For many long-time dentists who own their practices, the thought of selling can feel overwhelming. But unless you have a partner or family member standing in the wings with a clear succession plan in hand, selling your practice is the most likely path to a comfortable retirement.
If you’re within 5 years of your planned retirement date, now is the time to begin preparing for an eventual sale. Starting the process now will make the transition easier for everyone, from patients to staff members, even your family. Careful preparation also supports a higher valuation, since potential buyers will see a healthy, well-organized practice with strong future potential. And if circumstances should change and you need to sell earlier, you’ll be better prepared for the challenges involved.
Here are 7 essential things to begin working on now to prepare for a successful sale.
1. Document your operating processes.
Future buyers will want to know that your practice runs smoothly, with clear procedures in place that all team members know and follow. The best way to show this is to document how things work. Create a manual that spells out roles, responsibilities, procedures and business processes such as billing, collections and remittances. Include details such as insurance and banking procedures too.
Your documentation should include things like average treatment wait time, how many new patients you welcome each month, referral patterns and production reports (broken down by procedure). This information will give buyers a clear picture of a successful practice that’s worth your asking price.
You’ll want to invest time making sure your financial data is well organized. Many practice sales fall through when owners can’t answer financial questions quickly, since this creates a sense that the owner can’t confidently speak to issues such as cash flow, collection rates and overall profitability. Work with an accountant to get your financials in order, then keep everything updated so you’re ready when it’s time to sit down with potential buyers
2. Review and revise your fee structure.
Maybe it’s been years since you’ve taken a close look at what you’re charging. Be sure that you are being paid appropriately for the work that you do. One way to determine how your fees stack up against the local market is to consult the ADA’s Survey of Dental Practice Fees (free to ADA members).
Smart buyers will want to know how your fees compare with what other local offices are charging. Naturally, they want to avoid raising fees when they come in, since patients may feel angry and upset by this. Making sure you are charging appropriately will also give buyers a better sense of potential revenues – a key element in the sale.
Patients who’ve been with you over the long term will tolerate fee increases better from you than they will from a new owner. And if you discover your fees are significantly below market, you can make gradual increases over the next several years (and enjoy better income, too).
3. Build your online presence.
Having a simple, clean, updated website is a must, especially in competitive markets where people search for new dentists online. The good news is that your website doesn’t need to be elaborate or difficult to maintain. A simple format that helps patients (and potential patients) find the information they need will work well.
If you’re building a website from scratch, ask yourself: what do current and prospective patients need to know? Include all the basics – hours, location, insurance, services provided, oral care tips – with images that help tell your story. If you can make it easy for patients to schedule an appointment online, so much the better!
Part of creating a good website is letting your practice’s personality shine through. If you support your community by sponsoring youth athletics, hosting dental clinics or contributing to local nonprofits, share those details. Add a staff page with pictures and short bios.
Patient testimonials will help you share positive things that individuals and families say about your services. Include them on your site, and if you have positive online reviews, share them too! If you find negative reviews, don’t panic – just use them as a source of information about ways you can improve your practice.
Many dental practices have social media accounts as well, helping them create a friendly, positive presence in their local communities. You can ask members of the dental team for ideas that might work well on Facebook or Instagram– or take a look at what dental offices in your area are already doing.
If you need to build a website from scratch, seek out a web designer who has created sites for professional practices like yours. The ADA Member Advantage program offers good deals on marketing services that can help you get started. Another way to find the right website developer is to ask a colleague whose site you admire.
4. Organize and refresh your space.
Take a candid look at your practice space, from your waiting room to your operatories. Are your walls, furnishings and storage areas in good shape? How about your restrooms, parking area and landscaping?
Selling a dental practice isn’t too different from selling a home. Your space should be fresh, clean, organized, well-lighted and appealing. You don’t necessarily need to spend a lot of money, since minor updates can make a major difference. If you’re not sure where to start, talk with your staff or a design-minded friend who will give you an honest opinion and helpful suggestions.
After you’ve made the needed improvements, bring in a photographer to document your refreshed space. (This is also a great time to get staff photos for your website!)
5. Scrutinize collections.
Dental practice collections should run no less than 98% of adjusted production. If you’re falling short of this target, now’s the time to remedy things. Solid collections are often a top selling point when buyers are evaluating dental practices. (And improving your income now will benefit you and your staff long before the sale is made.)
Collections data confirms that buyers will earn solid income from the work they do. It also reflects how well your practice runs and how committed your team is to your success. Engaged staff members pay attention to productivity and understand that timely payment for services is part of the formula for profitable operations.
6. Consider equipment needs.
If you have equipment that’s nearing the end of its life, replace it now so you can enjoy using it for several years before you sell. While you may not need to replace everything, it’s important to realize that early- and mid-career dentists expect digital radiography. If you’re still using analog film, plan to upgrade sooner rather than later.
7. Move forward one step at a time.
It’s easy to feel overwhelmed by the work of evaluating and tuning up your practice, but keep in mind that you don’t have to accomplish everything all at once. If you’re starting at least 5 years ahead of retirement, outline a plan to complete the work in measured stages. The key is to begin now so that even if things change and you need to sell sooner, you’ve already built momentum. With consistent effort, your practice will soon be in great shape and ready for a new buyer.
If you’re ready to find the right person to eventually take over your practice, create your free ADA Practice Transitions profile today. Your ADA Advisor can help you explore your transition options, such as an Associate-to-Ownership or Mentorship-to-Ownership pathway, and give you resources to develop a plan that’s right for your practice, staff and patients. Create your free profile now.
More articles for you
Protecting your practice’s legacy
Life happened — and I had to sell!
What dental practice buyers want
How to sell now and retire later
Free ebook: building the right exit plan
Planning for life after retirement