There’s no crystal ball to tell you when is the right time to make any major changes to your dental practice, but there are some time-tested methods that can help point you in the right direction. “Your current actions will affect your future practice value,” Professional Transition Strategies Mergers and Acquisitions Consultant Matt Zolfo said in an article for Dental Review. Whether you operate a solo practice that you plan to sell when you retire, plan to open new locations, want to expand operations at your current practice, have an interest in joining a group practice through a merger or acquisition, or already know you want to sell to a dental service organization (DSO), the right plan depends on your short- and long-term goals. Either way, it’s best to go into a transition from a position of financial strength so you can maximize value, and for many dentists, that means scaling up or scaling out of their practice. Here’s how to know in which direction you should be heading.
Plan for growth
Simply put, more practices doesn’t necessarily mean more value. However, if growth is in your future, put systems in place early for compliance, marketing, equipment, facilities, maintenance, policies, procedures and finances so, in theory, it’s as easy as cutting and pasting. Yes, the laws of supply and demand are driving up transaction values in the marketplace, but first consider if your anchor location will get more traction than any additional locations based on area competition and demographics, which will have an effect on valuations.
Improve practice productivity
Seeing more patients and doing more work for the patients you serve are two tried-and-true ways to improve productivity at your dental practice. This can best be accomplished by maximizing efficiency by reviewing your overhead, including existing equipment, infrastructure and staffing ratios. If looking to attract more patients to your dental practice, consider extending hours by providing early, late or weekend options, if there is demand.
Focus on the numbers
Dental practices are either growing or declining — there’s no middle ground. As always, you’ll want to sell when production is high so it’s important to know where you stand at any given moment to know how far out you are from a possible transition. Make decisions with the end in mind because the moves you make now will affect the value of your practice when it’s time to move on, starting with the right team of advisors.
Rely on data
You don’t (and shouldn’t) have to make any major changes to your dental practice without first looking back on the data you’ve collected. Using data from systems to create future policies and procedures is an efficient way to build a business, as well as where and how to expand. An experienced dental practice broker can add to this equation to help make the soundest business decision possible for your specific scenario.
Avoid burnout
Above all, establish a quality-of-care threshold that works for you so you can achieve the right work-life balance. It’s easy to get in over your head when dreaming of ways to expand your dental practice, which most often leads to burnout. With every plan for expansion, your role will change, whether that’s for the better or worse. If you find yourself needing help, there’s no shame in hiring extra support staff with more overhead or even considering a sale to a DSO.
Bottom line
There’s no blueprint for planning out your personal and professional future. Contact the experts at Professional Transition Strategies to figure out the best plan for moving your dental practice forward.