No matter where you are in the selling process, you can never begin too early. The next thirteen tips can help you strengthen your current practice today.
1. Manage your fees. Fees should be reviewed and adjusted each year. Many resources are available to disclose treatment fees by percentile ranking for each zip code. You can add real value to your practice by getting your fees in line, provided you implement changes early enough.
2. Build a cash-flow analysis. The total value of the dental practice cannot surpass the ability of the practice to produce a large enough cash-flow to service the debt and provide a reasonable profit to the purchasing dentist. The net income of the practice is adjusted to return all income to the dentist as well as benefits to maximize net income. Owner benefits typically consist of all deductions for expenses not related to practice operations, but which were paid to the selling dentist.
3. Always maintain your dental production. While it is human nature for a dentist to want to slow-down before actual retirement, this will result in an exponential decline in practice value as well as profits. You must maintain the same growth rate of your practice until the actual sale date.
4. Continue to increase new patient numbers. Dental practice purchasers focus on this number and consider it the number 1 indication of practice vitality.
5. Get your financial records in order. Typica dental practice profit and loss and income statements fail to give a true practice overhead and profit picture. Ask your accountant to group related expenses together for the purpose of determining true profit. If you own two practices, avoid a co-mingled tax statement.
6. Boost your recall system. Hygiene income may comprise as much as 22 to 25 percent of the total income in a typical general dental practice. This percentage can climb to 30 percent or more in practices aggressively utilizing soft-tissue procedures. Generally, the higher the hygiene percentage the better ... unless the practice is one where the doctor is underproducing.
7. Review the condition of the patient records. In the due diligence process, a purchaser usually will review a representative portion of the patient records. The practice owner should maintain les with complete treatment entries, current patient information, and easily discernable treatment plans.
8. Clean up clutter and spruce up the decor. First impressions matter. Most prospective purchasers will be looking at multiple practices. Every attempt should be made to make your ofce stand out in the crowd. Continually invest in what it takes to maintain a fresh, updated office appearance.
9. Tune up the dental office equipment. Most purchasers expect to see modern equipment in the office. If they purchase a practice completely absent of modern equipment, they may adjust their offer to account for replacement of outdated equipment. The practice owner should keep equipment updated, both functionally and esthetically. Beware of substantial replacement of the equipment just for the purpose of selling the practice. This rarely warrants the investment.
10. Do not let the lease lapse. Do not let the lease lapse. Do not let the lease lapse!
11. Review your treatment mix. Performance of specialized dental care in a general practice that cannot be easily duplicated by a purchaser can be a major obstacle in an otherwise routine practice transition. If specialized treatment (orthodontic, TMJ, implants, etc.) comprises a signicant portion of your income, be prepared to be exible regarding practice transition requirements.
12. Emphasize the fee-for-service aspect of your business. Practice owners should try to retain the majority of their practice as fee-for-service and very carefully consider the insurance plans they accept. Make sure these plans may be transferred to another provider following a sale.
13. Check with your advisors. Consult with your practice transition consultant about a preliminary practice evaluation. Your advisor should be able to point out any weak spots and recommendations for correcting them. - 21151
1. Manage your fees. Fees should be reviewed and adjusted each year. Many resources are available to disclose treatment fees by percentile ranking for each zip code. You can add real value to your practice by getting your fees in line, provided you implement changes early enough.
2. Build a cash-flow analysis. The total value of the dental practice cannot surpass the ability of the practice to produce a large enough cash-flow to service the debt and provide a reasonable profit to the purchasing dentist. The net income of the practice is adjusted to return all income to the dentist as well as benefits to maximize net income. Owner benefits typically consist of all deductions for expenses not related to practice operations, but which were paid to the selling dentist.
3. Always maintain your dental production. While it is human nature for a dentist to want to slow-down before actual retirement, this will result in an exponential decline in practice value as well as profits. You must maintain the same growth rate of your practice until the actual sale date.
4. Continue to increase new patient numbers. Dental practice purchasers focus on this number and consider it the number 1 indication of practice vitality.
5. Get your financial records in order. Typica dental practice profit and loss and income statements fail to give a true practice overhead and profit picture. Ask your accountant to group related expenses together for the purpose of determining true profit. If you own two practices, avoid a co-mingled tax statement.
6. Boost your recall system. Hygiene income may comprise as much as 22 to 25 percent of the total income in a typical general dental practice. This percentage can climb to 30 percent or more in practices aggressively utilizing soft-tissue procedures. Generally, the higher the hygiene percentage the better ... unless the practice is one where the doctor is underproducing.
7. Review the condition of the patient records. In the due diligence process, a purchaser usually will review a representative portion of the patient records. The practice owner should maintain les with complete treatment entries, current patient information, and easily discernable treatment plans.
8. Clean up clutter and spruce up the decor. First impressions matter. Most prospective purchasers will be looking at multiple practices. Every attempt should be made to make your ofce stand out in the crowd. Continually invest in what it takes to maintain a fresh, updated office appearance.
9. Tune up the dental office equipment. Most purchasers expect to see modern equipment in the office. If they purchase a practice completely absent of modern equipment, they may adjust their offer to account for replacement of outdated equipment. The practice owner should keep equipment updated, both functionally and esthetically. Beware of substantial replacement of the equipment just for the purpose of selling the practice. This rarely warrants the investment.
10. Do not let the lease lapse. Do not let the lease lapse. Do not let the lease lapse!
11. Review your treatment mix. Performance of specialized dental care in a general practice that cannot be easily duplicated by a purchaser can be a major obstacle in an otherwise routine practice transition. If specialized treatment (orthodontic, TMJ, implants, etc.) comprises a signicant portion of your income, be prepared to be exible regarding practice transition requirements.
12. Emphasize the fee-for-service aspect of your business. Practice owners should try to retain the majority of their practice as fee-for-service and very carefully consider the insurance plans they accept. Make sure these plans may be transferred to another provider following a sale.
13. Check with your advisors. Consult with your practice transition consultant about a preliminary practice evaluation. Your advisor should be able to point out any weak spots and recommendations for correcting them. - 21151
About the Author:
Terry D. Watson, DDS, and Frank Brown, JD, LLM, are with Watson, Brown & Associates, Inc., a dental practice transition consulting and brokerage firm in Dallas, Texas. They are members of American Dental Sales, ADS Texas and can be reached at (940) 455-2299 or by e-mail at fbrown@wb-associates. Dental Practice For Sale Texas
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