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You have been thinking, it might be time. You have enjoyed a wonderful career in dentistry, have grown and nurtured an exceptional practice with wonderful patients. You have invested heavily in CE, for your clinical and business skills along with staff development and training. You would like to share what you have learned with a young doctor and begin to consider transitioning your practice, but you still love what you do.You are not sure though. Should you consider an associate so you can work a few days less every week? The associate can work your old schedule, you say. But wait, do you have enough room in your office for two doctors to be treating patients at the same time, you have never done that. You think I can expand and add an operatory, maybe…possibly? Or, expand our hours, with a staggered schedule? What is the staff going to say?! How about another hygiene room too, our patients are waiting way too long to get into hygiene!Whoa, not so fast partner…Can I afford all of this?How much is my practice worth?Should I consider selling my building too, or lease it back to the new dentist?When will I be ready to completely retire?Will my staff be ready to accept a new doctor and all of these changes?I have so many questions I don’t know even know where to begin.Do any of these thoughts, questions or ideas sound familiar? If they do then you are in the right place. Our Team here at OmniStar Financial are experts in all of these areas and can find the answers you need to feel confident with your decision so you can take action. In this podcast, we will review some of these topics to get you thinking and planning for your future.We like to say…> “If you are starting to think about a practice transition, then you are already three years behind. Today’s not to early to start planning!”> OmniStar Financial GroupI am nearly 35 years into my career and am now receiving more calls and having more conversations with my classmates who are beginning to think about or have already begun the process of transitioning their practice. I thought this podcast would be a great asset to have so I can share some talking points and get everyone thinking about what their transition might look like or could involve.To begin with, there are as many ways to transition a practice as there are dentists and practices to transition. There is no one way, no “cookie-cutter” way, no best or ideal way to accomplish such a monumental task. There is, however, one way that works best for you and your practice. Our challenge is to find that path with you.Our process here at OmniStar is very personal, methodical and hands-on for every dentist. We first start by identifying the wishes, goals, and desires of the dentist we are consulting with. These are all very different and unique for each doctor and their practice. Some may want to sell their practice and turn over their keys immediately, others may think of slowing down gradually over the next 3- 5 years with an associate taking a greater and greater role in the practice.We spend time educating the doctor about the process, steps and timing of key events necessary to prepare a practice for a successful transition. It can be a daunting and stressful time for the dentist as the practice he or she grew and nurtured for decades now comes under close scrutiny by others, especially the potential buyer's adviser(s) who will undertake a detailed examination of all financial aspects of the practice. We believe providing facts and filling in all the details and steps necessary can take away a lot of the worry and anxiety.Preparing the doctor and practice is critical here. This begins by examining the accounting systems, services, and reports that are being generated on a monthly basis. Many practices which have been operating successfully for decades can become complacent with record-keeping along with their bookkeeping. When these systems and records are closely examined by independent consultants they can be found inadequate, falling short of industry best practices. Deficiencies, inadequacies along with inconsistencies are never a good thing for a potential buyer’s advisors to find.In many closely held dental practices, quasi-business expenses sneak into the practice financials over time. A quasi-business expense would be something that benefits the doctor and other family members that are employees too. These additions or omissions can distort the financial picture of the practice and are sure to be pointed out and questioned by the purchaser’s consultants. Things like expensive CE, automobiles, rent payments (charging too much, or not enough), retirement plan contributions to name just a few are some of the more common areas we see.Other areas in practices that get overlooked, or undermanaged, include the Accounts Receivables as well as the depreciation schedule and assets. We observe that accounts receivable can accumulate in a practice with the good intention of eventually collecting the monies owed. Excessive and very old receivables adversely distort the financial health of the practice. Exceeding old accounts should be examined and a determination made as to the likely collectability of the monies owed. Non-productive accounts should be written off, or turned over to a collection agency. This write-off should be documented in the patient's ledger and used in future financial decision making should the patient ever return for treatment.> “There is no better predictor of future patient behavior as past behavior.”