Everyone would love to sell their practice when it is at it's peak value but the fact is that this is not usually the case. Most practices are sold when they are past their prime. So the question is, €How do I get my practice to it's maximum value now.€ There are several ways.
Let's begin by thinking like a prospective buyer. If you were a buyer, what would you like to see in a practice? You might like to see:
€ A healthy flow of new patients
€ Low overhead
€ A high number of patient charts
€ A high net profit
Based upon these assumptions, let's discuss a few simple, actionable strategies that most any practice could choose to employ to improve in these areas. First we will discuss getting new patient numbers to a higher level.
Strategy #1: Patient €mining€ services. There are numerous companies out there that will €mine€ your database of patients to reactivate as many of them as possible. The one that I am familiar with does it with a risk free guarantee. There are always quite a few patients in almost any practice who have slipped through the cracks so to speak. Staff may have a hesitance to contact inactive patients so a third party is a great way to do this. Patients may have left your practice and found that the grass was not really greener on the other side but are now hesitant to return to your office. There are also patients who have not been in for a long time who simply need to be reminded. Services like this let them know that they are still welcome and it gives them a comfortable invitation to return.
Strategy #2: Use a coupon. We live in a time when coupons and specials are everywhere! And there are more avenues than ever to get a coupon to a customer. Some of these are are Facebook, Twitter, Groupon, Living Social and your practice website. If you could get a new patient into your practice without it costing you anything, would you do it? Most dentists would certainly say yes. Usually the best way to do this is to run a special that covers your costs but does not result in any profit. Common specials might be prophy, exam and fmx/ or pan at cost with an option for custom whitening trays. Coupons should always specify that they may be used by new patients only.
Strategy #3: Send out postcards in your area. There are many services who can design and mail out custom postcards to families in your area. Check with different companies and see if they offer any guarantee of a return on investment. These companies want to sell you their service. If they do not offer a guaranteed ROI, you can negotiate to get one or find another company who will. Next let's discuss overhead.
The first thing buyers look at is net profit, so in preparing your practice to sell it is imperative that you get your overhead under control. A few ways to do this are:
€ Shop your supplies
€ Participate in free, local CE
€ Do not make any large expenditures unless absolutely necessary
€ Find a qualified independent dental repairman
€ Look at refinancing any loans you may have
€ If you are a member of organized dentistry, look into your National, State and local dental societies to see what benefits they have negotiated on your behalf.
Strategy #1: Shop your supplies. If you are used to buying all of your supplies from the same vendor without examining their pricing, you may be surprised to find that you can save a lot of money by doing a little shopping. Many online vendors have arisen in the last few years who can offer much lower pricing on many items. These are not cut rate items. I am talking about identical items that are as much as one third the price of the big supply houses. This is especially true of non-perishable items. Some of the newer national or semi-national suppliers can also offer very substantial savings.
Strategy #2: Free CE. Doing local, free (or nearly free) CE may not be as much fun as learning how to place implants in Cancun but it's a lot cheaper. Dental companies sponsor a ton of informative CE. Pick companies whose products you trust and ask about their upcoming CE offerings. If you do pay for CE, make it to add a service to your practice that you currently do not provide.
Strategy #3: No large expenditures. Making large expenditures to make your practice look more €modern€ is almost always a bad investment. Get what you have in good working order to maximize the value in what you already own.
Strategy #4: Find an independent repairman. My independent repairman saves me at least $10K every year. Big supply houses tend to be somewhat biased when it comes to repairs. Let's face it, they would much rather sell you a new one than fix what you already own. I had an x-ray unit that was deemed unrepairable by our (former) supply house technician that was repaired by our independent repairman with the replacement of a single set screw. My bill went from $4000.00 to $50.00. Working with people who do not have a built in bias can improve your bottom line substantially.
Strategy #5: Refinance your loans. Interest rates are great today but they are seemingly on their way up. If you have loans that are at a substantially higher rate than what you can get today, you should look into doing a refi either with your current lender or others.
Strategy #6: See what savings can be had via organized dentistry. You would perhaps be surprised at the discounts that have been negotiated by your state and national dental societies. There are bargains to be had on most of the services you use in your practice. Call or visit your society's website to see how your current vendors stack up.
