- If you plan to retire, you'll need a plan for selling your practice.
- You'll also need to determine your level of involvement after you retire.
- Taking steps now can help your earnings potential for the future.
Selling your physical therapy practice is a fundamental goal for your retirement plan. Depending on your objectives, you can continue practicing part-time with fewer administrative responsibilities or move on to another plan entirely. Regardless of what you choose, it helps to take the time to plan your sale properly and carefully. As a healthcare professional and a business owner, your physical therapy practice is important to you, and you've invested a lot of time and money into your business. Taking these steps can help your earnings potential while setting up your practice to continue succeeding after retirement.
1. Start Preparing Early
You'll have fewer options if you must sell your physical therapy practice in a rush. Start your planning at least a few years in advance so you have the time to research the market in your area and improve the value of your practice. In many cases, you'll want to start the sale process well ahead of the date you plan to retire. You might also want to make changes that increase your practice's value, which you'll need time to implement.
2. Clarify Your Goals
The most important thing here is to determine whether you want to stay involved in your practice after selling. You might want to hand off the practice if you're ready to retire. However, you may be looking to step back without stepping down altogether. Partially retiring allows for a gradual transition or a partial sale, where you stay involved in your practice with reduced responsibilities. Many buyers strongly prefer the original practice owner to stay involved in the practice during and for some time after the transition. Be sure to clearly define for yourself which route you’d prefer to take.
3. Increase Your Practice's Value
The more your practice is worth, the more you're setting yourself up for a wealthy retirement. Here are some areas you can focus on to improve your practice's value:
Buyers want to take on a well-organized practice that can smoothly transition to new ownership. Make sure all of your policies and procedures are clearly defined and documented. Copy and organize all of your practice's important documents like leases and insurance contracts. Carefully consider which electronic medical records system you use. If you sell your practice by merging with an existing group, the same system will appeal to the buyer and simplify the transaction.
Recruiting the right people is essential to ensure your practice runs well, both with and without you. In addition to hiring great physical therapists, make sure you're choosing professional and efficient front desk staff. Naturally, your therapists are the foundation of your practice's value since they provide the service. However, the staff is just as vital since they significantly impact patient experience and how well the office runs.
Your practice's reputation is a critical component of its value. Reputation affects your ability to bring in new patients and how investors or buyers feel about doing business with you. In addition to hiring friendly and professional front desk staff and providing high-quality physical therapy services, there are other steps you can take. Have an online presence for your practice that includes all the up-to-date information your patients need. Make sure your communication channels are easily accessible, identify patients with positive experiences, and ask them to write reviews. Consider charity sponsorships or other community involvement opportunities that make your practice more visible in a positive way.
4. Set Realistic Expectations
Understand the value of your practice so you can ask for an amount that's neither too much nor too little. A good number to look at is Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA). Your practice will be worth a multiple of that amount, depending on other factors like how desirable your location is and how much growth potential there is in your area. A reasonable estimate of your practice's value will help you plan your retirement by considering whether the profit you can expect will support your financial goals.
5. Prepare Your Practice to Run Without You
It's common for business owners to be the only ones with particular knowledge or control over specific business processes. To prepare your practice for retirement, you'll need to identify these areas and start documenting and delegating. Write down anything someone else would need to know to run your clinic, and make sure your staff knows where these documents are.
6. Find the Right Buyer
There are several ways you might approach finding a buyer. You can sell internally to a current employee, or you might sell to a friend, colleague, or friendly competitor with a practice in your area. Finding a buyer through your network can be much easier than selling in the open market. Selling to a franchise like FYZICAL is another profitable option, where there’s an established process for buying or partnering with existing practices. They can also offer a range of involvement options. If you choose to sell in the open market, working with a broker can help simplify the process in exchange for a percentage of the sale price.
Interested in selling to a successful and flexible franchise? Get in touch with FYZICAL to discuss your practice, or download our guides to learn more about preparing your practice for your retirement.
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