– We work with a lot of doctors that are looking to exit, looking to transition their practice.
– And I get the question all the time, “Colin, what’s my exit strategy? What kind of strategy should I employ to exit my practice when I’m ready?”
– And I always give them the same answer, and that is that I think the conversation around exit strategy is an inferior conversation.
– There’s fundamentally three strategies for exiting your practice: you can run it until you die and close it down, you can give it to your kids, or you can sell it.
– There’s your three strategies. Pick which strategy you want.
– The problem with most practices that I see, 90, 95% of the practices I see, is not in the strategy of what they need to do.
– The problem is their exit ability. They are non-exit able businesses or practices for a number of reasons.
– It’s kind of like when you go to buy a new car, and you’re looking at cars.
– And you’ve got the Mercedes, and you’ve got the Bimmer, and you’ve got the Lamborghini, and then you’ve got the ’79 Pinto that’s got 284,000 miles on the engine.
– Right? So when you’re going to look at these cars, when was the last time you bought the ’79 Pinto with the engine that only half the cylinders fired in?
– Probably didn’t buy it. And this is like a lot of dental practices. They’re running like a ’79 Pinto.
– The processes, the systems, the team, the marketing engine is not running.
– It’s misfiring. It hadn’t had its spark plugs changed in 100,000 miles, and it’s not working.
– Ergo, to a buyer, somebody looking at buying it, there’s no value, or there’s diminished value.
– So the problem with exit ability is generally around execution.
– It’s around building the systems, setting it up for success, building a strong team that’s going to maintain that continuity once the practice is able to transition.
– And whatever strategy you employ, whether it’s you run it until you die and shut it down or retire, you give it to your kids, or you sell it to somebody else…
… whatever strategy you employ, building those systems and building the team and building A-players and getting that marketing engine really dialed in, is not only going to throw off more cash from the practice and the business in the interim until one of those three strategies comes in down the road.
– It’s also going to dramatically change the exit at that point.
– If you give it to your kids, the value and the shoulders that they’re standing upon when they take over your practice is going to be so much higher.
– If you sell it, it’s going to be worth a half million, a million, two million dollars more because of what you’ve built, the engine.