How to Not Let the Value of Your Dental Practice Drop during a Transition
With so much going on during a dental practice transition, it’s easy to let things slide off your radar. A common and honest mistake is letting the value of your practice drop leading up to the proverbial changing of the guards. Here’s how and why not to let the value of your dental practice drop during a transition.
How it can happen
This is especially common when the practicing dentist decides to scale back but is not ready to hang up their hat just yet. By cutting back their schedules, only taking certain cases, reducing their hygienists’ hours, and so on, they are seeing their production and, therefore, their collections decrease. Considering a practice’s value is heavily dependent on the average of the last three years, with the most recent year being weighed heaviest, this reduction will result in a significant drop in value.
Consider updates
Just like you would make curb appeal or structural updates to your house before putting it on the market, you might want to consider the same for your dental practice before selling. Not only will necessary updates make it more appealing to a potential buyer, but all these pieces will also help increase your value and practice appraisal for the bank. Changes might include expanding services, updating equipment, cosmetic changes, and office relocation.
Keep an eye on the bottom line
Paid advertising, guerilla marketing, associates to network with, and other marketing opportunities will all add exposure to your practice before putting it on the market, while tracking your records over multiple years to show a potential buyer and your bank. A potential buyer will also want to know the cost associated with running your business, so now is the time to assess where cuts can be made, including electric bills and any staffing changes, as long as they don’t affect your top-line revenue or your patients.
Plan for the transition type
Strength in numbers lies in the economies of scale. Consider selling to, acquiring, or merging with another practice to grow your bottom line exponentially, whether or not you’re considering staying on with the combined practice.
What’s next?
Contact the experts at Professional Transition Strategies to help keep your transition on track.
The original blog post can be found on the PTS website.