If you’re a few years out from retirement, now is the time to start preparing your practice for an eventual sale. Taking the time to thoroughly prepare will streamline the transition for everyone, helping improve patient and staff retention. Careful preparation may even result in a higher valuation, as your practice will appear well cared-for and more organized.
And if the unexpected should happen and you’re forced to sell sooner than planned, you won’t be starting completely cold.
Document and improve your practice processes and finances
Potential buyers will want to know that the practice runs smoothly. The best way to demonstrate this is to document how things work: roles, responsibilities, insurance and collections policies, and so on.
Also document things like average treatment wait type, new patients per month, production reports (by procedure), referral patterns, etc. This information will help you present a clear picture of a successful, lucrative practice that’s worth top dollar.
Invest some time in organizing your books. I’ve seen sales fall through when sellers couldn’t produce requested information quickly, as it casts doubts about how well the practice operates. Work with an accountant to get your financials in order, then update the files periodically so you’re ready when a buyer asks.
By spending time now to prepare your practice, you’ll be ready to go when the time is right.
Adjust your fees
When was the last time you reviewed your fees? Review the ADA’s Survey of Dental Practice Fees (free to ADA members) to make sure you’re in line with your local market.
Smart buyers look at how a practice’s fees stack up against nearby offices. They don’t want to have to raise fees immediately after a purchase, as doing so can anger and frustrate patients. Plus, market-rate fees give them a better sense of the practice’s true opportunity.
Your long-term patients will tolerate a fee increase from you better than the buyer. And if you discover that your fees are significantly below market, you can use the next few years to gradually increase fees until they are more appropriate
Build a website and social presence
Today’s buyers want a practice with a clean, modern website that’s easy for patients to find. This is especially true in more competitive markets where patients begin their search for a dentist by using Google.
A website doesn’t need to be elaborate. A simple format with just a few pages can do the trick. Think like a potential patient: what information do you need to consider a practice? A brief description, nice photos, hours, location, accepted insurances, etc.
Then devote a little space to your practice’s personality. Detail anything the practice does for the community, such as sponsoring youth athletics or marching in your town’s parade. Include staff photos and short bios.
If you’ve got them, include a few patient testimonials. Take a look at any Yelp or Google Reviews that may already exist. If they’re positive, add them to your site! If they’re negative, try to understand why.
Also consider creating a Facebook or Instagram page to share practice photos or reminders.
You can work with an ADA Member Advantage partner like PBHS to help you build or update your website presence, or find a local web agency. And ask around. If you spot a colleague’s website that looks great, ask who built it.
Clean, declutter, and refresh
Take an honest look at your practice, from the waiting room to the operatories. When was the last time you painted? Are your chairs held together by duct tape? And what’s lurking under the cabinets? Don’t overlook your parking area or landscaping.
Just like when approaching a home sale, you want your practice to be fresh, clean, and organized. You don’t have to spend a lot of money. Minor updates, like those detailed in 5 Ways to Boost Your Practice’s Curb Appeal, can go a long way. If you’re unsure what you need, ask your staff or a trusted friend to provide an honest opinion.
Once you’ve cleaned, decluttered, and refreshed, hire a local photographer to come in for an hour and take some shots. Have them take individual staff and team photos, too. These will look great on your updated website and can help attract new patients!
Look at your collections
Dental practice collections should run no less than 98% of adjusted production. If your collections are falling short, now is the time to tighten things up. Aside from immediately increasing your bottom line — and eventual purchase price — solid collections are one of the number one things buyers look for when evaluating practices.
Buyers look at collections to confirm that they will get paid for the work that they do. They also use collections to gauge how well the office runs and how committed staff are to the practice’s success. After all, an engaged staff person pays attention to the practice’s productivity and understands how important it is for the practice to be paid in a timely manner.
Evaluate equipment needs
If you have equipment that’s nearing the end of its life, go ahead and replace it so that you can enjoy using it for a couple of years before a sale. That said, you don’t need to rip out and replace everything.
However, know that today’s early- and mid-career dentists expect digital radiography. If you’re still using analog film, plan to upgrade sooner rather than later.
If retirement is a few years out, don’t get overwhelmed by all these steps. Instead, create a plan for yourself to knock them out over time. Little by little, your practice will be in tip-top shape and ready for a great buyer.
Or maybe you're ready to be done with practice ownership, but you're still enjoying practicing dentistry. Check out How to Sell Now and Retire Later for alternate paths to retirement that might suit you perfectly. And don't forget to Plan for Life After Retirement!
If you’re ready to find the right person to eventually take over your practice, create your free ADA Practice Transitions profile today. We can help you explore your transition options, such as an Associate-to-Ownership or Mentorship-to-Ownership pathway, that can ease your way into retirement. When you join ADAPT, you’ll get resources that help you articulate your goals and develop a plan, then find the right person for your practice, your staff, and your patients.