This article is a continuation of “10 Steps You Must Do Before Selling Your Practice.” If you haven’t done so yet, we recommend reading the first article to get a better context when reading this one.
6. DECREASE OVERHEAD EXPENSES
By lowering your overhead, you will consequently improve the cash flow of the practice. Eliminate monthly expenses wherever possible, taking care not to hinder expansion activities. By decreasing the overhead of the practice, you will likely be in a position to sell your practice for a higher price. Improve your bookkeeping procedures so that you can accurately track your expenses and potentially cut them. You gain a tremendous amount of control by just knowing where your money is coming from and where it is going. Keep a close eye on your discretionary expenses, such as advertising, travel, new equipment, seminars, utilities, telephone, etc.
Analyze your payroll, department by department, function by function, employee by employee. If personnel are underutilized, eliminate a job position and reassign its duties to other employees. Make sure that you do not overload yourself (the owner) if you assign some of those duties to yourself.
7. TRAIN AND COMMUNICATE WITH YOUR STAFF
A trained and stable staff can pay off in many ways. A well-informed staff operates more efficiently and will raise your practice to the highest level of efficiency. More of your time could then be spent with patients/clients instead of doing tasks that your staff should be doing. If routine duties are done in a checklist fashion, less time is required to rethink tasks. The likelihood of error will diminish and available time with patients will increase, resulting in better quality care. A well-trained staff assures better patient/client control and greater morale. Also, when you are not in the office, it gives you the peace of mind of knowing you can leave the facility in good hands.
Good communication among staff and routine training reduces stress for everyone. The lower the staff’s stress level, the lower the owner’s stress level, which enables everyone to work better. Consequently, the patients/clients feel more relaxed. The salable aspect of this is that the buyer would prefer working with a well-trained, committed staff.
8.MANAGE YOUR RECEIVABLES
This aspect is very important. Ideally, you should collect all of your fees within 30 days of billing. Realistically, no outstanding bill should be more than 60 days old. And if receivables are 180 days old, your practice will be valued much lower than you might expect it to be. Past-due fees cut into the new owner’s cash flow. It also indicates that you have been doing a bad job of communicating with patients/clients. Thus, with overdue accounts, the new owner would have to spend extra time correcting bad payment patterns among patients/clients.
There is always the risk that “slow payers” will become “no payers.” The older the bill, the odds that you will never collect increase dramatically. And that can affect your gross sales and earnings.
9. IMPLEMENT A VIABLE MARKETING PROGRAM
If you do not have a marketing program, develop one. If you do have one, is it producing results and are those results measurable?
An active marketing program tells the buyer that you are not just selling yourself (the owner), rather you are marketing and delivering your practice’s services. This enhances predictability, which can translate into increased practice worth. A marketing program that is regularly producing results shows that it is not just your personality that keeps both new and established patients/clients coming in. A marketing program that works indicates that the practice is more important than any single person, including the owner. This instills the buyer with confidence that new patients/clients will continue coming in.
10. SEEK PROFESSIONAL HELP: Use objective, competent professionals to review your practice’s systems, procedures and all other aspects. This third-party objectivity is most valuable when called in at least six months to a year prior to putting your practice up for sale. It gives you time to make the necessary changes. A competent and impartial third party can help you see the entire forest if before you were lost among the trees. A professional can tell you what you need to do to shore up any weaknesses within your practice.
Have credible third party professionals handle the sales negotiations, even if just for this one reason: he will keep you from looking like the bad guy. Selling can be a very emotional process for you – you are parting with something that you have built and nurtured over the years. You will be saying goodbye to many fine people who you have had a hand in helping. It is also an emotionally charged time for the buyer too, since he is filled with fear of the unknown.
The professional third party offers a welcome buffer and can help negotiations go more smoothly. He can unemotionally pave the road to completion. Finally, a competent professional knows what is a fair price with reasonable terms for the sale of your practice and what isn’t.