There comes a point in your practice when you reach a cross-roads and you start wondering which path to take: Should I ramp up the practice? Or should I work out a sale price and prepare an exit strategy?
In order to strategically work out which path you should take, there are many separate factors to consider such as age, health and physical condition, financial security, personal goals, responsibilities, profitability of the practice, condition of the practice, market conditions, and so on. Here are a list of questions and thoughts to help you in this process, not in any particular order of importance:
- Personal Goals
Perhaps all you ever wanted to be was the profession that you chose, and you are not done with that path. Or maybe you have a level of excellence or skill you still want to reach for, or a size that you wanted your practice to achieve, and so on.
On the other hand, perhaps you have achieved your practice goals, but you have other goals that you have always wanted to accomplish. For instance, one client wanted our help to grow his practice so it would sell very profitably so he could be debt-free and have a substantial cushion to start his toy-making business that he had always wanted. There can be making opportunities for your “life after practice.”
- Age, Physical Condition and Health
Nowadays, age is not so much a factor with respect to ramping up or exiting. No one SAYS at what age you have to stop. One of our clients was 79 years old, in excellent physical condition, and wanted to double her practice. So she solicited our help and she did double in a few months and continued working till 89. A marketing campaign was needed because of her very white hair which suggested to patients that she must be retiring soon. The new marketing message sent out went like this: “Retiring? Not even thinking of it. I’m ramping up my practice!” It filled her practice back up and referrals from patients turned back on.
However, if you have physical conditions starting to make practising painful, then ramping up your practice and selling it profitably may be urgently needed. Alternatively, you could get in a few associates and become mainly the CEO of the business to keep the income flowing in while you cut back on your provider duties.
- Financial Security
This is a big one because you may live to be 85 – 100 years old and need to consider exactly how much money you need to have access to after you retire, taking into consideration inflation and also, what lifestyle you would like to have. Prepare for the worst-case scenario and live without worry.
You may be wanting to retire at a younger age for a variety of possible reasons but you still have kids who need to go to university, etc. and you need to keep the income flowing in order to fulfill those responsibilities. In that case, if you REALLY want to exit, let’s build up the practice so it sells for max profit and release you from it.
- Market Conditions
There are times when practices sell extremely well and other times when the market is down and there is a glut of practices for sale (like during a recession, for instance). If possible, you want to plan this carefully so you don’t give your practice away in a fire sale due to the economy.
- Condition of the Practice
If your practice is old looking, has equipment that is not up to date, little to no marketing is being done, with a lease that is ending soon and no 10-year renewal period in writing (as banks now require) or it has a demolition clause in it (which banks hate), is under- or over-staffed, and has a small patient base, you will not get top dollar for your practice. In this case, find a consulting company (we’re available!) to help you ramp up and get all these issues handled. You may then sell your practice for $200,000 to $500,000 more!
- Profitability of the Practice
Most practices are not running efficiently enough to say that they are at full capacity. Over the last 32 years, we have helped more than 1,800 practice owners take their practices to whole new levels, and therefore when they wish to sell, they will get a better sale price. The purchaser of a practice needs to see that there will be enough profit left over after paying all the usual bills AND the monthly payment on the new loan for the purchase. The previous owner did not have that big loan to pay out of his or her take home pay.
SO, HERE’S THE QUESTION:
With the above factors taken into consideration, do you want to ramp up your practice and get more enjoyment and profits? Or do you need an exit strategy to gracefully and profitably sail into a different future?