By Patti Sooy, RDH, BS, VP of Business and Program Development
“I never want to hear people say, ‘I’m too old for that.’ You are never too old to learn new things.”
– Cynthia Hutchins
Do you have a retirement plan? If you’re within ten years of wanting to retire, now is the perfect time to take a good look at your numbers and get an exit strategy in place. “Wait a minute,” you might say. “Isn’t ten years a long way away?” Not when contemplating your exit strategy and sales options for selling your practice at a nice profit margin. This takes time and planning to make sure everyone comes out a winner- you, your team and the purchaser. Granted, we at Productive Dentist Academy have worked with doctors who have cut that time to much less, we have been successful in achieving a fruitful transition. However, that requires extraordinary effort from the doctor.
As you start thinking about your retirement plans, about seven to ten years out is a good time frame to strategize and maximize the potential of your office. It’s all about buyer appeal. Typically, doctors who want help getting themselves ready for retirement need to increase collections, which is driven by productivity. Their systems may be less than stellar, and they say something along the lines of “I’ve had these same people working for me forever. I’m not inspiring them anymore to grow and I’m not sure what to do.” The good news is, a PDA business development coach does!
The Numbers Game
There are a few reasons doctors don’t come into business coaching until they’re closer to retirement. Sometimes they need a fast sale because of health reasons. Whether they’re senior doctors or mid-career and have health issues, they come to us in a little bit of a panic since they have such tight requirements. Other times, I have doctors say their practice has been fine, it’s cruising along. They may notice that collections have plateaued or gone down. AR might be a little out of control, meaning numbers are slipping and they are not getting paid for what they do. This also shows a buyer that the patients are trained that they don’t have to pay their bills. Any metric that is supposed to be growing but is instead showing a downward trend needs to be addressed before a sale transition.
When doctors express interest in a practice sale, we examine quite a few numbers:
The big point is, you want your numbers trending up. When doctors come to me in panic-mode, what they don’t realize is all those numbers above are related to systems. Production can be increased in many different ways. It’s all about focus. How you schedule, what you diagnose, your service mix options, case acceptance and financial options conversations can all make a big impact on productivity increase.
If your new patient numbers are trending down, you must look at:
Every office appreciates patient referrals. What are you doing to give them a great dental experience? If your new patient flow is going down, you’ve got to look internally first, then look at what your budget is. Most potential buyers will want to know that your current patients are coming back to you and that you are attracting new patients that appreciate good dentistry.
A Look at Location and Facility
Many dentists overlook their location when they make their retirement plans. Is your practice in a location that provides its own parking, has good traffic flow and 24-hour signage? Facility appearance is also very important. Is everything up to date? Is the paint neat and tidy? Is the landscaping thriving? What is your technology like? Does the carpet and flooring look new and clean? Is your front office welcoming?
A well-presented facility can either be a real incentive for potential buyers, or off-putting. Some doctors might look at facilities that need an update and be fine with that. Others won’t want to have to put in the effort to redo and update on office in addition to new ownership.
You might think, “Yeah, I don’t want to update all this stuff just to sell it. Let the buyer do that.” And that strategy might be okay. But, what if you need to attract an associate who you hope to sell your practice to down the line? The more up to date you can be on service mix, technology, equipment, furniture, instruments, front desk appearance and reception area, the better you will look in the eyes of a potential associate or buyer. Remember: whatever is attractive to patients will be attractive to a buyer.
Selling Your Practice to the (Right) Associate
About 50% of late-career doctors I’ve worked with, have an associate they are hoping to eventually sell to. There can actually be a big difference in planning the last years of a dentist’s career when a doctor already has an associate, verses one who is still working solo. First, the doctor who doesn’t have an associate might be a little more panicked, because they don’t have somebody that they can shift some responsibilities to, or partner with, or sell outright to. I’ll address this problem a bit later.
If you have an associate, you’ve usually had a conversation around partnership or full ownership at some point. Some associates are not interested in owning. They are completely content working for a paycheck. Be very clear about what you are looking for as the current owner when you interview and hire another dentist. If they are interested in purchasing the practice discuss a timeline and when that opportunity will be available. Sometimes there are productivity goals attached to purchasing. Leadership can also be an important trait. The team needs to feel that this dentist will continue leading in a positive way and take great care of both the team and the patients. Make sure you know they’re a good fit for this practice? When you retire, will they be successful on their own?
