Don’t coast into retirement
Practice Plan’s Richard Scarborough argues for a focused approach on growing your private patient numbers as you approach retirement
For many, the years up to retirement are a time to take their foot off the pedal and, sometimes, enjoy working fewer hours. While the temptation to take this approach is obvious, I would urge you to actually spend the later years in practice focusing on building your patient list and generating income in order to maximise goodwill value and ease the move into retirement. You can still do this while taking a semi-retired approach if you choose, it just needs some careful planning and forethought.
The first stage of this planning is to actually sit down and begin thinking about how you are going to retire, what it looks like for you and what you want to achieve. There is a huge range of options when it comes to retiring – whether you want to take a staged approach or have a fixed date in mind, for instance. Other factors to think about are do you want to retire from being a practice owner or from dentistry altogether, and would you sell to an associate or to a corporate?
Value is key
Whatever route you take there is one key pitfall you should try to avoid in order to make retirement as successful as possible, and that is ‘coasting’. I have seen it many times, dentists who are nearing retirement allowing the number of patients to naturally reduce, which in turn enables them to spend less days in practice.
However, if your patient base reduces, so will your turnover and profits (which decline more rapidly as your fixed costs remain the same), which in turn, devalues your practice. This can mean that you’re effectively working for nothing in the latter years as the income that you earn in those years could be offset by the decrease in practice value.
When it comes to selling your practice – whoever the buyer is – you want to demonstrate strong turnover and profits, and ideally potential for further growth. These are key factors that contribute to a higher practice valuation, which you really want to achieve to ensure the transition to retirement is as smooth as possible.
So, not only do you want to try and avoid this dwindling of patient numbers but it is important to keep one eye firmly on the prize of attracting new patients and actively evolve and grow your practice. A logical approach, that allows you to still semi-retire without affecting your goodwill value is to bring in an associate who can take over some of your work – and aid you in driving new patients and growing income.
Five year plan
To help you take a strategic approach to renewing your focus on attracting patients it can be worthwhile bringing in some expert help or working with a trusted provider to support you. They can help you examine your patient journey and identify areas for improvement, whether that be with proactive marketing, changes to the website, analysing your referral process or training for reception staff in how to deal with new patients arriving at the practice.
This can seem like a lot of effort when you’re thinking of winding down towards retirement, but having a provider to support you can also lessen the burden and help you develop a manageable action plan. Plus, the impact this work has on raising your goodwill value means it is more than worth the effort.
It’s also worth bearing in mind that valuations are based on the previous three years of accounts. So, you need to begin your retirement strategy at least that long in advance (although I would suggest you need five years to plan successful retirement, as you will already be in a financial year when you sell and retire, and when you begin planning). You need a feasible amount of time to create a growth curve of turnover and profit. This will smooth your route to retirement, and allow you to enjoy the hard-earned fruits of your labour.
Richard Scarborough is area sales manager at Practice Plan. Richard has many years’ experience in the dental sector, including as an area manager for a chain of dentists.
Practice Plan is a provider of practice-branded patient membership plans and an increasingly significant source of wider business support services for dentistry. Over the years, it has helped thousands of dentists introduce membership plans to become profitable and sustainable businesses.
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