In the course of your career, you might decide to sell your practice. There are ten important aspects of your practice that you should consider NOW, so that when the time arrives, you will have developed a truly marketable practice.
1. MAINTAIN STRONG REFERRAL SOURCES
Professional respect has value. Do you have good relationships with other professionals in your community? You should. If so, are those relationships so strong that you can transfer them to a new owner?
For example, if you have several professionals who continually refer patients/clients to you, you would want to ensure that those referral sources will continue to send patients/clients to the new owner. Otherwise, the buyer might want to discount the practice price by the amount that would be lost from not getting referrals from just those few sources.
Most professionals will continue to refer to the practice after your departure, as long as they are assured that those clients/patients they refer will receive the same good care that you currently provide them. It is also important for your referral sources to know that the new owner will reciprocate with referrals to them (assuming that is the type of relationship you currently have).
Keeping up with and then transferring these relationships will help your patients/clients too. That maintains continuity and quality of care for them, which will help them to always think well of you.
2. MAINTAIN FACILITIES AND EQUIPMENT
Everyone is inclined to pay more for something if it looks attractive. The same principle applies to buying a practice. If your facilities are pleasing to the eye, you might be able to command a higher price. While a clean carpet is only just that, it might demonstrate to the buyer that every aspect of your facility and practice is probably well maintained.
Well-maintained, state-of-the-art equipment also speaks well of you. It says that you have a growing practice that is keeping in step with technology.
3. INCREASE YOUR GROSS SALES
The best indicator of the value of a practice is its cash flow. Your successor will want assurance that he is acquiring a reliable income stream. Now is the time to concentrate on reactivation of old patients/clients, increasing your marketing budget to attract new patients/clients, setting goals for the staff and moving the practice toward maximum productivity.
4. IMPROVE YOUR BOOKKEEPING RECORDS
Part of selling a practice requires that you develop and present an accurate picture of what you have accomplished. You will want to be able to disclose good financial figures. Plan to have at least five years’ worth of good financials because the buyer wants predictability. Have an outside professional prepare “compiled statements.” That adds credibility. The practice buyer will find that well-maintained, accurate accounting records help with forward planning. Additionally, good records can even help you explain a slump period.
5. DEVELOP A TRANSITION PLAN
Very few practice owners supply the buying owner with a transition plan. If you were to do that, you will be far ahead of other owners who want to sell their practices. You should develop a plan because it not only can increase the worth of your practice, it can make life easier for everyone. Put the transition plan in writing, then review and outline all the systems and how they work. The marketing plan, referral sources, management policies and accounting systems should all be put down in narrative form.
Indicate a time frame in which the practice will be transferred to the new owner. That will give him an idea of how long he will have to learn the ropes. Don’t expect to make the deal and run with the money. An adequate time frame to transfer a practice in which you will be working side-by-side with the new owner, will range from 30 to 120 days, depending on the size and complexity of the practice.
Part of an effective, valuable transition plan can involve a good loan package. It shows that you have put together a transition plan that is easily understood by a third party. It indicates that you have a good relationship with the bank. That can enhance the value of your practice, since the banker knows that the systems will remain in place and generate cash flow to repay any loans.
Fill out the form to the right to continue reading “10 Steps You Must Do Before Selling Your Practice – Part II”(highly recommended).