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5 Things To Consider Before Selling Your Dental Practice

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By Kyle Francis, President and Founder Professional Transition Strategies

 

To many, the dental practice transition process seems daunting, but it doesn’t need to be. This is mainly because practice owners often don’t know where to start or how the practice’s value is determined, among other essential factors.

 

Whether you’re ready to begin planning your transition strategy or you want to learn more about your options, it’s important to understand what impacts the sale of your dental practice. Here are the top five things to consider before you sell your dental practice.

 

Start with the facts

Selling your dental practice is a huge step in your professional career. That’s why you need all the information available to make the best decision for you and your staff. First, you need to understand the fair market value of your practice for both an individual buyer and a group, as this can vary based on a range of factors.

 

Next, you need to learn about the different transition strategies and determine which scenario is best for you. The most common transitions are a(n):

  • Buy-out: Purchasers buy a practice within a relatively short time period. On average, this takes about three months and is the quickest transition route.
  • Buy-in: A specific buyer purchases a defined portion of the dental practice. This is a longer-term approach that can expand the value of your practice over time.
  • Associate to buy-in: A group of associates will court a potential buyer to purchase over a period of time. This process ensures compatibility and a smooth transition to map out the future of the practice. Division of power is the biggest decision that needs to be made with this method. While this is the longest approach – taking at least five years – it’s also the most flexible
  • Associateship: You can sell to associates while maintaining full control. In this method, not everything is agreed upon up front, which is why this transition option has about a 20% success rate; however, it can be profitable under the right circumstances.
  • Merger: Two existing dental practices combine into one entity and owners often stay on as equal partners after merging. Mergers offer great benefits like the net income remaining constant or even increasing because there is no loss of business.
  • Roll-up: You purchase multiple dental practices and combine them under one entity to maximize economies of scale. This can boost the value of your practice when it’s time to sell. A roll-up transition is the most lucrative if you have the time and capital to dedicate to this plan.
  • Affiliation: You sell the majority of your business to another entity, typically a dental service organization (DSO), with the intent to slowly transition out of the practice and give up clinical control to the group. This is an excellent way to maximize the practice’s value.

 

Proper planning prevents poor performance

Whenever I chat with dentists about transitions, I always recommend starting the planning process as early as possible – even up to ten years before you plan on selling.

 

You should start considering your options sooner rather than later because it gives you ample time to identify and make changes to your practice that can improve the valuation. These can range from amping up your marketing to increasing production and even upgrading technology to increase profitability.

 

Another reason to start planning your transition early is because you can be more discerning with the offers that you receive. When you’re in a pinch to sell your practice, it can result in taking one of the first offers and leaving money on the table. Taking your time with the sale puts you in the driver’s seat to evaluate offers and choose the one that’s best for you. A slower approach tends to make your practice more attractive to DSOs if you’re interested in an affiliation transition.

 

Don’t change the practice prior to looking to transition

The age old adage “if something isn’t broken, don’t fix it” also applies to getting your practice ready for a sale. Maintaining your production is one of the best things you can do to obtain the highest valuation possible for your practice because the financials from the most recent years will weigh the heaviest when determining the practice’s value. Slowing down your production can have a massive impact on the price you can get for the practice.

 

The same holds true for your practice’s specialty. Gearing up for a transition is not the time to focus on a new niche specialty. By opening the practice up to a new specialty – say, going from a general practice to a periodontics practice – you decrease the potential buyer pool and it can negatively impact your sale options.

 

Keep an open mind

The world of dental transitions has changed drastically. There are more transition strategies available now than 30 years ago. Bringing on an associate to hopefully buy your practice one day is not the only option. Keep an open mind to the different possibilities. It’ll ensure you choose a transition strategy that is perfect for you and your practice.

 

As outlined earlier, there are a multitude of options out there and you’ll find one that fits your needs. Maybe you want to start the transition process early by choosing an affiliation option and selling to a DSO years before you choose to retire. Or maybe you’re ready to get out of the business and want a buy-out option that’ll be quick so you can move into your next phase of life.

