Owning your own dental practice is more than just a job. As a small business owner you care for patients, pour your time and energy into building your practice, make day-to-day business decisions, and manage employees. When it comes time to sell your dental practice, how do you know you will reap the benefits of the time you poured into the practice? Unfortunately, many dentists in Austin don’t think far enough ahead and make small mistakes that end up costing them big when it comes time to sell. When you’re five years away from selling your practice it is time to start thinking about building value in your practice.
Investing in Your Practice Before Selling
There are two extremes when dentists think about preparing their practice for sale in Austin. The first is to pour as much money into the practice as possible, with the idea that they will get it back, and then some, after the sale. These individuals remodel their office, buy new dental chairs for every exam room, upgrade their digital equipment, revamp their websites, and more. This approach can easily cost tens of thousands of dollars. These doctors are not likely to recoup this investment when they sell their practice.
The second extreme we see is to do nothing. Dentists who have been practicing in the same office for 30 years do not want to bother upgrading anything just a few years before they retire. Why waste money upgrading your billing software and training your staff when the next owner might switch to a different system right away? These dentists will likely see less interest in their practice and may not get what they could have from the sale.
So, which is the right way to go about things? The answer is: neither. After over 20 years in the dental industry, our team of transition experts has seen it all. The truth is, most dentists will land somewhere in the middle of these two extremes. No matter what, it is a good idea to get a preliminary practice valuation to see what your practice is worth now, and learn how you can increase that value before you sell. Our team works with the valuation experts at Blue & Co. to provide fair and reliable practice valuations. Learn more about what goes into this report by visiting our dental transitions blog. If you’re just getting started, there are a few low-cost ways to upgrade your practice and get the most out of your sale.
Replace Your Handpieces Before You Sell Your Dental Practice
Despite the wide availability of electric handpieces, Dental Economics reports less than half of dentists use them. Dentists who still use air-driven handpieces often ask what the advantages of switching to electric are, considering the cost to upgrade. While making this switch certainly isn’t a “must have” for every dental office, we think the advantages outweigh the cost most of the time. Here are just a few ways you and your patients will benefit:
- Torque: Electric handpieces provide consistent, and higher, levels of torque when compared to air-driven devices. This allows for smoother and more efficient work. Not only will your patients appreciate this, it will allow you to work more quickly and increase your patient load (increasing your production and, therefore, the overall value of your practice).
- Noise and Vibrations: While dentists are used to the noise and vibrations of air-driven handpieces, many patients are made uncomfortable. In addition, the chattering caused by air-driven handpieces can produce a less efficient cut. Electric handpieces are more comfortable for the patient, and provide a smoother cut. Happier patients are more likely to return, and a stable patient base is integral to practice valuation.
If you are considering purchasing a new handpiece before you sell your dental practice in Austin, look into electric handpieces. There are plenty of models to choose from, with varying price levels and features. When you’re looking for the right model consider the attachments included, how much the model weighs, and how much maintenance it requires.
Electric handpieces are relatively inexpensive, but they can add great value to your practice, which is why we recommend this upgrade for many dentists. Increased comfort and efficiency will mean higher levels of satisfaction from patients and a greater number of patients served. Both of these factors will increase the value of your practice. Still unsure if new handpieces are worthwhile? Check out Dental Economics in-depth review of the pros and cons here.
See the Difference with an Intraoral Camera
Much like electric handpieces, intraoral cameras can add great value in terms of patient satisfaction. In addition, they aid in establishing a trusting relationship between patient and provider, whether you are just getting your Austin practice off the ground or are ready to sell your dental practice.
During an exam, you and your team take note of areas that need extra attention, but your patients must simply take your word for it. Established patients typically have no problem with this, but newer patients might be more skeptical. An intraoral camera shows patients much more than they can see in a handheld mirror. With the help of an intraoral camera your patients can see exactly what you see, lending increased legitimacy to your recommended treatment plan.
In addition to seeing things like cavities, intraoral cameras can be used for patient education and increased buy-in when it comes to routine dental care. Show your patients the spots they tend to miss when brushing and flossing. Use pictures to document your patient’s progress over time so they have evidence of how routine dental care, or lack thereof, impacts their oral health.
At this point you may be asking, as a dentist with a well-established practice, why do you need this upgrade? If you’re planning to sell your dental practice in the next five years you need to make sure that you are growing, and your patient retention rate is high. With the help of an intraoral camera your current and new patients will have increased confidence in you, be more likely to comply with your treatment recommendations, and recommend you to their friends. All of these factors lead to an increase in production which boosts the value and attractiveness of your practice.
