Have you given any thought to the future of your dental practice? Not next month or next year, but what will happen when you're ready to retire. Sometimes, retirement can be forced upon us. For example, one dentist I know had to drastically reduce his practice hours after developing severe neck and back problems.
Planning for your exit long before it's necessary can give you, your employees and your family peace of mind. Whether you plan to pass your business on to the next generation, hand it off to a partner or sell it altogether, planning is essential for a smooth transition. Unlike other businesses, a dental practice requires a licensed professional to take it over, which means succession planning well ahead of time is vital.
Start by deciding what you want to do after you retire. Do some soul-searching and talk to your family about how you envision your retirement and what will happen to your practice afterwards. Do you have a younger family member who's already a dentist or training to become one and has potential to take over your practice? If not, could you bring on a younger partner and eventually sell out to him or her?
If neither is your preferred option, you'll need to plan for maximizing the value of the practice so you can sell it when you want to retire. In all three cases, you should start planning at least five years before you intend to retire.
The option you choose for your exit strategy will depend on your goals for retirement. For example, if you plan to keep working until you're 70 years old and live frugally after you retire, you'll have a different exit plan than if you hope to retire at 55 and travel the world. Talk to your financial planner and your accountant to get a realistic idea of what your financial needs will be.
Next, talk to a lawyer about different methods of bringing a partner on board or transitioning the business to the next generation. It's important to make sure that all agreements are spelled out in contracts that detail not only of the terms of the partnership but when and how your share of the business will be bought out. For example, you might want to bring on a junior dentist, give it a year to see how the relationship works out, and then reassess whether the junior dentist is willing and able to take over the practice eventually.
If you're hoping to sell your practice to a currently unknown party at retirement, talk to your lawyer and accountant about ways to maximize the value of your practice so you can get the best possible price for it. Don't forget to keep up your practices' good reputation by maintaining an active social media presence and encouraging patient reviews. Lighthouse 360 can help with both of these tasks.
Remember, those who fail to plan are planning to fail — so start planning your exit strategy in plenty of time to ensure you reach your retirement goals.