 

Be realistic

When it’s time to sell, banks and other financial investors will look at the current and recent history of the practice. They’re not going to lend based on the practice’s potential. While potential definitely makes the practice more attractive, it won’t impact the fair market value of the practice. In this case, sprucing up your practice or investing in more quality equipment can make your practice more desirable and potentially increase the value a bit; however, it will never be one for one in terms of getting your money back on that recent expense.

 

With more exit strategy options than ever before, this is an exciting time in the dental transition industry. Now, dentists have more control over the outcome of selling their dental practice and can take advantage of strategies that weren’t previously feasible. When it’s your time to start planning your transition, be sure to prepare by gathering all the facts so you can make the decision that’s right for you.

WSJ Reports: The Smartest Ways to Use Online Reviews When Shopping

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In our last blog article, we looked at the Wall Street Journal’s analysis of how consumers really use online reviews, and how what you thought you knew about reviews might not necessarily be true. In this follow-up post, we’re looking at the WSJ’s “The Smartest Ways to Use Online Reviews When Shopping” article (Note: not linked here as the full article is only available to WSJ subscribers). We’ll use insights from this piece to focus on the ways patients might perceive and even misconstrue some of the reviews out there, and what you can do to make the most out of your practice’s online reviews.

Reviews That Stand Out Aren’t Always Bad

Many people will follow the pack – same thing is true for reviews. If there are a lot of good reviews, most readers will gravitate towards those. But if you have reviews that stray from the pack, don’t fret – it’s good for your readers to see an alternative. Obviously no one should relish a completely negative review, but a thoughtful, substantive review, even if it’s not 100% positive, can create a sense of credibility and legitimacy in the mind of prospective new patients as they evaluate your practice’s online review presence. It’s human nature to be a tad dubious of nothing but 5/5 reviews.

Embrace the Mistake Makers

Have any of your reviewers visited another dentist and had a bad experience only to come to your office to get it fixed? These are some of the best reviews to signal boost in your marketing materials or in a “Testimonials” section of your website. According to a recent piece in the Journal of Marketing, people perceive those who admit their past purchasing mistakes as more trustworthy in their reviews. People tend to appreciate when someone prevents them from making the same costly mistakes they did.

Details Matter

Focus on the specifics within your reviews. If you elevate the reviews that outline concrete, objective statements about quality in your practice, you’ll provide readers with a more balanced, factual look at the feedback you’re receiving. Anyone can toss out vague sentiments light on specifics, but that doesn’t tell a compelling story – only the facts can do that.

In our last article, we talked about how everyone loves emotional storytelling in their reviews, but it’s important to not get swept up in that. If you can amplify the reviews that tell a story and also provide helpful information to your readers, then you’ve done your job. Balance is key in all areas, and your reviews are no different. Highlight reviews in your marketing materials that are heavy on specific details and light on fluff as much as possible.


Don’t Sweat the Small Stuff … and One-Star Reviews

Just because a one-star review creeps up under your practice, don’t lose all hope! While sometimes reviewers have good reason to dish out low ratings, oftentimes they’re just getting something off their chest. A recent article in the Harvard Business Review, found that about a quarter of negative online reviews are unfair — the reviewer was complaining about something outside the company’s control. So, just remember from our last blog on this subject — resist the impulse to try and hide or delete negative reviews. Instead, do your utmost to respond in a kind, reasonable fashion, and take the categorically unreasonable reviews that may trickle in on rare occasions with a grain of salt.


Watch Out for Active Reviewers

You want your best patients to provide online reviews for your practice, but look out for multiple reviews from the same profiles. An analysis out of the University of Hamburg found that fake reviewers submit 12 times as many reviews as genuine customers. You can also spot fake reviews because they’re typically lengthy, but full of totally generic praise. Lastly, clicking on their profile to check out the reviewers avatar/profile picture and other publicly available info can sometimes quickly reveal whether you’re dealing with authentic feedback or spam.

In conclusion, when you’re assessing the state of your online reviews, beware of those possible fakes in the midst of the others. Google, Facebook, and others have a process by which inauthentic reviews can be flagged and reviewed for removal. This is something the TNT team can assist you with. Evidently fake reviews, even positive ones, hurt far more than they help in terms of your business’s online perception and should be dealt with accordingly. 


