There are days, I am sure, when you would like to just exit stage left and walk away from your practice, right? Especially this year of Covid-19 with all the difficulties, rules, regulations and so on associated with it. And some healthcare professionals did just that… locked the door and quit cold turkey.
However, most of the rest of us are bravely sticking things out and doing our best to hold everything together and adopt and adapt to new ways of doing things!
Some sample questions we get asked are:
- When should I start planning for retirement?
- Can I stop working 5 days per week and go down to 2 without cutting my income – a semi exit strategy?
- Should I sell my practice and just be the associate for the rest of my career?
These are good questions, and here are some answers:
Let’s take Question #2 first because this can be done at any stage of your practice ownership. I will answer by way of a case study of one of our clients:
One of our dental clients (call her Susan) had 3 children under 5 years old and desperately wanted to cut back her working days from 5 to down to 2 days per week so she could be with her children. Obviously, her income needed to stay where it was or better at the same time. She asked me this and I told her we can help her do that, but that she would need a half day for management time also.
We got her busier and further booked out in her schedule within a couple of months, then found an associate for 2 days per week, which meant she could cut out one of her days and not lose income after paying the associate 40% of his billings.
Then, with more marketing internally and externally, we created enough patient base to need a second associate. His hours enabled her to cut out 2 more days! All of that took only 6 months and voila – she worked 2 days per week (plus a half day for management) and was with her cutey pies the rest of the week. Happy camper who did not need to do a complete exit from her practice! The best of both worlds.
When should you start planning for retirement?
Our senior consultant’s answer: YESTERDAY! You start with making appropriate investments and tucking away as much as you can. And if you are not making enough to do that, you need to get some help to get your practice making more profit so you can.
We usually recommend you start making retirement plans for 2 to 5 years before your desired departure date. It may take a while to find the right associate and groove them in until they are sufficiently productive that they become the eventual purchaser of your practice. You must allow for the fact that your first try at finding the right associate may not be successful. There is a correct way to bring in an associate who may be your eventual buyer and how to keep them from deserting the ship before than happens. If you contact us, we can walk you through this system.
Skip to the End
As an alternative, you may choose to skip the associate route and just advertise your practice for sale a couple of years ahead of your retirement date as it can take some time to find a buyer and also to do the requisite paperwork of selling. This allows you the option of leaving cold turkey or staying on as a part time associate if the new owner wants you to.
The third scenario: Should I sell my practice and just be the associate for the rest of my career? This is an excellent question and there is no cut and dried answer. How long is “the rest of your career?” If you are planning to be “out of there” within 2 years, will the profit from sale (coupled with savings and investments you may already have) be enough for you to live on comfortably for the next few decades?
Who’s the Boss?
The next question is: Can you see yourself working under and for a different boss who may not be as astute as you were at running your practice? We have seen this go both ways: it all worked out beautifully and everybody’s comfortable; and we have seen the seller within three months climbing the walls in frustration and who then wants to take off right away but can’t because they’re on contract. A trial period might be a good paragraph to have in any such agreement. A prenup agreement, you might say.
The world is your oyster and you can have almost any outcome as long as you do the proper planning for it and know what you want and where your end game to be.
Contact us to help with your future plans.
Call us at 416-466-6217 for a FREE Practice Assessment!