Regardless of where you are in the selling process, you can never start too early. Consider the following 13 tips to improve your practice now.
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. Do a cash-flow analysis. The total value of the practice cannot exceed the ability of the practice to generate enough cash flow to make payments on the debt required to obtain the practice and provide a reasonable profit to the purchasing dentist. The net income of the practice is adjusted to add back all income to the dentist/owner and benefits paid on his or her behalf. Owner benefits include deductions for expenses not necessarily related to the operation of the practice, but which were paid out on behalf of the selling dentist.
3. Maintain your production. Sometimes owner/ doctors will start to slow down before actual retirement. This results in an exponential decline in profit and practice value. It is important to maintain the historic growth rate of the practice until the sale closes.
4. Maintain new patient numbers. Practice acquirers hone in on this data point and consider it to be a true indication of the 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 all dental records. In the due diligence process, an acquiring dentist may examine a portion of the dental records. The current practice owner should maintain les with accurate treatment entries, up-to-date patient information, and easily read treatment plans.
8. Clean up clutter and upgrade the office decor. A typical prospective dental purchaser will be reviewing multiple practices. Every attempt should be made to make your dental office stand out in this environment.
9. Tune up the dental equipment. Dental purchasers want to see modern equipment in your office.
10. Do not let the lease lapse. If you expect to sell your practice using third-party financing, be aware that the lender will require the purchaser to acquire a lease (inclusive of renewal options) for at least the length of the note (typically 72 to 84 months). Talk with a lease broker whenever you renew your lease to help you negotiate terms allowing you to transfer the lease without unreasonably locking you in.
11. Review your dental treatment mix. Performance of specialized dental care in a general practice can be a major obstacle to the sale of your business.
12. Emphasize fee-for-service. Purchasers generally place a signicant importance on the fee-for-service component of practice income. Practice owners should attempt to keep the majority of their practice fee-for-service and carefully evaluate insurance plans they participate in. 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. - 15683
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. Do a cash-flow analysis. The total value of the practice cannot exceed the ability of the practice to generate enough cash flow to make payments on the debt required to obtain the practice and provide a reasonable profit to the purchasing dentist. The net income of the practice is adjusted to add back all income to the dentist/owner and benefits paid on his or her behalf. Owner benefits include deductions for expenses not necessarily related to the operation of the practice, but which were paid out on behalf of the selling dentist.
3. Maintain your production. Sometimes owner/ doctors will start to slow down before actual retirement. This results in an exponential decline in profit and practice value. It is important to maintain the historic growth rate of the practice until the sale closes.
4. Maintain new patient numbers. Practice acquirers hone in on this data point and consider it to be a true indication of the 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 all dental records. In the due diligence process, an acquiring dentist may examine a portion of the dental records. The current practice owner should maintain les with accurate treatment entries, up-to-date patient information, and easily read treatment plans.
8. Clean up clutter and upgrade the office decor. A typical prospective dental purchaser will be reviewing multiple practices. Every attempt should be made to make your dental office stand out in this environment.
9. Tune up the dental equipment. Dental purchasers want to see modern equipment in your office.
10. Do not let the lease lapse. If you expect to sell your practice using third-party financing, be aware that the lender will require the purchaser to acquire a lease (inclusive of renewal options) for at least the length of the note (typically 72 to 84 months). Talk with a lease broker whenever you renew your lease to help you negotiate terms allowing you to transfer the lease without unreasonably locking you in.
11. Review your dental treatment mix. Performance of specialized dental care in a general practice can be a major obstacle to the sale of your business.
12. Emphasize fee-for-service. Purchasers generally place a signicant importance on the fee-for-service component of practice income. Practice owners should attempt to keep the majority of their practice fee-for-service and carefully evaluate insurance plans they participate in. 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. - 15683
About the Author:
Watson, Brown & Associates, Inc is a Dentist and Tax Attorney/Accountant with years of Texas dental practice transitions experience. Backed by in-depth experience, knowledge and credibility essential to making your practice transition seamless and successful. Dental Practice For Sale Houston and Dental Practice For Sale San Antonio