Let’s say you have an associate who has been working with you for three years. They seem to get along with the patients, but don’t seem to be super driven or interested in taking on any more responsibilities. At that point, you may need to mentor them in case presentation or to take on more responsibilities. If they want to put in their hours and go home, they may not be the best choice. Remember, you often have to groom associates for business ownership. It’s not uncommon for doctors to approach us for coaching and assistance with vetting associates as potential future business partners or buyers.
Finding the (Right) Associate
Sometimes it’s hard to tell when you hire an associate if they will end up being the right personality to buy your practice in five or ten years. It really starts during the interview. When a doctor is looking for a specific type of associate – like one who will be ready to own the practice down the road – we are able to support the doctor in the interview process. Business coaches are trained in what to ask, what to watch and listen for and how to read the doctor during the interview. It doesn’t stop there, however. If the doctor chooses to hire that doctor, they need to be willing to learn and grow as an employee first. The team can be a big help.
For example, I helped a practice just recently who had their associate choices down to two prospective doctors: One of the owner doctors was leaning toward one applicant and the other owner doctor and spouses were leaning toward the other. When we reviewed all the specifics surrounding what the owners wanted in an applicant, we were able to have a better definition of a personality type we were looking for. We had each applicant take a personality survey that told us how they best work with others and how they would interact with the owner doctors and their individual personalities. After evaluating the results, it was pretty obvious which direction the office should go.
The fact is you may go through a few associates before you find the right one to buy your practice. But if you can get the right person in from the beginning, you’ll save yourself time and stress later. Unfortunately, some doctors who are looking for an associate get frantic. They may hire a doctor and trust they’re going to do a great job, they don’t look much at personality. They also choose not to mentor and train. This is a big mistake. Make sure you are clear about your expectations right away and have meetings surrounding responsibilities and treatment philosophies. A business coach can help with the hiring process, training and getting the doctors and team members on the same page. Your goal should be to find someone that is a good fit with your practice goals.
I Need Out…Now
One of the most challenging scenarios a doctor can find themselves in is wanting to be out of dentistry quickly. I’ve had doctors share with me that they are burned out. They just want to be done, but are not sure of their exit options. If you’re in a panic, that’s OK! You just have to refocus and get dedicated to the process of getting the practice ready to sell. It’s very doable! In fact, if you’re committed, you can double your practice in 18 months with the help of a good business development coach.
For doctors who are very close to retirement or need a quick out for health reasons, I usually tell them we can’t come in, wave a magic wand and make this better. But we can help them reach the goals they want and set a strategy if they are super committed to the process. They must work hard to make the changes happen. Having their team on board is an absolute must because if they aren’t, it’s going to be a much, much slower process. So, yes, you can double your practice in 18 months and sell, but you must be 100% dedicated to making that happen.
It’s kind of like training for a marathon. If you find a training schedule and stick with it, race day will be much more predictable. If you only train a little here and a little there- guess what- race day may be incredibly tough. Same with losing weight or training to climb mountains. Whatever it is, whatever you set your goal on, if you’re committed to it, you’re going to reach it faster when you commit to the process. When a business coach makes a suggestion based on your goals and you choose not to implement that suggestion, it will be difficult to get it done in the time line you set. You’ve got to be open to changing some things and then actually do it. Especially if you want to achieve aggressive goals.
A Plan for the Future
If you walk away from this article with anything, I would hope it would be the understanding that you need to start planning for retirement 7-10 years before you’re ready to walk out of your practice for the last time. The more time you give yourself, the fewer stress points you’ll have and the easier and more enjoyable you’ll make your last years in practice. But I also hope that if you’re close to retirement you know that there is hope for you getting your numbers up if you’re willing to put in the effort.
Whatever your goals are – fully retire, work one to two days per week, etc. – call on a Productive Dentist Academy Business Development Coach. We can help you achieve your specific goals so you have the retirement you want, while having the peace of mind that you are leaving the practice you worked so hard to build thriving in the hands of the next generation.
As I mentioned at the beginning of this article, many dentists who are in late-career are burned out or unsure of their next steps. Partner with a business coach to help you run numbers, make a plan, find the right people, and set yourself up for an easy transition. Fill out the form below to request your Complimentary Practice Assessment and see how a PDA Business Coach can help you accomplish your goals.
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