I recently met a dentist whom I’ll call Dr. Woeful. During a midlife crisis, he decided to raise his family 100 miles from his current office. He bought a new practice in the desired location before selling the old one, but his former rural location has attracted no buyers. He now has two practices. To make matters worse, the dentist who sold him the new practice is old, ornery, and unwilling to change or leave - so Dr. Woeful agreed to keep the geezer on. As he told me his story, Dr. Woeful was inconsolable. And I was horrified, because it didn’t have to happen!
Sadly, this isn’t an isolated case. Too many dentists dive headfirst into a practice transition without careful planning. The average dentist is 54 years old and has a painfully inadequate $225,000 or less in retirement funds. Does this profile fit you? It’s not too late to avoid the fate of Dr. Woeful and bow out of dentistry with grace, dignity, and a secure future. All it takes is a transition plan. All dentists - even those just starting out - need one. Before deciding which transition option suits you best, you need to clearly define what you want. Ask yourself these questions:
• What are my ultimate goals for an ideal transition? Is it your vision to mentor a successor and turn your practice into a legacy that lives on after your exit? Or would you rather do your best until the end, then lock the door behind you? When you know your ultimate goal, you can design the right strategy to achieve it.
• Do I know the value of my practice? Although a good financial planner will prepare you for retirement without counting on a practice sale, if you can sell this major asset, so much the better. The difference between selling for 50 percent of gross revenue or 110 percent lies in how excellent the practice is. Are your systems in order? Is there dentistry left in your patient base? Is there a marketing strategy that a new provider can continue? Are your accounts receivable clean? Are you free from managed-care plans that, if discontinued, would cause a mass patient exodus? Factors like these can add or subtract $100,000 to a purchase price. Another consideration: Will your practice keep its value when you leave, or is it so specialized that few will have the interest or skill to buy it?
• When is the best time for me to exit? Many doctors would love to die at the chair, but since this is traumatic for patients and staff, we don’t recommend it. The timing of your exit is a personal decision. Some doctors sell too soon, then flunk retirement. Others remain too long, interfering with the new owner’s plans. The right time depends on your values and goals, so give this matter careful thought.
• Could I work well with another dentist? You can save yourself untold stress by choosing a transition strategy that suits your personality. If you’re like many dentists who enjoy practicing solo, then try to avoid taking on a partner or associate in your transition.
• What are the potential obstacles to my strategy? Do you have enough money to retire? Is your area forecasted for an economic decline? Do you have an office space that will accommodate another dentist during your transition? Do you have any limiting features, such as operatories plumbed for a left-handed dentist? Are there other issues or systems in the practice that automatically detract from a sale; if so, can you correct them? The sooner you begin addressing the obstacles, the greater chance you have of overcoming them.
Every dentist deserves a graceful, seamless exit from a noble career. Lots of pain can be avoided by knowing what you want and by clearly defining - and avoiding - the failure patterns that can get in your way. Once you do that, you can take your bow, gather your roses, and leave Dodge for your next great adventure.
Amy Morgan is CEO and lead trainer of Pride Institute, the practice-management firm that helps dentists better their lives by mastering the business side of their practices. Get the vital information you need to make the best transition decisions by attending Pride’s popular seminar - now in its 15th year and completely revised - “Associates, Partners, & Appraisals.” For information, call (800) 925-2600 or visit www.prideinstitute.com.