Regardless of where you are in the selling process, you can never start too early. Consider the following 13 tips to improve your practice now.
1. Manage your fees. Fees should be reviewed and adjusted each year. Many resources are available to disclose treatment fees by percentile ranking for each zip code. You can add real value to your practice by getting your fees in line, provided you implement changes early enough.
2. Do a cash-flow analysis. The total value of the practice cannot exceed the ability of the practice to generate enough cash flow to make payments on the debt required to obtain the practice and provide a reasonable profit to the purchasing dentist. The net income of the practice is adjusted to add back all income to the dentist/owner and benefits paid on his or her behalf. Owner benefits include deductions for expenses not necessarily related to the operation of the practice, but which were paid out on behalf of the selling dentist.
3. Don't slack off on your production! It is common for dentists to reduce their workload and slow-down. This causes a large decline in practice value and lowers profits. It is critical that the historic growth rate of the business be met.
4. Keep new patient numbers up. Purchasers focus on this number and consider it an indication of practice vitality.
5. Get your financial records in order. Typica dental practice profit and loss and income statements fail to give a true practice overhead and profit picture. Ask your accountant to group related expenses together for the purpose of determining true profit. If you own two practices, avoid a co-mingled tax statement.
6. Reinvigorate your recall system. Hygiene income usually comprises 22 to 25 percent of the total income in a typical general practice. This percentage can climb to 30 percent or more in practices aggressively utilizing soft-tissue management procedures. Generally, the higher the hygiene percentage, the better ... unless a situation occurs where the doctor is underproducing, which articially raises the hygiene percentage
7. Review the condition of the dental patient records. Through due diligence process, a purchaser usually will review a representative sample of the patient records. The practice owner should maintain les with total treatment logs, current patient data, and easily understood treatment plans.
8. Clean up clutter and spruce up the decor. First impressions matter. Most prospective purchasers will be looking at multiple practices. Every attempt should be made to make your ofce stand out in the crowd. Continually invest in what it takes to maintain a fresh, updated office appearance.
9. Tune up the dental office equipment. Most purchasers expect to see modern equipment in the office. If they purchase a practice completely absent of modern equipment, they may adjust their offer to account for replacement of outdated equipment. The practice owner should keep equipment updated, both functionally and esthetically. Beware of substantial replacement of the equipment just for the purpose of selling the practice. This rarely warrants the investment.
10. Do not let the lease lapse. Do not let the lease lapse. Do not let the lease lapse!
11. Review your dental treatment mix. Performance of specialized dental care in a general practice can be a major obstacle to the sale of your business.
12. Emphasize fee-for-service. Dental practice purchasers place a real importance on the fee-for-service component of practice income.
13. Consult with your advisors. Practice transition consultants/advisors should be able to identify weaknesses and recommend methods to correct these. This will help you maximize revenues from the transition of your practice. - 15438
1. Manage your fees. Fees should be reviewed and adjusted each year. Many resources are available to disclose treatment fees by percentile ranking for each zip code. You can add real value to your practice by getting your fees in line, provided you implement changes early enough.
2. Do a cash-flow analysis. The total value of the practice cannot exceed the ability of the practice to generate enough cash flow to make payments on the debt required to obtain the practice and provide a reasonable profit to the purchasing dentist. The net income of the practice is adjusted to add back all income to the dentist/owner and benefits paid on his or her behalf. Owner benefits include deductions for expenses not necessarily related to the operation of the practice, but which were paid out on behalf of the selling dentist.
3. Don't slack off on your production! It is common for dentists to reduce their workload and slow-down. This causes a large decline in practice value and lowers profits. It is critical that the historic growth rate of the business be met.
4. Keep new patient numbers up. Purchasers focus on this number and consider it an indication of practice vitality.
5. Get your financial records in order. Typica dental practice profit and loss and income statements fail to give a true practice overhead and profit picture. Ask your accountant to group related expenses together for the purpose of determining true profit. If you own two practices, avoid a co-mingled tax statement.
6. Reinvigorate your recall system. Hygiene income usually comprises 22 to 25 percent of the total income in a typical general practice. This percentage can climb to 30 percent or more in practices aggressively utilizing soft-tissue management procedures. Generally, the higher the hygiene percentage, the better ... unless a situation occurs where the doctor is underproducing, which articially raises the hygiene percentage
7. Review the condition of the dental patient records. Through due diligence process, a purchaser usually will review a representative sample of the patient records. The practice owner should maintain les with total treatment logs, current patient data, and easily understood treatment plans.
8. Clean up clutter and spruce up the decor. First impressions matter. Most prospective purchasers will be looking at multiple practices. Every attempt should be made to make your ofce stand out in the crowd. Continually invest in what it takes to maintain a fresh, updated office appearance.
9. Tune up the dental office equipment. Most purchasers expect to see modern equipment in the office. If they purchase a practice completely absent of modern equipment, they may adjust their offer to account for replacement of outdated equipment. The practice owner should keep equipment updated, both functionally and esthetically. Beware of substantial replacement of the equipment just for the purpose of selling the practice. This rarely warrants the investment.
10. Do not let the lease lapse. Do not let the lease lapse. Do not let the lease lapse!
11. Review your dental treatment mix. Performance of specialized dental care in a general practice can be a major obstacle to the sale of your business.
12. Emphasize fee-for-service. Dental practice purchasers place a real importance on the fee-for-service component of practice income.
13. Consult with your advisors. Practice transition consultants/advisors should be able to identify weaknesses and recommend methods to correct these. This will help you maximize revenues from the transition of your practice. - 15438
About the Author:
Watson, Brown & Associates, Inc is a Dentist and Tax Attorney/Accountant with years of Texas dental practice transitions experience. Backed by in-depth experience, knowledge and credibility critical to making your practice transition seamless and successful. Dental Practice For Sale Dallas and Dental Practice For Sale East Texas
