We get inquiries from many chiropractors who ask how to grow their chiropractic practice value before selling.
The smartest docs ask questions like this several years before they are ready to sell or transition – when there is still time to make changes that will improve chiropractic practice value.
Chiropractors who want to increase what their practice is worth often ask this question after we conduct a chiropractic practice valuation to determine the fair market value of the business.
And then there are some DCs who just do what they think will increase value.
The first two groups are on the right track.
But the last group…
Let’s talk about how you can avoid their mistakes.
Wrong Assumptions About Chiropractic Practice Value
The primary challenge with the last group -- the DCs who go out and make “improvements” to their practice in hopes of increasing value – is that they really don’t understand the components of what makes a chiropractic business valuable.
After all, there are a lot of different things the “experts” will say you need to work on to improve your practice.
- Some say to increase Patient visits.
- Others recommend you increase Patient visit average.
- Still others prefer Dollar per visit average.
- Lots of practice management groups promote more new patients as the answer.
- Some will state that a big Case average is best.
- There are also those who promote a Cash Practice as the way to improve.
- Still others focus on improving your percentage of collections or decreasing Accounts Receivable.
All these can be helpful things to work on and likely any will bring a measure of improvement to your practice.
Some may even help you grow your chiropractic practice before selling.
But there is a wrong assumption about chiropractic practice value built into all of these.
Why PROFITS is the #1 Target for Increasing Practice Value
Instead of focusing on a dozen different helpful metrics, let’s hone in on one – PROFITS!
Profits are the single best factor that will determine the value of your practice.
Buyers may get emotional about many things in respect to your practice. They may like the look of your office, the feel of your clinic flow, the location and so much more.
But at the end of the day, Profits are also what Buyers like best and what they are looking for most.
Here’s why:
You can increase your new patients or weekly visits but if the result does not improve your bottom line (profits), then you are justs working harder.
You can sell big cases, but if it takes big marketing dollars or expensive equipment or a fleet of staff to take care of these patients – and it reduces your profits – your big cases are going to get small results.
You can run a cash practice that is super simple, streamlined & requires only 1 staff member – but if it does not produce enough profits; then it’s just a small practice.
You see…PROFITS are they key metric to monitor when growing or selling your business.
The Stop Sign That Halts Every Buyer
It may sound like an exaggeration, but Profits are also the primary stop sign that will halt every Buyer and keep them from moving forward with the sale.
An ugly office is not recommended. But at the end of the day, Buyers are looking for PROFITS – not a palace. In fact, if there are enough profits in the business, they can remodel, paint, get new carpet, etc. If there’s not – there will be no interest.
Your volume can be higher or lower than what a Buyer is looking for – but the PROFITS will attract or repel them to your practice style.
A price can “seem” like a bargain on the front end – but it’s the back end (PROFITS) that make it a good deal or not.
No matter what a Buyer states that they are looking for – they will turn away without profits in place.
A TINY “TO-DO” LIST
While many Sellers and business owners feel like they have a huge “to-do” list, it really can be quite tiny.
Focus on profits.
Buyer will have also their list of “wants.”
But in reality, most Buyers take a very simplistic look at your business and they need to see that your profits look healthy.
NEXT STEPS
It’s likely you will fall into one of three groups:
Group 1: You already know where to improve your practice profits to grow your chiropractic practice before selling AND you’re not close to your target date yet. Start there and work to improve before you sell.
Group 2: You don’t know how to improve your profits OR the value of your chiropractic practice. So you can’t figure out if this is the time to sell or to continue to work on your practice. To learn more, watch one of our FREE Online Training Videos on making the most of your chiropractic practice sale or Schedule a FREE, no-obligation call to discuss your situation today!
Group 3: You know that you have good profits. Now may be the time to maximize them and sell. Or now may be the time to discover your practice value, so that you can plan to maximize your business sale. We’d love to help you get started. Schedule a FREE, no-obligation call to discuss your situation today!