Give Your Practice a Fresh Face
How long have you practiced at your current location? For Austin dentists preparing to retire and sell their practice the answer could be 30 years or more. During that time funds were likely directed towards things like upgraded equipment and marketing campaigns rather than a new coat of paint or updated decorations. And, as long as the wallpaper is not starting to peel and there are no unsightly stains on the carpet, that was not a problem. However, when you are preparing to sell your dental practice in Austin you should try to think both like a patient and a potential buyer.
We typically do not recommend remodeling your entire office, but small cosmetic upgrades can be a good investment. If you’re having trouble deciding what needs to be upgraded around your office try this simple exercise. Park in the patient section of the parking lot and imagine you are arriving for your first appointment. How does the outside of the building look? Curb appeal is important, even for dental offices. Enter the waiting room and sit in the chairs. Are they sagging or cracked? Does the paint or carpet have stains? Does the waiting room feel welcoming? Continue through the office taking note of the sights, smells, and atmosphere. Recruit your office staff and hygienists in this exercise as well, they will likely have an opinion if asked. A few small upgrades will go a long way in making your office feel more inviting, without breaking the bank.
Making the Switch to Digital Before You Sell Your Dental Practice
The use of an x-ray machine is invaluable in dentistry, and technology in this area has come a long way in the past decade. However, not every dentist has changed with the times, and a significant number are still using outdated x-ray machines. Many dentists who are nearing retirement do not see the point in upgrading to digital radiography. Between the cost to install a new system and the learning curve for the dentist and staff it simply does not seem worthwhile.
While these arguments are valid, what they fail to recognize is that digital radiography isn’t just the future of dentistry, it’s the present standard. Younger dentists have not been trained on older x-ray machines. They will be less likely to buy a practice that has not been updated to digital technology as this will require that they either learn quickly how to use the older system, or immediately invest in a new system. Investing in digital technology is not inexpensive, but in most instances it is worthwhile because it increases your practice’s value, and makes it much more attractive to buyers.
What to Avoid Before You Sell Your Dental Practice in Austin
As we mentioned above not every investment in your practice is worthwhile when you are preparing your practice for sale. Large equipment purchases, other than making the switch to digital, typically do not bring a return on investment. Unless your equipment is malfunctioning or your software is out of date to the point it is unusable, we recommend holding off on replacing it.
Our best piece of advice for dentists preparing to sell their practice is to avoid making rash decisions. Think through the usefulness of each purchase, consider whether it will add value in the short term, and ask for the advice of your dental CPA and practice transition specialist. Making the right kinds of updates, like those mentioned above, will add tremendous value to your practice. Some updates we recommend avoiding before you sell your dental practice are:
- New Furniture: Too often we see dentists replacing perfectly good waiting room furniture or dental chairs simply because they are the “wrong color.” Unless the furniture is broken, stained, or frayed, most buyers will not care or notice if you replace them.
- Billing Software: Your office staff is used to a certain flow, and even if a new billing software promises more efficiency, there is always a learning curve. Slowing down collections in order to train your staff is not useful when you are trying to build value in your practice. That said, if your software is so out of date it is difficult to use, it may be a good idea to replace it.
- Anything that Provides Long-Term Value: Plenty of equipment in your dental office is made to last a decade or more. This is great when you are first starting out, as your cost per use goes down over time. However, if you are making a large equipment purchase and planning to use it only for the next three years until you sell your practice, it does not make sense to buy.
Market-Driven Decision Making
When you are planning to sell your dental practice in five years or fewer, it is a good idea to invest in your practice in practical, cost-effective ways. Your goal should be to increase production, decrease overhead, and make your practice as appealing as possible to buyers in your area. This is why it is so important to work with a team of experienced professionals including a dental CPA, dental attorney, and dental practice transition expert. Your team will help you determine which upgrades are worthwhile, and which are a waste of money and time.
One of the biggest factors in determining which upgrades are worthwhile is your local market. Dental practices in Salado will not have the same needs as practices in downtown Austin. In fact, it might make sense for one of those practices to remodel their office, while the other practice only touches up the paint. Working with a transition expert is key to determining the needs of your specific practice.
If you are considering selling your dental practice in the Austin area, or anywhere in the Southwest, contact the practice transition experts at DDSmatch Southwest today. With over 20 years in the industry we can help you determine which steps will add the most value before you sell your dental practice in Austin. Set up a consultation by visiting our contact page or calling 855-546-0044.