today and maybe here tomorrow. Now, I’m not saying you need a brick and mortar office to start off with. You could strictly do telemedicine, use the office I’ve already established for credibility, but I’m merely telling you what you can expect to spend if you eventually decide to go that route. You’ll also need to understand this industry inside and out if you’re going to be the captain of your own ship, this means you’ll have to learn about hormone replacement therapy and there’s a lot to learn.
[00:03:16.520] – Sam Ridgeway
So I’d set aside at least a month to get educated. Now, that doesn’t mean you have to be a medical professional yourself. You’ll end up hiring one of those, but you should at least be well versed in the HRT industry and have a solid conceptual understanding of how hormones work in general. And you need to understand how hormones affect both men and women. So it’s a lot of information. Next, you’ll have to hire employees. Now, as previously stated, I’ll provide you with the medical director.
[00:03:44.300] – Sam Ridgeway
So I’m taking care of your largest financial burden. But you’ll still have to hire an NP or PA to legally handle your consultations. You’ll also need and track distribution. So not only do you have to pay yourself, but you have a minimum of three other employees to cut paychecks for as well. Now, could you do customer service and orders by yourself in the beginning to save money? Possibly, but there’s so much more other work for you to do that I don’t know
[00:04:12.980] – Sam Ridgeway
that you’d have the time. And next you’d have standard business expenses, phone systems, Internet connectivity, liability insurance, things every business needs to operate. So let’s recap. At this point in time, you just invested a quarter of a million dollars of your own capital. You have zero customers. You’re also bleeding anywhere from ten thousand to twenty thousand dollars a month in fixed costs when you factor in standard business expenses and employee salaries. And on top of that, you can expect to be in business for at least a year before you become a profitable organization.
[00:04:46.070] – Sam Ridgeway
Couple that with the fact that a vast majority of new businesses fail and you can see where the cards are unfortunately stacked against you. But let’s say you’re one of the lucky ones. Even if you were able to generate half of the revenue necessary to pay fixed costs during that first year, you’re still out another hundred grand or so before your clinic is in the black. Therefore, you’re now into this thing for a respectable three hundred thousand all cash before you’ve seen a smidgen of profitability.
[00:05:13.550] – Sam Ridgeway
And what does profitability even mean? Well, let’s keep going with full disclosure for almost every dollar you bring in, roughly 50 percent of that will go to medication costs. So when you make a dollar, fifty cents of that will go back out the door to pay the pharmacy for meds. Now, I’m not saying fifty percent profitability is bad. I’m saying the 50 percent you do make gets stretched rather thin. Which brings me to my next point, which is the single biggest reason I’ve held off on franchising the success of your business is highly dependent upon having a lot of customers or as we refer to, the Viking patients.
[00:05:48.440] – Sam Ridgeway
And this is because we offer our services at a price point almost anybody can afford, and when you have thinner margins, you need a larger volume of patients to compensate for the decrease in individualized revenue. And I’m glad we finally brought up the subject of patient acquisition, a.k.a. how to get customers, because I know everybody coming to me about a franchise thinks they’ll open their doors on day one and have a line of people stretching as far as the eye can see, throwing money at the receptionist without a care in the world about how the program works or what it costs.
[00:06:22.520] – Sam Ridgeway
But it doesn’t happen like that. You might get your first 20 patients or so through friends and family. Maybe you have a lot of friends. Maybe you can get 50 people. But where do you go after that? If you’re not a marketing guru, you’ve just added another rather hefty expense to your payroll and advertising budget because it takes a couple of thousand patients to make what I would call a good living in this business. Now, I was lucky when I started Viking.
[00:06:46.880] – Sam Ridgeway
I already had a YouTube channel with about thirty thousand subscribers, most of which we’re already interested in hormone therapy. But without that foundation already in place, I would have been just another casualty in the HRT industry. And believe me, there are tons of those. Seriously, stop and think about this. How would you let people know you exist? Where would you advertise? How would you out market the few successful clinics that have the capital experience and name recognition already in place?
[00:07:16.610] – Sam Ridgeway
Now, admittedly, when I proposed the franchising idea eight months ago, I hadn’t really thought of these factors. I was going off of my experience in the industry, which was in hindsight, far from typical. But once I really started playing things out and putting the franchising documents together, I was like, wait a minute, how are these people going to become profitable if they have to build a customer base from scratch? Now, understanding all of this, here’s what I could have done.
[00:07:43.700] – Sam Ridgeway
I could have sold you a pipe dream. I could have shown the revenue. Viking has pretended it’s what every clinic could expect, taken the one hundred and fifty thousand dollar franchising free from twenty or thirty people and retired in Mexico fat, dumb and happy. And none of this would have been underhanded because I would have provided the franchisee with an incredible foundation to build a clinic upon. They’d have the exact same tools Viking used to create what I consider to be the best hormone clinic anywhere.
[00:08:11.480] – Sam Ridgeway
But after hearing everything I’ve told you today, we all know that wouldn’t be right. I’d literally be setting someone up for failure, taking their money and leaving them to wither on the vine for the sole purpose of bettering my own financial future. And not only do I find this immoral, unethical and unprofessional, but I believe in karma. And as we all know, karma is a bitch. So why there could be innovative ways to structure a deal by doing things like personally financing the hundred and fifty thousand dollar franchising fee so it can be paid out over time or temporarily renting out Vikings medical staff to eliminate that expense from your payroll or a host of other out of the box ideas.
[00:08:48.950] – Sam Ridgeway
I wanted to be honest and forthright about the challenges you’d face if you attempted to open a hormone clinic. Now, I’m still open to the idea of franchising, and I know if you have a large supply of money and the ability to market, this is definitely a lucrative business. But I wanted to throw everything on the table. I wanted you to know what you’re getting into. I didn’t want there to be any surprises. And lastly, there’s a huge difference between franchising and an affiliate program.
[00:09:18.320] – Sam Ridgeway
Viking will put an affiliate program in as soon as our new software program has been written and implemented. And an affiliate program is where you just get paid for sending referrals to Viking. So whether you start a franchise, become an affiliate or simply remain a patient, you are never too old to live like a Viking until next time. Peace Out.
