Time to move on?
Dean Barker discusses ways to build an effective exit strategy by maximising untapped practice potential
Life working as a dentist can be very demanding, especially for those who own and manage a busy NHS practice.
With so much uncertainty around the NHS contract reforms, combined with the unknown outcomes of Brexit, it’s no wonder that many principals and practice owners are considering their options and looking to make the transition to a new career path, or even into retirement.
Despite the uncertainties of the wider economic environment, an NHS practice that is comfortably fulfilling its contract with a proven income stream remains an attractive proposition to potential buyers. This is good news for practice owners, who are in the driving seat when it comes to determining their future.
Whatever stage you find yourself at – be it wanting to get away from the stresses of business ownership or deciding to give it all up and head for pastures new – it makes sound business sense to plan an exit strategy at the earliest stage possible.
Planning your exit
An ‘exit strategy’ is a term often used in business and financial circles and although it has a suggestion of finality about it, it does not necessarily refer to the time when an individual leaves the profession for good. An exit strategy is just as applicable to an individual selling a practice, brokering an associate buy-out or simply choosing to do something completely different.
The value of your practice is likely to form a significant part of your total assets and ultimately fund your future chosen lifestyle. So just as many of us make improvements to our homes to increase their value when the time comes to sell, it makes sense to maximise the value of your business to increase the profit from the sale of your practice.
Untapped potential in the practice
As well as continuing to meet UDA targets and controlling costs, in order to maximise turnover and profits it pays dividends to look at the untapped potential in your practice.
Fully maximise all chair time
An empty chair is a lost opportunity to generate revenue and actually costs the practice money as overheads and staff still need to be paid whether the chair is in use or not. If your surgeries are already working at full capacity, consider extending opening hours to create additional chair time.
It makes sound business sense to plan an exit strategy at the earliest stage possible continued growth throughout this year and on into the foreseeable future
Utilise your hygienists and therapists
This can generate far more profit than the use of associates alone. By concentrating on the most cost-effective treatment options profitability can also be increased.
Focus your efforts on high-grossing treatments
Maintaining or increasing the level of turnover in the practice can be achieved by reviewing those lucrative treatments and finding ways to further promote them to your patients.
Try to keep referrals in-house
If you refer just one dental implant a month at £2,500, this has a value of £30,000 per year, which often is revenue that can be ’lost’ to another practice. Consider bringing in an implant dentist, maybe one Saturday per month when the practice is normally closed, or more often if needed. For even better income opportunities, consider asking them to become an associate.
Don’t sit back
It can be tempting for dentists heading into retirement to reduce their time spent in practice, but this could be a mistake. A practice needs to be functioning at its peak to prove that it is a viable investment. Any signs of underperformance will be a red flag to a buyer, who may be concerned that you’re struggling to hit targets or hiding underlying inefficiencies.
Today’s dentists are fortunate in that they are able to plan and execute an exit strategy much earlier than their predecessors.
Mediestates’ extensive and comprehensive understanding of the dental market and how it relates to individual circumstances allows the team to help plan and execute exit strategies at the earliest opportunity.
So, whether you want to sell outright or stay in the practice for years to come, using a specialist broker, such as Mediestates, can provide you with the knowledge and practical guidance to help you plan the exit strategy that is right for you, both now and in the future.