How to Build Value Within Your Dental Practice and Sell It - Avi Weisfogel
In today's episode of The Entrepreneurial Dentist, Avi Weisfogel discusses how to build a dental practice so that you can sell it for maximum value. Listen to the podcast or watch the video podcast on Vimeo
Avi Weisfogel, The Entrepreneurial Dentist coming to you guys with the tips for today, which is really looking at the value of your practice. What the practice value is, and listen, what did, what do you get when you sell your practice? You know, part of my mission is always to make it so when a dentist goes to sell his life's work, he gets the max for it.
Even then, it's not the prettiest thing. The trajectory path of most dentists is build your practice, keep your practice way past the point of its highest peak, and then sell it. As we know, dental practice itself are typically around 70 cents on the dollar. What I mean by that is there's this formula and this formula was just put out by someone and it's accepted.
70% of like the three year average growth seems to be a number that practices go for. Now. Of course, there are times where it goes for a little higher. There's times where it may go for lower. Let's talk about a time it may go for higher. DSO is are coming in with all sorts of offers and you feel like you've just hit the jackpot.
What comes with that. A big restriction on your time. So it's like, well, I, this is great. I'm getting such an offer. How can I turn it down? But then you're not looking into the full picture, the full picture of how much you're able to create revenue wise during the period that you are beholden to this DSO three years, five years.
And then what are you able to do in addition to when you sell out to this DSO. Yeah. It's a difficult process. So if you sell it to a DSL where your number gets higher, you're actually losing more money than if you just sold it, walked away and did something different with your time where you were actually maximizing the value I have.
So there's an exercise that you should do. It's called how much do I need to make per hour to pay my bills. And how much do I need to make per hour to pay my bills, put some money away for retirement, and how much do I need to make per hour to pay my bills, make some money for retirement, put some money away for a time and have a little fun in the process.
And these are the numbers you need to know because then you judge the activities and it can't be shortsighted. It can't just be, well, if I need to make $500 per hour and I'm about to get 700,000 look at the headstart it gave me. But what do you weigh then then able to do with that time is really the issue and if you sell for a lot and you are stuck and you now have to work for X amount of years at X production, salary, whatever it may be, how is your numbers looking then.
Yeah. Let's talk about another thing that goes into it. Equipment I, I've talked about this numerous times. How much of value does the equipment get in this process? The answer, unfortunately, is none. I recently met a dentist who bought somebody old equipment. Oh, patients attached no money. You know, she paid for the equipment.
There was a bank that actually funded this, even though this wasn't the right thing to do. You can get into trouble way too easily in this industry. There has to come a time where you start to look at things the way a businessman does. You have to stop thinking like a dentist. You have to start looking at the alternatives and the possibilities of what you can make in this world.
Of what you're capable of doing. You know, your job. If you're like me, my job was, Hey, I'm a man. I get to go support the family. Yes, I know old fashioned ideas. Women make a great living these days. I know plenty of successful, uh, females in the world of dentistry and business in general, but I felt it was my responsibility to support the family.
That was the gig that was put on me, and so I had to really buckle down and go for it. In my case, I bought a dental practice and I kept going with the idea of trying to make it nicer and this is going to be the answer and that's going to be the answer when the reality is none of these pieces of equipment were the answer.
The answer was more, Hey, gain a better understanding of business. You really want to provide for your family, gain a better understanding of business, what business is about, what your time is worth. And what you can do with your time. How are you going to maximize your time? So the biggest value is coming off what you do.
Really the answer is you need something that can scale something that grows without you. There are, the industry is not that. If you're going to just do dentistry as your career. You have to get a handle on overhead. You can't keep buying equipment. You have to be able to look at ideas that are gonna allow you to grow.
Otherwise, honestly, your head for a lifetime of stress. A lifetime of figuring out where and how you're going to pay the bills, a lifetime of borrowing money to pay the bill. It's absolutely the worst case scenario because what's going to happen three to six months after you borrowed that money is now you're going to have to still pay the same bills that got you in over your head only now you have another loan on top of it.
You also might like to listen to Taking Your Dental Business To The Next Level