Between this article and our prior companion piece, we’ve now looked at everything you thought you knew about online reviews. When you ask your patients to write reviews for your practice, keep these tips in mind to ensure you’re getting the most out of your online reviews so you can bring in more patients! When you’re putting together marketing materials for your website, social media, or other acquisition channels, don’t forget these truisms and best practices.

When you’re ready to start assessing your reviews and determining how to manage the content you have on your Google My Business or Facebook pages, contact us at TNT Dental. Our team is here to help you put these tips and principles into motion and turn your review presence into a true conversion machine.

WSJ Reports: How Consumers Really Use Online Reviews

As you might remember from the “Why Your Online Reputation Matters” article, online reviews are key to converting website viewers into patients. When you can capitalize on your patients’ positive experiences with your practice and take their testimonials to tell their story (all for a minimal cost!), it resonates with new and prospective patients.

So, naturally, you’d think the icing on the cake would be a slew of five-star reviews on your Google My Business or Facebook page, right? Not so fast, according to the latest findings in the Wall Street Journal. In their “How Consumers Really Use Online Reviews” article, they discovered some surprising facts on how readers interpret reviews and disseminate what’s too good to be true.
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Do You Know Your Dental Practice’s Patient Attrition Percentage?

Most would say the key to growing your practice would be getting new dental patients, but there’s more to it than just that. We work with a lot of dentists across the country, and the keyword you need to focus on and understand is attrition. You can’t be bringing in new dental patients and then leave the backdoor open for those new patients (or even your existing patients) to leave!

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How to Get Your Dental Office to the First Page of Google

As a dental practice today, you understand the importance of making it to the first page of Google. You want to be discovered by prospective patients, and Google is part of the gateway to making that happen. If you’re working with a dental marketing company, they should be managing your SEO strategy to help drive those patients to your page. But it’s important they’re taking the right steps to make sure you’re not only getting to the first page of Google but also getting the bank for your buck!
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Going from a $0 to $1M Dental Practice with 1 Front Desk Person

If you are a startup dental practice, you have a world of possibilities ahead of you, along with potential roadblocks. Startups are the new kids on the block, offering a fresh face for dental needs in the community. On the other hand, the uphill climb that comes with that includes addressing your three biggest challenges: how to get new patients, gain “big” practice accessibility, and manage costs.

As a new practice, your goal is to be successful, be aggressive in getting new dental patients, and hire the right people to work for your office. Traditionally, you had to sacrifice one of these factors in order to achieve success, but with new technologies and advancements, going forward, you can have it all!
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Net Promoter Score: How One Number Captures Potential Future Success

If you’re looking for ways to attract new dental patients, you might be focusing on the number of patients coming in the door, but that’s not the only number you want to keep in mind.

Now, think about companies you enjoy. What do you like about them? Is their customer service top-notch?

Companies gauge feedback on these factors and more to determine customer loyalty as part of the Net Promoter Score (NPS). If you’re not monitoring this score now… add this to the list of numbers to follow!
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Building Your Dental Practice’s 2022 Marketing Plan:
How to Get More Leads

Building Your Dental Practice’s 2022 Marketing Plan:
How to Get New Dental Patients

Our most recent article, “Building Your Dental Practice’s 2022 Marketing Plan: Managing Attrition”, focused on how you can manage attrition rates in your practice. By doing this, you can lower your marketing costs, which come in handy as you begin the groundwork for building your 2022 marketing plan! In the third article of this four-part series, we’re looking at the component almost everyone equates with success in a dental practice – the number of new patients. We’ll dive into how you can get new patients to walk in the door, and what that means for your marketing strategy as you look ahead to next year.

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Building Your Dental Practice’s 2022 Marketing Plan:
Managing Attrition

Reducing your dental practice's attrition in 2022 to save marketing dollarsIn our last article, “Building Your Dental Practice’s 2022 Marketing Plan: How to Set Goals,” we began the conversation about the importance of planning next year’s marketing strategy.

In the second installment of our four-part series, we are assessing the next step in your marketing planning… how to close your dental practice’s “back door” and manage attrition.

We’ll take a deeper dive into the three critical components of controlling your attrition rate: measure, manage and reduce.

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