Cliff's Notes

The Business of Dentistry

What Is Your Dental Practice Worth? The In’s & Out’s of Selling!

Cliff’s Notes for November 7, 2010

 

….. E-Blast….. 

 

Cliff Marsh, Henry Schein ……Cell: 201-321-7494……Fax: 201-262-2210…..E-mail: cliff.marsh@henryschein.com 

http://www.cliffsnotesblog.wordpress.com

 

 

Business is not financial science, it’s about trading, buying and selling. It’s about a product or service so good that people will pay for it.

Anita Roddick

 

 

In This Week’s Issue

*What Is Your Dental Practice Worth? The In’s & Out’s of Selling!

*Convention Extras, Round 2!

*More About Deregulation!

*Stanley’s Dental Outlet Store!

 

 

What Is You Dental Practice Worth?……………………………………………………..

When my clients ask me this question, I ask them “are you asking about today or when you’re ready to walk off the field?” When you sell your practice (business) you will probably only do it once, so do it right. Most dentists are shocked when they find out their practice is valued for a lot less than they thought. A practice that grosses $1M annually may only be worth $450k. On the other hand, if the transition is structured correctly, it may be worth $1.5M. That’s why you talk to a “Transition Specialist” and not a regular practice broker. For more information on Transition Specialist please contact me at any time (201-321-7494).

 

Today’s buyers are looking for technology. When my wife and I were looking for our first house we figured on saving money and getting a “fixer upper”. My father asked me how much I was planning on spending on renovations and suggested we add that amount to our “budgeted amount” and buy a house that didn’t need any work. Ah! The wisdom of the ages, we took his advice and moved into a house that didn’t need any work. That’s what a buyer will look for. They want to spend time building the practice not re-building the infrastructure. Saving money by not updating your office will cost you money. You also want to have a current DPAT report (digital practice analysis tool) to show the potential of the practice and highlight areas the new owner should concentrate on for future investment.

 

The most profitable way to sell a practice is to bring in an associate 3-5 years before you want to leave. Yes, you may take a initial reduction in income, but if structured correctly, you can double your net equity income. However, don’t try to structure a program on your own and your accountant can’t do it. They can help, but most accountants don’t understand the day by day production of a dental office. It is a small specialized field.

 

Another thing to consider is the name of the practice. “Main Street Dental Center” is much easier to sell than “Dr. Smith, Family & Cosmetic Dentistry”. A seamless transition is much more effective in retaining patients and more desirable to a prospective buyer.

 

Preparing your practice for sale is much like preparing your house for sale. The Real Estate Agents tell you that you have to create “curb appeal” and that you need to generate the right impression, and that appearance is key. They tell you to remove the clutter, to make your home neat and clean, and to price your home right. That is great advice to sell your home, and it is great advice to sell your practice. Think esthetics, eye appeal and neatness. Buyers are as interested in the overall look and feel of the practice as they are in the financials and patient records.

 

 “Curb Appeal” – Packaging is 95% of the Sale!

Start at your office front door. Is it worn, is the hardware old and tarnished, has your door signage seen a better day? Then paint or stain the front door, put on a new door knob, and make sure signage is in good shape. 1st impressions with a Buyer are very important.

 

Next, take a walk through your office. Is the furniture in the waiting room worn and frayed? How’s the paint on the walls? What about the carpeting? Are there burned out fluorescent lights? How is the lighting? Is the office clean? Really clean? Is the office cluttered? If the answer is yes, then get to work! Replace that worn out waiting room, paint the walls and replace some carpeting, change burned out bulbs and make sure that the office has good lighting. Lighting makes all the difference. Clean up the office. And I mean deep clean!! Come on, this is a place that renders health care! The cleaner the better. I have been in to many offices that I would be afraid to open my mouth in. Just imagine what a buyer thinks about a dirty office. Throw out the clutter. That means magazines, boxes, no longer used dental disposables, broken equipment, etc. Empty that op that you’ve been using as a catch all room. How’s a buyer going to see the potential for an additional operatory if the room is filled with junk??

