In every business and in every goal that you set, you have an end in mind. When you set your New Year’s Revolution on January 1 of getting in shape, you had in mind a fit, tone body at the end. The same goes for a dental practice. When a dentist first purchased or started his/her practice, he or she had visions of grandeur of helping patients achieve top oral health while making a good living. Most dentists achieve that goal. But then, they let the practice go, stop replacing equipment, stop marketing and watch their production and patient base dwindle down losing 20% to 50% of the value of their practice. Money they could have put towards retirement. They end up having to retire vs. planning to retire.
So when do you start planning for retirement? How about now? Especially if you’re within 5 to 10 years of retiring. Here are a few steps to follow to help you plan for your transition:
- Meet with your financial planner to determine how much money you will need to retire. They can help you calculate how much you will need to save in order to maintain your current standard of living while in retirement.
- Perform an assessment of your practice. This would include an assessment of your equipment, technology, procedures, ratio analysis, hygiene, new patients, financial review, overhead, marketing, etc. If you do not have the time or know-how on how to do this, you can either contact me or your Henry Schein representative. Henry Schein has a great tool called the Dental Practice Assessment Tool (DPAT). It points out all the good things and opportunities for improvement in your practice.
- Go over your practice assessment in detail with someone knowledgeable about practice management and transitions to determine your targeted sales price you are hoping to achieve when you transition your practice.
- If you need help implementing improvements in procedures or other recommended areas in your practice, hire a reputable dental practice management consultant. They can help you get to your goals quicker.
- Implement improvements recommended as part of the assessment. If you’re within 7 to 10 years of a transition, it’s the perfect time to update your equipment and even remodel your practice. Having a fresh look will help your practice sell quicker.
- After you have implemented the recommended improvements and tuned up your practice, have an appraisal of your practice performed. I would recommend having one performed every few years as a litmus test to see if you’re getting close to reaching your targeted value of your practice.