There comes a moment in all our lives when we start to consider the future. This moment arrives at different times for each of us and is sometimes driven by particular circumstances meaning that the decision is taken out of our hands. In an ideal world most people would like to be in a position in which they plan for their future with an element of certainty.
Although dentists enter their profession for many different reasons many of them become business owners. One of the key benefits of running a small business is that it enables the principal or practice owner an element of control over their own destiny. For many, this ability to self-manage their own circumstances is of great value, particularly when it comes to making important life decisions.
An ‘exit strategy’ is a term often used by accountants and business consultants and although it has a suggestion of finality about it, it does not necessarily refer to the time when you leave the profession for good.
An exit strategy is just as applicable whether you are selling your practice, becoming involved in an associate buy-out or simply choosing to do something else.
As we all know from our own domestic circumstances, when we come to dispose of an asset, such as a house, we are always advised to build in as much value as possible prior to the sale, and the same is true of a business.
Rule of thumb suggests that in order to gain the maximum possible return this kind of planning should begin at least five years before an exit is due, and in most cases a lot earlier.
The plan to ‘build value’ requires an understanding of which aspects potential buyers will value. In many ways the value of a practice is a little bit like beauty – it’s in the eye of the beholder, or in this case, the eye of the purchaser. However, there are certain things that can be done to build inherent and acknowledged value into your business.
Patients
Patients are the lifeblood of every practice – new ones and old ones, but most of all loyal ones. They all count, and the more you can prove a loyal and long standing patient list the more value you will have in your practice. A dental plan is the perfect vehicle to retain and reward loyal patients who are regular attenders. By enabling patients to budget for their dental care on a monthly basis you can encourage attendance and improve their oral care in the process, thereby cementing a loyal patient base as an asset of the practice.
A full appointment book
When a prospective purchaser, whether external or from within your own practice, considers the viability of your business they will look at your future appointment book to assess the types of treatment your practice delivers and assess where opportunities lie.
Regular income
Peaks and troughs in revenue are a fact of life for many dental practices. In particular, income can fall when holidays are taken. Practices with patients on dental plans receive payments every month via their plan administrator, which not only eases cash flow, but also evens out the often unpredictable nature of fee-per-item patients. The ability to demonstrate a consistent and regular income will give a prospective buyer confidence in the future and enables the seller to demonstrate a solid business foundation.
The value in your brand
Brand value is becoming an increasingly important asset in the ever competitive dental market. A strong brand identity that is consistent through all aspects of practice communication undoubtedly adds worth to the practice itself. This is particularly true if the brand is not directly associated with the individual practice principal. Although in small professional businesses it is common for the name of the principal or partners to be used as the name of the business, this can make it more difficult to transfer the full value of the brand to new owners. As a result, those practices with most ‘brand value’ are those which have developed an image that is independent of individual personalities.
Strong financial base
Naturally, financial stability is a key element to be able to demonstrate and this is greatly bolstered by the support of an experienced third party who is an expert in their field. This is particularly true when dealing with financial matters. A central element of dental plan administration is the processing of patients’ direct debit payments, as a practice owner you need to ensure that this is in safe hands. A proven track record and robust business processes are exactly the sort of evidence that any prospective owner and their advisors will want to see.
A practice branded dental plan can play an important role in helping dentists achieve the true value for their practice. Above and beyond the month on month benefits to the practice and patients alike, dental plans are a useful tool to demonstrate and provide evidence of patient loyalty, reliable income and financial stability – all the things in which any prospective buyer is most interested.
Whatever stage of your practice life you find yourself at it is never too early to start thinking about building value into your business. Making the right choices early on will lay the foundations you need to achieve your long term goals and ultimately realise your practice’s full potential.