 

Now that you’ve tackled the facility and furniture, it is time to take a look at your equipment. Is all your equipment in working order? Are the chairs torn? Is your slow speed belt driven? Are you still hand dipping X-Rays? If you were a buyer would you buy your office with broken down, worn out, torn, antiquated equipment or would you be more inclined to buy a practice with equipment that is in working order, in good shape and manufactured in this century? Get a maintenance guy to come in and go through your equipment. Fix what’s fixable, replace what is not. Make it work or replace it. You don’t have to spend a fortune, a $10k investment could mean $50k in a sale.  When all is said and done, do the final touches like air fresheners, fresh flowers, coffee in the waiting room, and I’ve even know a few sellers who have added a portable cookie maker in the waiting room.

 

Now that the office is ready to show, it’s time to do your paperwork. Yes, paperwork. Many doctors dislike doing paperwork but if you do not have adequate records available for review, buyers will pass on your practice and move on to the next one. You need to have available the last three years of tax returns for the practice and a P&L for the current year. In addition, you will need to have available an Account Receivables (A/R’s) Report, a copy of your Lease Agreement (if renting) and bank statements showing all bank deposits, (this info will be needed for the buyer’s CPA to review after opening escrow). Only reported income will be considered in negotiations. Speak with your financial advisors about this at least 3 years prior to the sale.

 

NY Extras, Round 2 – From Cliff’s Notes at the Show……………………

Hu-Friedy: If you can’t attend the show, I can place the orders for you so you can get the all the freebies!!  Think about it, discounted prices &

20% in Free Goods & a Gift Card. If you can’t make it to the show, call Cliff @ 201-321-7494.

 

SDI (Southern Dental Industries……………………………………………..

Pola Day, Pola Night     Buy 10 kits, Get 3 FREE  

Pola Office+ 3 patient Kit  ONLY $ 135  (suggested retail $206)

Buy a Radii Plus LED Curing Light, Get a Diagnostic Tip FREE

 

 

More About Energy Deregulation……………………………………….

Since it began in the late 1990s, deregulation of energy has created opportunity throughout the marketplace.

Deregulation allows consumers to choose where they buy their power, much as they can choose their long-distance company. This choice creates a competitive marketplace in which each energy company is working to provide the best product. Creating competition drives prices down and improves quality.

The product

Viridian Energy is proud to stand out among its competitors by offering an affordable product that meets or exceeds the proposed 2020 federal environmental goal of 20% renewable energy.

It’s safe and reliable energy

Under deregulation, each part of your energy service is broken down into separate pieces that are provided by different companies. Delivery of the electricity to your home as well as all necessary service is still provided by your utility, making it possible for you to still have safe and reliable electricity in your home. Electric suppliers like Viridian are licensed by state and federal agencies and are not in competition with the local utility. The local utility does not make any money on the energy, only on the delivery and service of electricity, so the utility company supports customers who choose to switch suppliers. We provide greener energy to the grid and your utility delivers that energy to your home or business. It’s that simple. All this adds up to a perfect reason for you to exercise your choice to select the best supplier for your electricity.

It’s up to you

Deregulation means you can shop around to find the product that’s best for you. You have a choice. Why wouldn’t you make the choice that saves you money and helps the environment? You can make a difference for your family and the environment with Viridian.

http://www.viridian.com/cliffsnotes/default.

 

Stanley’s Dental Outlet Store………………………………………………..

Demo’s, Reconditioned & Overstocks. Log onto:

http://www.hsi-outlet.com

 

Sunday, November 6, 2010……………………………………………….

Don’t forget to turn back your clocks and sleep an extra hour. I hope you enjoy your family and the day.

 

Cliff Marsh

Henry Schein Dental

P.O. Box 663, 45 Rt. 46 East, Suite 605

Pine Brook, NJ 07058

tel. 201-321-7494

fax.201-262-2210

e-mail. cliff.marsh@henryschein.com 

 www.cliffsnotesblog.wordpress.com 

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November 7, 2010 - Posted by | Uncategorized

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