Right in your town, maybe down the street, a practice is ready to change hands. His patients care about their dental health and the Doctor, young or old, has reason to sell. It will sell to a young competitor or you could be the owner with a thousand new patients coming to see you within the year.
Increasing your net is always the goal. We may phrase it as reducing overhead or finding greater efficiency but we all want to take more money home for our efforts and time. If you purchase an additional practice in your town and merge it into your existing practice and office, 65% of the additional practice gross will be your increase. Of course, this requires your existing practice to be in order with 20% for team and lab or equivalent being 10%.
1000 new to you patients come in the form of 4-5 days a week of hygiene being added to your existing practice. You are seeing these patients through new eyes and we have never failed to recoup the price of the practice several times over. The majority of production in any practice comes from new patients. All patients in a newly purchased situation are new to you and your team. These thousand patients add tremendous awareness and vitality to your practice. Why struggle when you can add patients who already see the importance of dentistry?
There is strong competition in cities for new patients. Adding a practice is a smart move. You must continue to market and brand yourself. Social media and the Internet continue to carry your message, keeping you on the forefront of people’s minds.
This amazing growth strategy is sitting in your town and someone different than you may be the winner. Why not you, an established dentist with team, systems, skills and commitment? Do the math to see the advantages for you. For easy math, you are producing $1M and your net is $400K. You find a practice doing $800K with a net of $350K. 65% of $800K is $520K making your new net is $920K. Why the big increase? The only increased expenses will be 20% for team, 10% for lab and 5% for supplies. All other expenses remain the same. Your payment to the bank on a five-year note at 4% is $176K a year.
For some, I have already lost you at “how?” Not seeing the bigger picture for profitability and service, your first concern is how can I make that work, will I need to purchase his building, what if her practice is larger than mine, what if the dentistry is not the same as mine, how, how, how? And worrying about the how will stop all decision-making and action. Opportunities will be missed.
There is a supply and demand issue with fewer boomer Doctors than expected putting their practices on the market and demand is high. Prior to 2008, prices were steady at 18 months of net. Presently, the selling price is two years of net and dentists are bidding over the asking price. In most of these sales, the seller has the advantage because the numbers of practices are limited.
A practice purchase will come in all different forms. This may be a retiring dentist or someone retooling. Family health may require a move. The very best avenue is to be friends with your local dental colleagues and be available to dentists who are thinking of making a move. Others who may know would be a local lab, dental supply rep, broker or other sales reps working the area.
Your job is to find the practice. Since each is different, share with the selling dentist your keen interest. Make no promises initially. Work with an advisor who has handled dental sales before. With no business advisor, call me as you don’t want to walk this one on your own.
Some pitfalls might be allowing the selling Doctor to stay indefinitely, not paying attention to the numbers and blowing these new patients away with pressure sales. Also, you want your existing practice to have your house in order with leadership, communication, skills, numbers, and systems.
