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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.

TNT Marketing Education Series: #2 – Dentistry’s Deadliest Marketing Mistake

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Are You Making Dentistry’s Deadliest Marketing Mistake?
Presented by The Scheduling Institute & TNT Dental

As you might remember in January, we kicked off our TNT Marketing Education Series with a talk about geofencing. We continued last month with the second installment in the series, “Dentistry’s Deadliest Marketing Mistake,” with Jacquelyn Mavrookas from the Scheduling Institute. Known as the world’s largest practice management company, they work with growth-minded doctors ready to learn about marketing and new dental patient generation.

In this series, Ms. Mavrookas walks us through the main components dentists need to focus on to grow their practice, but also helps us understand the biggest factor sabotaging their marketing efforts.

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Using Geofencing & Other Data-Driven Techniques for Growing Your Dental Practice

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Geofencing & Other Data-Driven Techniques For Growing Your Dental Practice
Presented by Simpli.fi & TNT Dental

New Year, new you, right? The same could be said for your dental practice, and TNT Dental is looking forward to helping you get there! We’re excited to roll out a new TNT Dental Marketing Education Series, designed to help YOU learn more about the latest trends in dental marketing and what you can do to grow your dental practice!

We’re bringing the top professionals in their fields to you via an interactive webinar, to share tips and tricks of what you need to know to enhance your dental marketing efforts. This first series, “ Using Geofencing & Other Data-Driven Techniques for Growing Your Dental Practice,” will be one of eight installments sprinkled throughout the year for YOU, our clients.

We kicked things off this month with David McBee, the Director of Training at Simpli.fi, and more importantly, a prominent figure in the world of internet marketing. He broke down the myriad of ways dentists can utilize targeted display to stay in front of the right audience and get new patients. Read on to learn more about how this powerful marketing technology works and how it can work for your practice!

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VIPS Dental Hosts Moderate Dental Sedation Safety Conference

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VIPS Dental logoMore and more dental practices are now offering a growing variety of sedation options in order to stay competitive and help more patients, making safety a much larger concern moving forward.

VIPS Dental is hosing a CE course we think you should know about, designed specifically to help dental practices navigate this ever-changing landscape so you can always be prepared and serve your sedation patients with peace-of-mind.

A panel of experts will discuss a variety of topics you’ll be able to utilize immediately at your practice, such as: which emergency equipment/drugs and response skills you and your staff should have, how to protect yourself from liability, and how to improve the overall safety of your sedation practice. Whether you’re practicing in the Dallas/Ft. Worth area or anywhere else in the nation, this course will help you stay on top of the latest trends, changes, and regulations so you can better protect yourself and your patients at the same time.

Learn More at TXSedationEd.com

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