Smart Money

How Strategic Investments Are Helping Labs Grow

By

Click to download a PDF of Smart Money.

 

NEW YORK—The optical lab business, at its most elemental, has always been a numbers game.

Running a lab, though, is a complex undertaking that involves more than simply dollars and cents. It also about the number of prescription jobs per day it can produce, and the percentage of those jobs that are rejected because they don’t meet quality control standards. It’s about maintaining a job average that’s calculated based upon production yields and the average price per job. It’s about the cost of capital equipment, consumables, overhead, labor and dozens of other budget line items.

Today those costs are escalating, as anyone who runs a lab or plans to start one, will confirm. Automated production systems and digital lens processing equipment, a requirement in modern labs, is expensive, and the cost of attracting and maintaining a workforce, particularly one that includes workers with computer and engineering skills, is also high.

“Running an optical lab is capital intensive,” observed Tom Sloan, a veteran lab owner and executive who left the industry in 2002 for the finance sector and who is now returning as an investor in a new lab, Independent Optical Lab, in Greensboro, N.C. “Some of that comes from the fact the machinery is much more sophisticated, with all the automation and robotics, than when I left the business. That sophisticated equipment produces a higher level of quality and consistency in the product, and the market is demanding that now.

“With the sophisticated product and higher level of quality, the economics of the market have changed as well,” noted Sloan. “Today, both at the retail level, the optometric level, and at the wholesale level, there’s been an inflation in the prices. There’s more money being made at retail and is available to be made at wholesale today than there was in my previous era.”





Although the rewards of running a successful lab can be considerable, so too, are the risks. In addition to steep capital equipment and operating costs, labs face increasing demands by customers for rapid, personalized service, the ability to supply customers with an ever-growing range of sophisticated, high quality products and the need to offer those products at competitive prices.

These factors require labs to make significant investments at all levels of their business. Miscalculations—failing to automate certain processes, relying on a vendor who can’t support their product, waiting too long to upgrade equipment—can result in costly downtime and lost revenue. The margin for errors is slim, and the pressure to succeed is higher than ever before.

Lab are, out of necessity, taking a critical look at the investments they are making in facilities as well as in human resources. In the following profiles, we spoke to nine leading lab owners and operators about their own investment decisions, and how new technology has and/or will change the way they process lenses.

We also share the findings of a new Jobson Research/Vision Council survey that reveals which technologies require the most investment, which provide the best return on investment, when to automate production and how lab investments are being financed.