Is this the right practice for you? How will you know if you should buy this practice? You have already decided where you are willing to look for a practice, whether it be a rural or urban area, and you also have decided on how long you are willing to wait to purchase a practice. Now, you need to consider how you want your new practice to look and feel.
When you are looking for that right practice, you should start by doing your homework. The first thing you need to know is what attributes of a practice suit you.
Ask yourself some of these questions.
- How many operatories do I want?
- What do I want the flow of the office to look like?
- What kind of image do I want to project?
- Is the décor important?
- Does it matter if it is a leased space or a building?
- What systems are important to me?
- Can I practice without a computer for a short period of time?
- Do I understand the components of overhead?
- What are my financial needs for income?
- Will the practice net support my income needs and the debt service?
- Will I be hiring my own representation (broker, accountant, or attorney)?
You might also want to imagine yourself working in your own office. Ask yourself what that office looks like, how it feels, how many employees you see in your office, what the equipment looks like, what the files look like, etc. The items that stand out in your vision will get you started.
What do you do with the answers? Create a report card of the items that are important to you! Decide on a grading system (Grade on a score of 1 to 5, with 5 being the lowest score), as well as what scores you are willing to accept for each item. Be realistic. Decide on what is t to you. You should have only two top scores and be willing to accept lower scores for the other areas. Remember, you always change things about the practice over time. Here is an example:
Now you are ready to look at some practices. When you visit a practice, make sure that you take your report card with you so you can assign a grade to the items that are important to you while you are there. Ask about them. Just observing may not give you the full story.
Share your report card with those advisors with whom you choose to work. What you think about these major areas is essential to the success of your practice.
Now for the moment of truth. There is no perfect practice! You need to remember that you should not be looking for your dream practice, but rather a practice that serves your basic needs and has the potential to become your dream practice. If you focus on finding all the attributes that you want in a practice, you will never be satisfied with any practice. However, if you focus on those few attributes that are really important to you, it will be easier to find that practice more quickly. You can always update equipment, add computers, equip another room, or convert the patient charts to a new system, but you cannot afford to pass on an opportunity just because it lacks one attribute from your wish list. Waiting until you find the perfect practice may cost you more in lost earnings than if you purchase one that meets most of your needs … and make it into your perfect practice! Every month you wait to purchase a practice, you are losing the opportunity to build equity.
So, do your homework when it comes to looking at potential practices. If you find one that meets your significant needs, you can develop it into your dream. What fun you will have creating the practice your way!
Theodore C. Schumann, CPA, CFP, is the owner of DBS Professional Practice Brokers and Dental Business Services, Inc. He is a member of the Academy of Dental CPAs. He has a broad background working with dentists in a variety of roles, including consultations regarding buying and selling a practice, marketing, strategic-planning, cash flow, human relations, as well as accounting and tax-planning. Sherri Thorp, CPA, is a veteran of practice sales, acquisitions, and transitions. Both Schumann and Thorp are members of American Dental Sales, the largest group of dental brokers, appraisers, and consultants in the United States. They can be reached at schumannpc@dentalbusinesssuc cess.com or by calling (800) 327-2377.