Oh boy, here we go. This is the hard to swallow realities of life and I’m packing some controversial punch lines in here too.
Let’s start with the obvious.
All smart and responsible doctors want their practice to have life after them. If not for legacy or ego reasons (which I think are fine to have as priorities), then for your team and your patients.
They want to be left in good hands and they want you to be able to continue the mission and purpose of what you have sacrificed your life to achieve and develop.
This leads us to the eventual exit. Naturally, there is going to be one; it is just a matter of whether you are going to have any say in it or not.
The easy options are…
First, you could sell out completely by letting it go to the highest bidder and be done. Some people like this and in certain markets it is a very successful (and maybe even the most lucrative) option. In other markets, it’s hardly even possible even if you wanted to.
But, it doesn’t eliminate the transition completely; you just lose any possibility of choosing your successor or hanging on long enough to milk a couple extra million dollars out of the practice.
You can still exit on demand when you are good and ready. Plus, it can be cleaner but it also eliminates a lot of control, options and revenue potential as you would have with other things we discussed last week.
Next, we have the transition into an associate buyer or partnership with one or more doctors.
I would advise you that the biggest thing with a sellout of the practice is that there is a counterproductive approach to slowing down, increasing lifestyle and decreasing demand on your production because if you slow down you lessen the value of the practice before you sell it.
You want to do the opposite. You want to ramp up, accelerate, dramatically increase profit (and there are exact predictable ways to do it quickly) and then you want to show that profit and consistency for a period of time. The longer the better.
And if you cross the year mark (and two years is better), you substantially increase the value of the practice and the sale.
The moral of the story is the only way to win in selling your practice is…
A – Not to have to
B – Not to need the money
C – Have a clear idea of how you want to go about it
You will always make a lot more money each year you keep it; more so than you will once it is sold.
Remember, just like a piece of real estate, you can get a big pay day one day but after that the next day you wake up you no longer have the asset.
Now, I also want to hit you right between the eyes with the unfortunate events that occur all too often in our industry.
You have an unprepared doctor who is not financially independent and has not put any effort into the systems of the business or any future succession planning.
…and then an accident, a health issue or (heaven forbid it but it does happen to all of us), death.
The worst possible scenario is something happens to you and your family doesn’t have the means to support themselves since they no longer have income coming in. Their only option is to liquidate the practice.
And that just broke all three rules listed above under A, B and C. Not good.
While we can’t prevent these things from happening, we can prepare for the possibility and be proactive.
I know that’s a lot to take in and it is certainly things you have thought about whether you are at the beginning or the end of your career.
Last week, I gave you some homework… did you do it?
Because it’s exactly what I’m talking about right here right now – being proactive.
You can’t afford to be negligent in your preparation. You are receiving a polite reminder right now. Not to mention, you are being guided by someone who deals with more doctors, more scenario’s and more solutions to problems than any one person alive, in the intimate way that I do.
You may know your situation, you may have heard stories but have you thought about the what if’s and the exit for yourself?
Now is the time to get ahead of it or to refresh, renew, double check whatever you already have in place.
And even if you have all the money in the world and the best contingency plan, it still doesn’t solve you going out on top (which is always the best way) and getting to choose how it happens. You should be able to finish strong and be at your best when it’s time to walk away.
That’s where we are going next week. In the meantime, do your homework.
