Most chiropractors are aware of their own mortality enough to realize that one big risk of waiting to sell your chiropractic practice (or transition to your associate) is that none of us can cheat death. The other obvious inescapable reality of life (and business) is taxes. While that’s another topic for another day, it’s easy to understand that the more tax planning you can do before your sale the better off you will be.
Beyond those two glaringly apparent realities, there are several other risks lurking around the corners of your chiropractic practice sale or transition that you might want to be on the lookout for. These risks can best be classified as “unanticipated.” Literally, one moment everything is sailing along fine in practice, the next and you are the guy falling down the flight of stairs you’ve walked a thousand times. What happened? Something changed.
And when that change occurs, the fall is often a drop in your practice value or an altogether sabotage of your sale. Here are several big changes that few chiropractors anticipate but we all should be aware of:
1) Lagging Local Economics: the recent years of nationwide economic depression should be a blatant reminder that the possibility of a financial downturn can sour your sale. But seldom do chiropractors consider that their practices are even more effected and impacted by LOCAL economic events. Depending on the size of your city or town, you could literally be one corporate migration away from local economic disaster which moves a ton of people out of your area and, along with it, your practice production.
For example, I recently spoke to an aging chiropractor with a strong practice in an extremely economically depressed town. On the plus side, he was able to diversify his practice enough to keep going despite the economic collapse around him. Unfortunately, he also admitted that he “pulled the trigger” on his transitions too late — just a few years prior and his practice was every bit as strong – but so was the economy. Even though his practice does well, a buyer has to live somewhere. And this chiropractor is 80 miles from nowhere amidst a long busted economy. Now he is wondering how long he can hang on before he can convince a buyer to want to live in his parts of town or to literally keep lowering the price until someone bites at the big bargain.
2) Disability: while some may fear the final end, disability is a bigger adversary that many have to face. It’s one thing to check out permanently and hopefully leave your spouse and family with a life-insurance plan that will support them independently of your practice sale. It’s another to crunch the numbers and realize that partial or full disability could potentially handicap your practice WORSE than dying.
I hate to say it, but I’d guestimate that nearly 1/3 of the chiropractors we speak to who are interested in transitioning their chiropractic practice (through a sale, associate opportunity or other option) are eager to do so because of a disability. They got injured or have an illness that makes their practice “not what it used to be” and makes the prospect of production turning around nearly impossible.
3) The Numbers Game — one of the most glaring numerical factors we cannot ignore is the massive segment of the population known as the Baby Boomers (Born between 1946-1964) and among them, Baby Boomer Chiropractors who are at, in or around retirement age. The first wave hit age 65 in 2011 and there are a lot of boomers left still seeking to retire. Really, it’s simple math that’s at risk here — if you are among the boomers generation, there are more of you than anyone else. Translation = more want out than in. (Also can be translated as a “buyer’s market”)
4) The Directionless Associate – this is the associate who seems content, doesn’t seem to be going anywhere anytime soon and suddenly…does. What’s most surprising about this associate is that you might have even casually mentioned your practice sale or transition in the past but (typically) their response was positive but not assertive. You probably assumed (and so did they) that things eventually may work out; but in the meantime, life went on. And so did they — leaving you with no associate and no transition plans.
WHAT TO DO TO DECREASE RISK
Behind all these scenarios above, there is essentially a huge risk in hanging on for too long. Anyone of these risk factors could cause you to pass the peak of your practice value or miss your opportunity entirely.
There’s really only one solution to decreasing this risk and that’s increasing your planning.
After all, we all face risks every day with every breath we take. Some are more calculated risks than others. So it’s not a question of finding the “perfect” time to begin your transition plans or your chiropractic practice sale. The perfect time may never happen and even without “perfect” timing, you may still navigate a successful transition.
Perfection aside, planning (and early planning especially) does provide you with options, informed decision making and perhaps the best chances to make the most of your opportunities at hand — while simultaneously reducing risks.
In years of walking, coaching or perhaps even coercing chiropractors into taking better care of their transition plans and their future, I’ve found that the single biggest intimidating factor is simply starting the process. Interestingly enough, we’ve had many clients report to us that starting is also the one of the greatest sources of stress relief in regards to transitioning to life after chiropractic.
If you are a Baby Boomer Chiropractor, please take these words to heart and start planning. If you’re looking to sell your chiropractic practice or transition in the next few years (regardless of your age), you’d do well to heed the same advice.
The risks are there either way — it’s now your choice and chance to avoid the devastation they can cause and steer your practice towards a successful end (and probably sooner than you think).
Want more help with planning or the process? Our Sell, Switch or Slow Down FREE WEBINAR is designed to help you on the way to maximizing your chiropractic practice sale value and minimizing costly mistakes. Register today to get on your way!