A lot of work went into building the practice you have today. As you set to retire or transition away from daily operations, implementing a game plan for a sale is a top priority.
This process can take at least two years to properly plan and execute, especially in today’s climate. Once your practice is valued, the planning for practice transition can begin to take shape. So, wherever you are in the process, the following tips can guide you through this exciting time and help increase the value of your sale.
Start right now
Even if retirement is still years away, early planning will provide a clear roadmap for successfully making this transition.
In the unlikely event that you must sell earlier than expected, it’s possible that your return upon a sale that’s rushed will be significantly lower than one that’s planned out for at least a year.
A sudden death or disability can lead to an early sale. In other cases, poor business planning can result in a premature sale. For this reason, doctors are urged to commission an appraisal for their practice. From there, dental practice leaders can build and implement a customized business roadmap years ahead of the anticipated date of retirement or sale.
Location is another consideration that warrants advance planning. Depending on where your business is located, it could be more challenging to identify a viable buyer.
Handing over management to a new dentist also requires a large investment of time, especially in the case of specialty practices. When you give yourself and the incoming owner sufficient time, you can ensure a smooth transition for yourself and your predecessor. This approach is not only business-first but patient-first, too.
The reality is that a transition of this scope simply takes time. To achieve the full benefits of your transition plan, you will have to practice patience and allow for the strategies to develop and produce the benefits you envisioned.
Finally, playing the long game will also set you up to succeed financially in that you have plenty of time to accumulate assets and ensure retirement security. Prospective sellers sometimes fail to project the full value of their assets, which can strain their post-practice budgeting.
Boost marketing
It may seem counterintuitive to invest in outreach if you plan on transitioning. As retirement comes closer, in fact, doctors will curtail on their marketing efforts. Across the industry, some may even cut off their efforts altogether. This can be a costly error.
As your marketing efforts decline, so will new patient leads. Other numbers are also likely to drop. These numbers will not look favorable to prospective buyers. If your numbers continue to slide down, it would not be unreasonable for an incoming buyer to ask for a steep discount given all the ground that will have to be made up.
To maintain a healthy flow of returning and new patients, it’s vital to keep up with your marketing efforts. Showcasing your business in its best possible light is good business for the now and for your transition.
If you want to get back on track, a good starting point is polishing your internal marketing efforts. This will boost referrals from patients and staff. Next, consider refreshing your webpage, investing in search engine optimization campaigns and expanding social media.
Control overhead
It’s an easy equation to consider: The lower the overhead, the wider the profit margin will be. This outcome will produce an optimal sales price too.
During this planning period, practice due diligence in all financial reviews to keep the business performing at a high and efficient level.
The annual budget should be as detailed as possible, outlining specific amounts for major categories. Personal and discretionary spending must also be tracked and tallied to determine the actual business profits.
Of course, labor costs are the heaviest overhead item. As such, doctors must practice prudence when determining increases, especially if the practice is not growing at an ideal pace. Instead, practice owners in this position can provide bonuses.
Raise fees
It’s natural to shy away from raising fees, especially if you’ve been at it for a long time.
The reality is that annual fee increases drive profitability, and of course, the practice’s overall value. Raising fees is directly related to profitability because it’s tied to collections the practice brings in. This steadily increasing number will also leave a favorable impression on a prospective buyer.
If you are interested in a consultation on how to sell your practice, contact us today!