There are few businesses that involve the operational complexity of a dental office. Dentists juggle operational responsibilities while they’re managing their next anxious patient, and every move significantly impacts the efficiency and profitability of the enterprise. Some business missteps occur, but there is usually time and opportunity to address them and correct the future course. However, when it comes to selling the practice, the window of opportunity closes much quicker and with less forgiveness.
Most dentists deal with a practice sale one time in their ownership experience. A transition signifies a change of direction that impacts the rest of life’s journey. As if a practice sale isn’t enough, the Hawaiian market includes unique factors that often get overlooked. Unfortunately, I see numerous regrettable incidences that shouldn’t have happened in the first place.
In dentistry, there are procedures you’re comfortable performing, and there are others you refer to a specialist. Valuing, listing, and selling your practice is no different. A sale entails multiple moving components, and it’s not a time for guesswork. If the sale process is cohesively designed, you can confidently start to enjoy the future sooner than later; failure to get it right can lead to years of needless challenges.
Most dental practice transition mistakes made by well-intentioned owners can be easily avoided if you’re equipped with expertise, guidance, and experienced resources. It doesn’t make sense to build an outstanding brand and fail to maximize the value of your practice or undermine your legacy. Let’s consider eight key mistakes I’ve seen dentists make when selling their practice.
1. Mistiming The Exit
A dental practice is likely the most valuable asset in a dentist’s portfolio, and the business generates regular income for many years. A detailed evaluation commences way before you’re prepared to sell as part of a holistic plan with a planned timeline. Selling too early without a clear income replacement plan can create extra stress, and selling late could leave money on the table. Transition professionals that are well acquainted with the process can help you secure your future and maximum profitability.
2. Expectations That Don’t Match Reality
It’s not uncommon for dentists to overrate the value of their dental practice. Proper planning involves an informal and formal valuation, and this process should start long before the expected sale. A seasoned transition expert can aid you in evaluating the practice value and consider what’s reasonable in the current market. Keep in mind to review tax and income ramifications with a dental CPA and a comprehensive financial planner.
3. Making Verbal Promises
Verbal agreements or assumptions pose problems even in the most solid relationships. Always avoid making casual commitments regarding dental practice sales that aren’t in writing. For example, associateships with the potential for buy-in often fail because of misunderstandings that aren’t clarified in a contract. This principle is not intended to comprise relationships but instead to strengthen them.
4. Incorporating Major Changes Too Late
Practice upgrades are one possible way of boosting the worth of your dental practice, especially if you’re planning to sell it in the future. However, upgrades should be well-structured in a general strategy that considers the overall timeframe and goals. Extensive modifications can upset a transition or add unanticipated expenses into the equation at an inappropriate time.
5. Disregarding Complex Psychology
Dentistry involves extreme levels of trust and close relationships with patients that deserve special attention during transition. The range of emotions and perceptions can be more complex than many sellers anticipate. A well-thought-out transition plan safeguards your legacy, employees, and clientele with a strategic deployment of thoughtful communications through verbal, digital, and print formats.
6. Settling For Middle-Of-The-Road Results
Dentists’ retirements have continuously increased over the last 10 years, and COVID-19’s lasting effects on dental transitions remain unpredictable. However, probable buyers enjoy multiple practices to pick from in most areas. So, they’ll often pick a well-rounded, profitable operation or offer a discounted offer for a mediocre business.
7. Taking An Unexpected Offer
If your practice produces over $1 million annually, you’re probably on the radar for an unsolicited offer from a DSO or other group entity. If you haven’t received an unexpected offer for your business, it’s probably a matter of time before you get one. Don’t accept an offer at first pass, even from the most respected DSO, without making an inquiry from a practice transition specialist. These offers aren’t weighted in your favor.
8. Exiting Without A Next-Phase Plan
Dentists looking forward to retirement are often surprised at the unexpected psychological changes after completing the sale of their dental practice. Don’t ignore the significance of a life-design plan that involves more than finances. Although fishing and golfing offer an outlet, most dentists find it more challenging to leave the structure and socialization of dentistry than they initially thought. Taking time to create new purpose may include mentorship, teaching, entrepreneurship, or volunteering.
Put The Pieces Together
A dental practice sale marks a key point in a career journey, and it’s time for both celebration and careful planning. If you’re a typical dental owner, getting this exit right gives you the opportunity to reap the benefits from your life’s work. It’s critical to sidestep mistakes that can compromise years of committed service and weaken the opportunity to reap financial benefits.
Your network is one of your most essential tools, and the right resources can be a gamechanger as you face a practice transition. Choose professionals that are well-versed with the rapidly moving markets and the myriad of challenges involved in a smooth sale. Getting this piece right safeguards your reputation, optimizes the selling price, and helps you experience more of your dreams.
Contact me today to discuss any questions about your practice and preparing for a transition. I’m here to help.