Ten Years Out – 6 Things You Can Do Now
I recently appeared on a blog by Nate Bonilla-Warford about how to prepare for selling your practice. Practitioners often find themselves in a position where they are ready to retire but can’t find anyone interested in buying their practice. They end up closing their doors with nothing to show for their life-long work.
As a broker/appraiser, I must admit this happens all the time. As you’ve heard me say before, a $500,000 practice is tough to sell. The problem is cash flow; there must be enough available for a buyer to pay himself, as well as pay a bank note. Smaller practices provide a nice living while the owner is working, but there is nothing left over after they pay themselves. And oftentimes the practice has grown stale, sales begin to decline, and equipment becomes outdated.
Even if retirement is more than ten years away, here are six things you can do now to build a practice you can sell:
- Track your metrics and maximize your net profit. Set up your Quickbooks accounts to reflect your key areas of expense: cost of goods, staff salaries, occupancy costs, equipment, advertising, and general office overhead. Proper bookkeeping will allow you to easily view your P&L and ensure that you are within the norms.
- Go large. You don’t have to be huge, but unless your net receipts are at least $800,000 it is very difficult to have enough net profit to have anything left over after you pay yourself a fair salary.
- Find an associate. Multiple doctor practices have a significant edge when it comes time to sell. As soon as possible, find another doctor to work in your office. Even if it is part time, it will give you a welcome break. If your net is where it should be, you can afford to pay them and still make money on their work. Most importantly, associates are your first option for a future buyer.
- Treat your optical as if is a separate business. If you’re not retail-minded, find someone that is. Monitor your sales, adjust inventory to match what your clients’ want, and watch your cost of goods expense. Delegate someone, give them clearly defined goals, and hold them accountable. Reward them through bonuses when they hit their goals.
- Look at your practice through the eyes of your customers/patients. Obsess over customer service. Nothing is more important to your success. Analyze every step of the patient experience, identify weaknesses, and fix them.
- Have weekly staff meetings. Share the vision with everyone, and allow everyone to participate. As a team, create goals and use office meetings to ensure your goals are being met.
Need help? Hire a consultant. There’s no shame, and having an outside set of eyes can put you on track to build a practice that will attract buyers when you’re ready to retire.
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