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Finding and Funding Your Exit: Tips to Prepare You for Retirement Jay M. Geier

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Flight attendants begin every flight by pointing out the exits. They do not wait until there is an emergency to tell you how to get off the plane. Their job is to prepare you at the beginning of the flight in case of an emergency. When it comes to dentistry as a profession, there are many helpful guides pointing out the “on-ramps” but it’s up to you to find your own exit.

Most dentists spend a great deal of time planning their entrance, but leave the exit up to chance. Your exit strategy is a significant part of your overall plan. At the start of your career, you were ambitious and had a clear vision of what you wanted to achieve. You knew the kind of dentistry you would practice and envisioned the kind of practice you would build.

Your dreams also included a goal for financial health and the kind of lifestyle you would have. Yet, nine out of 10 dentists I work with do not have clarity about their exit strategy. The reason they don’t have clarity is because they cannot visualize their exit date. They cannot visualize exactly what they need, or what it’s going to take to be at peace with the decision.

British playwright, Tom Stoppard said, “Every exit is an entrance somewhere else.” Leaving your practice is not an end, but the beginning to another part of your life.

Reverse Your Shrinking Margins
acquire new patients each year. However, at some point your practice might plateau where growth becomes flat. While the growth caps, your overhead does not. Administrative expenses, insurance, payroll and vendor costs all continue to increase, while reimbursement might actually decrease. Added to this, your personal expenses also continue to rise. A bad month or two can result in major stress and tough decisions about reducing expenses. You start cutting out things you shouldn’t like staff incentives and marketing. The good news is that there is a way out.

In the early days of growth, you are building your practice and an exit strategy is not top of mind. In the U.S., traditionally we work a certain number of years funding our retirement along the way through pensions, and other investment vehicles. We reach a certain age and we retire.

You earn a good living and assume that you will be able to retire with ease, but many dentists struggle with leaving the practice because of money. They have no idea how to answer the question of how much is enough. When you cannot answer how much is enough, the answer is always one more dollar.

Your Three Categories
The first step in planning your exit strategy is to review where you are now. To do this, let’s begin by examining three key categories – cash, real estate and your practice.

Cash - Debt = Total Cash
Cash is IRAs, retirement plans, savings, mutual funds, stocks, bonds, anything that is a cash equivalent. Add up all of your cash and then subtract your debt to obtain your total. Do not include mortgage debt or lease payments as they will be paid out of the business.

Real Estate Current Value - Real Estate Debt = Equity
The second category is real estate and we always want to assess current value rather than inflated value. In other words, this is the amount you would receive today if you sold the property. This number should always reflect present day value. Subtract your debt from your value to obtain your equity.

Value of Your Practice
Your practice is probably worth less than you believe. The typical formula for business valuation is three to four times EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization). This is in a good market. We are currently seeing one to two times at best.

EBITDA x 3 (or 4) = Value of Your Practice

Get Your Net Income Up!
Typically, when we are looking at an exit we choose an amount of money and age and begin making the monthly payments to reach that goal. If you want to have $5 million by the time you are 60, and that is 20 years out, you will need to save $21,000 per month for 20 years. This assumes no interest. So it will get you to the number for sure.

Now take your real estate debt and do the same thing. Pick an age and divide your debt by the number of years you have left, divide it by 12 and come up with a mortgage acceleration payment. If you want to exit, you must pay off your primary home and/or your primary office if you can. Our main concern here is paying off any home you intend to keep.

Let’s stop for a moment and consider an example. You have $500,000 in cash, $500,000 in equity in your primary home and $500,000 in debt on your home. You sell your practice for $600,000.

At this point, you might realize that you do not have enough cash to pay off your real estate debt, and if you sold your practice, you would net only one to two years of income from the sale. Ouch! Income is very important to wealth accumulation.

In order to sell your practice and make your exit, you must have a great deal of cash and all of your real estate paid off. It’s been said that cash is king, so it’s obvious you need to increase your income in order to meet that magic liquidity number for exit.

It is possible to spend one-to-two days in the practice and produce the income you want. There are two economic models and one of the reasons your numbers are not where you want them is because you’re operating in the wrong model. The first economic model is the “time and effort economy,” in which you work for a certain amount of years and then you stop and live on your retirement income. I also refer to this as the “rat on a wheel” model. This is what most management companies teach. In this model, you are making a nice living compared to most people. However, you also have a lot of stress, expenses and simply aren’t living the lifestyle you want. You work four or more days a week. You take very little time off and you may go on one vacation a year, that’s if you’re lucky.

Now, let’s talk about the results economy. In this economy, you remove the limits from your income and accumulate what you need in the years that you have allowed. The secret to moving into this economy lies in your practice.

No matter where you are today, with commitment you can turn your practice into a results economy model in three years. Time and effort relies on you, but results rely on maximizing the potential of your practice and you do that by investing in the growth of your practice. When you move to a results economy, you are also able to step back before you completely step away. You can work a few days per week, and take unlimited vacations because your practice is producing the level of income needed to reach your goals. You are not the single producer.

Building your practice is going to create cash and enable you to move from time and effort to results. It is possible for you to spend one to two days in the practice, and produce the income you want. It’s just a matter of whether you’re willing to accept it as a reality or not.

Let’s assume that you have 15 years left until you want to retire to accumulate cash. You are saving $5,000 per month and at eight percent in 15 years you will have $1.7 million. This of course does not include taxes. That number is not enough for most of us. For most, $20,000 per month begins to get us in the ballpark. This would give you $7 million in 15 years. You would need to save $240,000 a year, or more if you are older, to reach that goal. With your schedule, and current level of resources, can you achieve that number? If you answered “No!” you are not alone. Good news – you can get caught up.

Work “On” Your Practice, Not “In” Your Practice
By now, you have realized that in order to exit, you are going to have to make some significant changes. The time and effort economic model is flawed. Your results are limited to your own efforts and incapable of expansion. This model will leave you feeling trapped and frustrated. The results economy is something very few consultants talk about as many of them are stuck in the same time/effort cycle.

Results are not limited to your time and effort. Building your practice allows you to scale up without increasing your personal output. You have a choice of limiting your capacity, which will limit your income, or adding capacity and growing your income.

Your practice is a golden goose, but it needs to be nurtured and fed to keep producing eggs. Feed your golden goose by making needed investments into equipment, space and human capital. Growth requires you to focus on the business side of your practice.

Yes, this does require a change in mindset. Be open to innovation and change. In the past, you might have wanted a one-person practice, but you alone cannot produce enough to fund your exit. Hire an associate. Have you noticed the practices around you that are adding doctors and locations? The math is simple, increasing capacity increases earnings, assuming of course that it’s done correctly.

You can’t grow if you’re “doing dentistry” all day. When you first started your practice, you spent time working in your practice. You were focused on the clinical side and delivering excellent care to your patients. It is now time to work on your practice, and make decisions that will grow your greatest asset. You cannot stop the ticking of the clock, and like it or not change is going to happen. You can accept forced change or you can take control of the change. The choice is up to you.
Author’s Bio
Jay M. Geier is a speaker, consultant and the president and founder of the Scheduling Institute. He helps his clients reach new levels of success and create the lifestyle they dream of using their practice as their vehicle. New clients begin working with Jay by enrolling in the Scheduling Institute where he guarantees a 10 to 30 percent increase in new patients by leveraging a practice’s greatest asset – staff. He offers private coaching to a smaller, select group of his clients. Jay can be contacted by e-mailing jaygeier@schedulinginstitute.com, by calling 877-216-3220 or by visiting www.schedulinginstitute.com.
 
Dentaltown Magazine
September 2025
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