Selling your Practice
What three things can you do today to significantly impact the value of your business?
When establishing your clinic’s long-term goals, it is so important to create a strategic plan for your clinic today to be able to provide some direction for the future of your business. If you know the long-term plan is to sell the business, then starting to implement strategies now to ensure that when the time comes, you have positioned yourselves to be an attractive asset for someone to purchase as well as creating a business with the highest amount of perceived value.
Here are the three things I would evaluate to create a valuable business.
- Assess your key person risk
- Establish multiple revenue streams
- Create financial optimization
Asses your key person risk
Who is your main revenue provider in the clinic? If they left tomorrow, how would it impact the business? These are important questions to ask and consider when creating a business that would be an attractive asset for purchase in the future. Typically, the two main staff roles that are the highest risk are the clinic manger and the main provider (doctor/owner). To tackle these issues, we first create a standardize position for the role including defined duties and roles & responsibilities. Next, we want to spread out the main provider’s revenue among other staff that can do similar treatments and maintain only essential services for the doctor or owner keeping their revenue to below 50% of the total.
Establish consistent multiple revenue streams.
The two things to consider when examining your monthly revenue is knowing what your most profitable treatments & services are as well as those that have the least amount of volatility. Clinic owners can consider focusing on injectables, certain laser treatments, consistent retail sales (In-clinic and online) and recurring monthly sales through memberships and packages. Each part of the business must operate as a profitable segment versus being a loss after incorporating consumables, leases, and staff payout.
Create financial optimization.
Understanding your financial data as well as your ratios in marketing, overhead and payroll will help you better evaluate the performance of your business and determine where improvements are needed. Utilizing industry benchmarks to create a standard or goal of what each ratio should be allows the clinic owner to improve processes, efficiencies, and profits.
As a business owner, it is important to know and understand each of these three business considerations when creating a valuable business. Determining your risk factors, knowing where your clinic generates money and how efficient your business operates allows you to be better informed when making business decisions for the future.