What can you do now to make your dental practice more profitable now, and more valuable in the future? In our next series of blog posts, we will explore the CoreValue framework of value drivers — a set of 18 factors that impact the value of an enterprise. All of these value drivers make your dental practice more profitable now and increase its value when you sell. This week we’ll examine Barriers to Entry.
How easy is it for someone to enter your market and compete with you? A high barrier to new entrants reduces competition, which leads to a potential for high profitability. A high barrier to entry reduces the risk for the buyer, so a buyer will gladly pay a premium for such a business, particularly if it’s profitable.
The specialized training and education required to become a dentist, plus all the expensive equipment creates a high inherent barrier to entry for dental practices.
But are there other ways to further raise the barrier for competitors? Rose Stabler at Divestopedia outlines the ways a business can make it harder for a new entrant to compete. We’ll discuss three that apply to dental practices.
Customer Goodwill
Do you get a steady stream of referrals from delighted patients? When your patients love the way they’re treated and the quality of care from your office, they can’t help but tell family and friends about you. The patient experience includes every detail in every interaction they have with your practice. Is it easy to find your phone number and call for an appointment? What about online appointments? How do your staff members answer the phone and greet patients? Is your waiting room warm and inviting?
Business Model
Your business model includes all the systems you’ve set up to run your practice. A well-run practice with well-designed systems becomes a turn-key operation for a successor, and commands a premium when sold. This includes not only the systems for patient experience, but your back office operations as well. Is your bookkeeping done efficiently in the cloud, or do you still rely on manual data entry?
Market Domination in a Niche
A specialty practice that’s the only one in town is more difficult for competitors to replicate. However, the specialized training required combined with proprietary secrets of your own may make it difficult for you to find a successor.
What’s the barrier for your practice?
Every practice can find ways to differentiate from the crowd to create its own barriers to compete. Call our office today and we’ll discuss the ways you can create a unique and valuable practice!
Eric Burgmaier, CPA, CVA is a Certified Valuation Analyst and can help you build a valuable and profitable practice. Call our office today at 505-299-8383 and talk to Eric, Matt Stafford or Melissa Ackerman about steps you can take today to put more dollars in your pocket now and throughout the life of your practice! Stay tuned to learn how to transform your practice into the best and most valuable it can become!