Pass it on!

Practice Readiness Part 3

Personal Timing, Business Timing, and Market Timing

You’ll reap maximum return on the sale of your business when planning, preparation and timing come together. Assuming you’ve left sufficient time for all the financial, tax and strategic preparations involved in enhancing the value, saleability and net proceeds of your business, there are three overarching factors that determine the right time to sell: personal timing, business timing, and market timing. Let’s take a look at these three areas then ask the question: Do you want maximum value for your dental practice?

Personal Timing:

This is all about you. Do you still have the drive and energy to take your business to the next level? How’s your health and vitality for the job? Does a new business challenge still get you fired up or would you rather be spending more time away from the business and enjoying the fruits of your labour? If you’re simply not into your practice the way you used to be, for whatever reason, it’s probably time to think about letting it go—before it starts to decline.

Here’s an excerpt from a Forbes story by Kate Harrison, contributor:

Which do I have more of: passion or exhaustion?

“People who are thinking about starting their own businesses often ask me what I feel is the single most important thing they need in order to be successful. I always answer “passion.” When you are involved and invested in a start up, you will need to spend so much time and energy on your project that if you do not really care about it, you will simply not be able to sustain yourself through the work that it requires.

I have always cared deeply about the environment and created a company dedicated to helping people decrease their impact on the planet. My desire to create change fuelled me for four long, exhilarating, exhausting years. Along the way I sacrificed money, personal time, and family time, but I for most of that time, I did not feel a moment of regret.

Then one day recently I woke up and realized I was just tired. I was burnt out and even a week long vacation without my computer did not revive me. My scale had finally tipped from passion to exhaustion. If you are tired and cannot revive yourself, it might be time to find a new principle or make the difficult decision to sell.”

I cannot really add much more to this article, it tells the story totally. I speak with so many principles at this point of the cross roads and it normally is the beginning of the end for them.

I think it is wise to consider the scenario of sudden ill health, I was recently involved in a sale of a practice whereby the principle suddenly became very unwell and didn’t have an Practice Readiness / Exit Plan in place or the time to create a “Plan B” consequently that practice sold for less than half its value purely because of the timing.

Business Timing:

Is about where your business is in its life cycle. Most businesses experience cycles of growth, plateaus and decline—where is your business in this cycle? Are you still seeing revenue and profit growth or have revenues levelled or even dropped? Similarly, where’s your business relative to the market potential? Is it full of fresh new opportunities or is the industry saturated, hyper-competitive and declining? It’s best to sell a business while you’re still going strong, and growth and profits are still steeply curved upwards. Don’t wait too long because buyers simply won’t pay as much for a business that has flat or declining profits.

Market Timing:

This is a tricky one. You’ll want to look at the economy, financial markets, and the pool of potential buyers to determine if the markets are in an upswing or downswing. It’s sometimes tough to gauge, but it’s best to sell in a market upswing, I guess in the dental industry we are a little insulated in the fact our market is reasonably stable, having said that this is where we need to make sure our Practice Readiness / Exit Planning is current at all times.

To summarize, the ideal time to sell your business is while it’s still growing, before your enthusiasm fades and early in an economic cycle, and your health is fine. Is that easy to do? No. But being fully aware of the factors you can control and being ready – when the time is right – can make a huge difference in your net proceeds.

Every owner also needs to be aware of the anticipated mass exodus of Baby Boomers business owners. As these Baby Boomers, who own 65% of small businesses, begin to exit in record numbers, experts predict a buyer’s market with only the best in class and well prepared businesses holding their value.

Smart owners are preparing now, so that they can take full advantage of optimal timing while ensuring their businesses are well positioned for a successful sale in any circumstance that may present.

Want Maximum Value for Your Business?

Maximizing the value, selling price and net proceeds from the sale of your business requires planning and foresight. It also typically takes time to implement value enhancements, saleability preparation and tax minimization strategies. That is why it is imperative to have an ongoing Practice Readiness / Exit Planning strategy in place at all times. It’s the cheapest insurance policy you will ever invest in.

Next week’s post we will address:

• What is and Why Reverse Due Diligence?
• Do you know the answers to these questions?
• How Will You Ensure Your Success?
• Top 10 Value Enhancement Insights
• Top 10 Preparations for Sale Strategies
• And last of all No BS

Every practice where we have been involved in the planning and sale process, have achieved successful outcome and satisfactory sale price, sometimes it’s even been up to 24 months prior to selling.

How? Because we work in conjunction with the owners and their specialists to create a bullet proof Practice Readiness and Exit Plan.

I would like to offer you a FREE consultation about your practice. It takes just a few minutes over the phone.