Can you point to where you are? If you are at the maturity stage, you have some big decisions to make. Some doctors describe this stage as chronic renal failure? Is this where your business or practice is at? See if you can mark “X” where you are on this cycle! Give us a call, and we can tell you how you can re-grow your practice, so it is attractive for the next generation of owners to take over.
Where do you exist on this lifecycle? Mark it with the letter “X”.
Succession planning – Is your practice attractive for the next generation to invest in?
There is nothing attractive about a business or practice that does not have an exciting future! After all, nobody wants to get on board of the Titanic!
You only need one younger owner to attract many other younger owners. It is about leaving a legacy and not a liability. An excellent succession plan allows the senior owners to gradually retire and not be forced into a “cold turkey” retirement.
This occurs mainly in mature practices, because part time doctors continue to incur many full time overheads, which make them eventually unsustainable if there are not enough providers. More importantly owners are throwing good money after bad. If a practice owner is going to quit within 2 years, then it does not make sense to invest in new plant and equipment and infrastructure. This includes people, unless you are going to remain in business or practice for at least another 5 years, regardless of whether you can sell the practice or not. Many owners do recognise this fact and they undercapitalise their practices which can lead to declining quality of care. This is obvious to patients and staff by the old magazines, the waiting room in desperate need of painting, staff with little or no training, and a low level of investment in computerisation and practice infrastructure. These are the warning signs and this can result in a medico-legally risky environment! Furthermore, this first impression does put off doctors and providers from joining the practice.
Finally, why invest in something you can’t eventually sell? This should be a choice and not a fait accompli. A good practice must demonstrate an attractive future and investment return. If you do not understand or cannot explain this, this is the main reason why your practice cannot be sold for a fair value. This has more to do with financial literacy, rather than your practice being worth very little. Many practices are worth a lot and the owners do not realise this. The following diagram illustrates the point. Contact us for further information.