I hope these strategies will be helpful to you in maximizing the value of your practice prior to your future practice sale. In our next article, we will discuss all of the information you will need to assemble to create a beautiful practice portfolio. Talk to you soon.
Let's begin by thinking like a prospective buyer. If you were a buyer, what would you like to see in a practice? You might like to see:
€ A healthy flow of new patients
€ Low overhead
€ A high number of patient charts
€ A high net profit
Based upon these assumptions, let's discuss a few simple, actionable strategies that most any practice could choose to employ to improve in these areas. First we will discuss getting new patient numbers to a higher level.
Strategy #1: Patient €mining€ services. There are numerous companies out there that will €mine€ your database of patients to reactivate as many of them as possible. The one that I am familiar with does it with a risk free guarantee. There are always quite a few patients in almost any practice who have slipped through the cracks so to speak. Staff may have a hesitance to contact inactive patients so a third party is a great way to do this. Patients may have left your practice and found that the grass was not really greener on the other side but are now hesitant to return to your office. There are also patients who have not been in for a long time who simply need to be reminded. Services like this let them know that they are still welcome and it gives them a comfortable invitation to return.
Strategy #2: Use a coupon. We live in a time when coupons and specials are everywhere! And there are more avenues than ever to get a coupon to a customer. Some of these are are Facebook, Twitter, Groupon, Living Social and your practice website. If you could get a new patient into your practice without it costing you anything, would you do it? Most dentists would certainly say yes. Usually the best way to do this is to run a special that covers your costs but does not result in any profit. Common specials might be prophy, exam and fmx/ or pan at cost with an option for custom whitening trays. Coupons should always specify that they may be used by new patients only.
Strategy #3: Send out postcards in your area. There are many services who can design and mail out custom postcards to families in your area. Check with different companies and see if they offer any guarantee of a return on investment. These companies want to sell you their service. If they do not offer a guaranteed ROI, you can negotiate to get one or find another company who will. Next let's discuss overhead.
The first thing buyers look at is net profit, so in preparing your practice to sell it is imperative that you get your overhead under control. A few ways to do this are:
€ Shop your supplies
€ Participate in free, local CE
€ Do not make any large expenditures unless absolutely necessary
€ Find a qualified independent dental repairman
€ Look at refinancing any loans you may have
€ If you are a member of organized dentistry, look into your National, State and local dental societies to see what benefits they have negotiated on your behalf.
Strategy #1: Shop your supplies. If you are used to buying all of your supplies from the same vendor without examining their pricing, you may be surprised to find that you can save a lot of money by doing a little shopping. Many online vendors have arisen in the last few years who can offer much lower pricing on many items. These are not cut rate items. I am talking about identical items that are as much as one third the price of the big supply houses. This is especially true of non-perishable items. Some of the newer national or semi-national suppliers can also offer very substantial savings.
Strategy #2: Free CE. Doing local, free (or nearly free) CE may not be as much fun as learning how to place implants in Cancun but it's a lot cheaper. Dental companies sponsor a ton of informative CE. Pick companies whose products you trust and ask about their upcoming CE offerings. If you do pay for CE, make it to add a service to your practice that you currently do not provide.
Strategy #3: No large expenditures. Making large expenditures to make your practice look more €modern€ is almost always a bad investment. Get what you have in good working order to maximize the value in what you already own.
Strategy #4: Find an independent repairman. My independent repairman saves me at least $10K every year. Big supply houses tend to be somewhat biased when it comes to repairs. Let's face it, they would much rather sell you a new one than fix what you already own. I had an x-ray unit that was deemed unrepairable by our (former) supply house technician that was repaired by our independent repairman with the replacement of a single set screw. My bill went from $4000.00 to $50.00. Working with people who do not have a built in bias can improve your bottom line substantially.
Strategy #5: Refinance your loans. Interest rates are great today but they are seemingly on their way up. If you have loans that are at a substantially higher rate than what you can get today, you should look into doing a refi either with your current lender or others.
Strategy #6: See what savings can be had via organized dentistry. You would perhaps be surprised at the discounts that have been negotiated by your state and national dental societies. There are bargains to be had on most of the services you use in your practice. Call or visit your society's website to see how your current vendors stack up.
I hope these strategies will be helpful to you in maximizing the value of your practice prior to your future practice sale. In our next article, we will discuss all of the information you will need to assemble to create a beautiful practice portfolio. Talk to you soon.