This article is a continuation of “Looking Toward the Future: How to Make Your Practice Salable.” If you haven’t done so yet, we recommend reading the first article to get a better context when reading this one.
- TRAIN YOUR STAFF AND ESTABLISH GOOD COMMUNICATION AMONG THEM
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-possible 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 and the likelihood of error will diminish. 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.
- MANAGE YOUR RECEIVABLES
This factor is essential for you to control. 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.
- 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), but rather that 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 one person, including the owner. This instills the buyer with confidence that new patients/clients will continue to arrive long after you’ve left.
- 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 most 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 all involved. 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 recorded.
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.
- SEEK PROFESSIONAL ADVICE
You probably already have a lawyer and an accountant. That’s a good start. But you also need specialists in the fields of preparing a practice for sale and the actual selling of it. Seek out advisors who have a working knowledge of the complexities of exit strategy planning. Utilize objective, competent practice management professionals to review your practice’s systems, procedures and all other factors involved in a sale. Advisors are most valuable when called in at least nine months to a year prior to putting your practice up for sale, preferably two years or more. It gives you time to make necessary improvements. A competent and impartial third party can pull you up out of the weeds of day-to-day operations and help you to see the bigger picture. He can tell you what you need to do to shore up any weaknesses within your practice.
Have a professional broker handle the sales negotiations to ensure they go smoothly. Selling will likely be a very emotional process for you — you’re parting with something that you built and have nurtured for many years. It is also an emotionally charged time for the buyer too, since he is filled with fear of the unknown. Having a team of professionals working in concert with you will virtually guarantee the successful sale of your practice when the time comes.
The actions we’ve highlighted here are just a mere fraction of what you need to consider when planning to sell your practice. An exit strategy should be built around your personal objectives (what you DO know) as you move into the next phase of your life. Don’t limit your exit strategy planning with what you DON’T know! Schedule a free consultation with our Senior Practice Analyst to learn what you don’t know and what it will take to ensure that you are able to exit your practice when you want to, how you want to and for the amount that you desire.