For many private practice owners, it can be difficult to save up enough money for retirement. The same can be said for business owners of all industries. 37% of small business owners who lack a retirement savings don’t make enough money to open a retirement account (Inc).
Many business owners have little to no plan in place because they think they can sell their business whenever they’re ready to fund their retirement. Do you fall into this category?
If so, get ready to face the reality that you’re unprepared for retirement. Only 20 – 30% of businesses that go on the market end up selling. This is especially prevalent in the physical therapy industry. Why? Because, your practice probably isn’t worth much without you.
If you plan on selling your practice you need to ask yourself: If I left my practice for 6 months, what would it look like when I returned?
If the answer isn’t pretty, you don’t have a very valuable business to sell. Buyers are looking for PT practices that are systems-driven and operate smoothly without an owner present. Most importantly, your business must be profitable and show a history of profit increase.
Large consolidators and acquirers in PT are not looking to buy a small business with a lack of managerial systems and procedures in place already. Not to mention, you’ve put a lot of sweat equity and time into your practice, it would be extremely disappointing to sell your practice for mere asset value.
If this sounds true about your business, you can expect to sell your practice for MUCH LESS than you probably think, or not sell at all—closing your doors for good.
While this may have felt like a lot of doom and gloom, there is a silver lining to all of this! Whether you’re nearing retirement or just starting your career in PT, you can still build substantial value in your private practice and retire wealthy.
- Analyze your market. Evaluate external trends/competition and the strengths and weaknesses of your practice.
- Improve your operations. Implement a management team, polish up your facilities and reevaluate your staffing needs.
- Determine your business worth. Be realistic and do your research. You may need to consult with a financial advisor to understand the value of your assets, employees, etc.
With the right planning and implementing, you can build a more valuable practice that will be worth much more to buyers in the future. Establishing your goals, reducing inefficiencies and implementing business systems are just a few of the steps you need to take in order to plan for your retirement.
If this all seems overwhelming, you’re not alone. Selling is a hot topic in PT private practice, as many owners are experiencing roadblocks and challenges. To learn more about selling and preparing for retirement, watch this short video from FYZICAL private practice owner, Matt DiMauro.