A few weeks ago on our blog, we mentioned the three pillars that need to be buttoned up and maximized for a practice to survive and thrive:
Upon reviewing the blog, a fellow dental expert and friend of ours, Kyle Francis, of Professional Transition Strategies, kindly, respectfully, and knowledgeably brought to our attention The Fourth Pillar: Beginning With the End in Mind.
No matter how buttoned up, planned out and strategized your marketing, operations and finances are, your practice will not be as successful as it could be unless all options are understood, you are set to grow with a purpose and the end result is mapped out.
As your career unfolds and evolves, there are countless options down the road: merger, acquisition, expansion, outright sale, DSO, affiliate with a DSO, associateship, partnership, the list goes on. The first issue is that many dentists are not fully aware of and do not fully understand all of their options, the pros and cons of each and ultimately which one fits into their dream and long-term plan the most seamlessly.
A practice “transition” can mean many different things, but without understanding all of your options, you’re indirectly and unknowingly limiting your pool of options.
As doctors look toward the last chapter of their careers, there are several moving pieces to consider:
- Do you want to phase out of the practice over time?
- Do you enjoy the business management side and want to have a hand in it?
- What aspects of your practice are appealing or unappealing to a potential buyer?
These are just a few of the questions you can begin to ask yourself as you map out and plan your ideal exit strategy. By getting your ducks in a row as early as possible, the clearer and more seamless your path will be.
Take this doctor, for example, who purchased a practice in 2010 for $800,000 and has grown it over the past 8 years to over $3,000,000, almost entirely organically and without conscious effort. Now, this doctor is looking to sell his practice and his options are rather limited. His plan and desire was to mentor a doctor and train him into full-time, ultimately taking over the practice. However, not many single doctors at that stage in their career can afford this size of practice, nor would they thrive in a mentorship program built on this foundation. His options now are limited to an affiliate DSO or private equity investors.
There are worse problems to have, though. If this doctor would’ve mapped out his exit strategy and grown his practice with that intention, he’d have more options at this point in time.
Another often-overlooked option is a shared space practice. In locations that are more densely populated and with greater competitive saturation, this is a fantastic option. In many cases, just by joining forces, consolidating operations, minimizing facility costs, bundling overall expenses and maximizing production, an additional 14% can be made on the bottom line.
Kyle and his team have seen a $1,200,000 shared-space practice (with three doctors total) reduce overhead to 42%. On the flip side, they have seen a single doctor-practice doing $1,200,000 with overhead never dipping below 65%. By scaling strategically and making conscious business decisions, you can bring your career dream to fruition and bask in the power of being out of debt.
Kyle and his team are practice transition specialists, dedicating their lives to helping doctors maximize their careers, fulfill their dreams and live a debt-free life. Professional Transition Strategies offers complimentary consultations to effectively and realistically map out your exit strategy and end result.