You can never begin to early when selling your dental practice. Consider the next series of tips to improve your existing practice.
1. Control your fees. Your practice fees should be reviewed and adjusted each year. There are a number of resources available to you for reporting fees by zip code. This is an extremely important and valuable task, as proper management of practice fees can add significant value.
2. Build a cash-flow analysis. The total value of the dental practice cannot surpass the ability of the practice to produce a large enough cash-flow to service the debt and provide a reasonable profit to the purchasing dentist. The net income of the practice is adjusted to return all income to the dentist as well as benefits to maximize net income. Owner benefits typically consist of all deductions for expenses not related to practice operations, but which were paid to the selling dentist.
3. Always maintain your dental production. While it is human nature for a dentist to want to slow-down before actual retirement, this will result in an exponential decline in practice value as well as profits. You must maintain the same growth rate of your practice until the actual sale date.
4. Keep new patient numbers up. Purchasers focus on this number and consider it an indication of practice vitality.
5. Get your financial records in order. Most practice profit and loss statements or income statements fail to give a true practice overhead and profit picture. Ask your accountant to group related expenses together for the purpose of determining actual overhead and profit, and to include expenses benefiting the doctor. If you own two practices, avoid a co-mingled tax return or financial statement.
6. Reinvigorate your recall system. Hygiene income often totals 22 to 25 percent of the total net income in a typical dental practice. This percentage can climb to thirty percent or more in practices aggressively utilizing soft-tissue management. The higher the hygiene percentage, the better ... unless a situation occurs where the doctor is underperforming, which articially raises the hygiene percentage
7. Review the condition of all dental records. In the due diligence process, an acquiring dentist may examine a portion of the dental records. The current practice owner should maintain les with accurate treatment entries, up-to-date patient information, and easily read treatment plans.
8. Clean up clutter and upgrade the office decor. A typical prospective dental purchaser will be reviewing multiple practices. Every attempt should be made to make your dental office stand out in this environment.
9. Tune up the dental equipment. Dental purchasers want to see modern equipment in your office.
10. Do not let the lease lapse. Do not let the lease lapse. Do not let the lease lapse!
11. Review your treatment mix. Performance of specialized dental care in a general practice that cannot be easily duplicated by a purchaser can be a major obstacle in an otherwise routine practice transition. If specialized treatment (orthodontic, TMJ, implants, etc.) comprises a signicant portion of your income, be prepared to be exible regarding practice transition requirements.
12. Emphasize fee-for-service. Purchasers generally place a signicant importance on the fee-for-service component of practice income. Practice owners should attempt to keep the majority of their practice fee-for-service and carefully evaluate insurance plans they participate in. Make sure these plans may be transferred to another provider following a sale.
13. Check with your financial and business advisors. Talk with your dental practice transition consultant about a draft dental practice evaluation.
1. Control your fees. Your practice fees should be reviewed and adjusted each year. There are a number of resources available to you for reporting fees by zip code. This is an extremely important and valuable task, as proper management of practice fees can add significant value.
2. Build a cash-flow analysis. The total value of the dental practice cannot surpass the ability of the practice to produce a large enough cash-flow to service the debt and provide a reasonable profit to the purchasing dentist. The net income of the practice is adjusted to return all income to the dentist as well as benefits to maximize net income. Owner benefits typically consist of all deductions for expenses not related to practice operations, but which were paid to the selling dentist.
3. Always maintain your dental production. While it is human nature for a dentist to want to slow-down before actual retirement, this will result in an exponential decline in practice value as well as profits. You must maintain the same growth rate of your practice until the actual sale date.
4. Keep new patient numbers up. Purchasers focus on this number and consider it an indication of practice vitality.
5. Get your financial records in order. Most practice profit and loss statements or income statements fail to give a true practice overhead and profit picture. Ask your accountant to group related expenses together for the purpose of determining actual overhead and profit, and to include expenses benefiting the doctor. If you own two practices, avoid a co-mingled tax return or financial statement.
6. Reinvigorate your recall system. Hygiene income often totals 22 to 25 percent of the total net income in a typical dental practice. This percentage can climb to thirty percent or more in practices aggressively utilizing soft-tissue management. The higher the hygiene percentage, the better ... unless a situation occurs where the doctor is underperforming, which articially raises the hygiene percentage
7. Review the condition of all dental records. In the due diligence process, an acquiring dentist may examine a portion of the dental records. The current practice owner should maintain les with accurate treatment entries, up-to-date patient information, and easily read treatment plans.
8. Clean up clutter and upgrade the office decor. A typical prospective dental purchaser will be reviewing multiple practices. Every attempt should be made to make your dental office stand out in this environment.
9. Tune up the dental equipment. Dental purchasers want to see modern equipment in your office.
10. Do not let the lease lapse. Do not let the lease lapse. Do not let the lease lapse!
11. Review your treatment mix. Performance of specialized dental care in a general practice that cannot be easily duplicated by a purchaser can be a major obstacle in an otherwise routine practice transition. If specialized treatment (orthodontic, TMJ, implants, etc.) comprises a signicant portion of your income, be prepared to be exible regarding practice transition requirements.
12. Emphasize fee-for-service. Purchasers generally place a signicant importance on the fee-for-service component of practice income. Practice owners should attempt to keep the majority of their practice fee-for-service and carefully evaluate insurance plans they participate in. Make sure these plans may be transferred to another provider following a sale.
13. Check with your financial and business advisors. Talk with your dental practice transition consultant about a draft dental practice evaluation.
About the Author:
Watson, Brown & Associates, Inc is a Dentist and Tax Attorney/Accountant with years of Texas dental practice transitions experience. Backed by in-depth experience, knowledge and credibility essential to making your practice transition seamless and successful. Dental Practice For Sale Dallas and Dental Practice For Sale East Texas
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