> Dr. David DarabDepreciation schedules and old “mothballed" equipment can also accumulate over years and years. This distorts the Balance Sheet, especially the Asset section, and ultimately the calculations used to determine practice value. Almost as exciting as watching paint dry, perusing and updating the depreciation schedule should be undertaken to “clean up” your financials. Equipment that is no longer in service, or has already been disposed of should be removed from the schedule and the asset adjustment made.Quasi-business items like automobiles, photography equipment and artwork that are used exclusively by or for the benefit of the doctor owner should also be identified and accounted for.Remember, your associate or purchaser is buying a business, your business. You and your advisors should do everything possible to present an accurate picture of your financials, assets as well as cash flows. Regardless of what you think, have heard, or read in throw away journals, your cash flow is King, and represents a critical asset in practice valuation.Practices with well established and written business systems and protocols along with consistent and strong cash flows and profitability have greater value to a purchaser and bring premium sales price compared to one where systems, cash, and profits are lacking.Other assets that need evaluation and possible updating include the practice equipment, technology, software, and web presence.Consider the following questions…how would you answer them?Is the practice completely digital?What kinds of imaging systems are used?Is there a digital workflow?What about the Practice Management Software? Is it current?Are the billing systems efficient?Is it a Fee for service practice? Is the fee schedule used by the practice current?Has the fee schedule been analyzed and benchmarked?What is the insurance profile or mix?Does the practice have a website that is current?Is it SEO Optimized? Does it rank at the top of a web search? Does it have over 60 5-Star patient reviews?Yes, lots of questions, and at times more questions than we have answers, at least initially.How about a few more questions…What does your workweek look like? What days and hours do you work?Have you been slowing your schedule down a bit? Or Driving Strong until the end?Are you accepting new patients? Do you see children?What is the demographic profile of your patient population? Do you have a wide range of ages? Or has your practice matured with you and now it mostly mature adults?What is your wait time for a new patient visit?Is it possible you have become highly selective with your new patients because you are so busy and can?Well, if you are considering an associate you will soon have several more “mouths to feed”, literally; an associate dentist along with his assistant(s) and hygienist. These additional employees will place immediate strain on your cash flow and profitability, do you have sufficient new patients entering your practice to maintain this new higher cash flow?Maybe you need to change some of your processes and systems in order to attract more new patients.Developing some basic social media marketing on Facebook, Instagram and Twitter might be in order to help jump-start and leverage the energy around a new associate.Maybe you haven’t thought about all these details before and that’s ok! That’s why we are here, to illuminate these potential blind spots for you!We take a “deep dive” into all of these areas looking for deficiencies and make recommendations to bring them up to current standards of accounting and reporting as well as best practices. Although we are not accountants or CPA’s, OmniStar has excellent Accounting Firms in its stable of Consultants and Strategic Partners. This also includes attorneys, bankers, practice appraisers, web designer and any other specialist needed in the process of Practice Preparation, Valuation and Transition.Once the doctor's succession plan is sketched out the question next turns to the practice building and real estate. Should one sell the practice and building at the same time, or continue leasing the building to the new dentist. These are great questions requiring a detailed and systematic approach to Wealth Management. Our Team at OmniStar uses a multistep process beginning with an evaluation of the dentist’s assets including Investments, Real Estate, and Practice. This is followed by a detailed analysis of cash flow, insurance, Asset allocation, savings plan, tax strategies, pension plans, and risk tolerance. Following this evaluation and analysis, actionable strategies are detailed and then implemented. Monitoring and optimization of the strategies follow as results are tracked and progress towards one's goals are achieved.As this analysis is completed new goals are identified and the process repeats itself in a constant cycle. With each iteration of this cycle, practice efficiency is improved, results are obtained and new goals identified which allow for continuous improvement.In almost every practice we consult with, blindspots are encountered and processes identified that can be improved through face-to-face team training and coaching which OmniStar provides to the doctor and staff. Remember it is never too soon to start “getting your house in order” when considering a practice transition. It is much better to be prepared early, than risk not being prepared when an unexpected opportunity knocks at your door. You want to be prepared to accurately answer the multitude of questions that will be forthcoming from both the acquiring or associate dentist as well as their advisor. (s)This brings up a very important point to remember; you do not always have precise control of the timing of your transition. Opportunities may appear earlier or later than planned or anticipated. Remembering this and being flexible can still enable the transition and transaction to work for the benefit of all parties. OmniStar can use its financial modeling to examine multiple “what if” scenarios to help you decide what path to follow.And finally…With all sales, especially that of practice, the Tax Man Cometh. Structuring the transaction so the tax consequences are minimized for both the buyer and seller is paramount for all!Remember too, throughout this process...> “It’s not the deal, but the people in the deal that makes a difference.”> Dr. David DarabWe are approaching the end of this Podcast now, hopefully, I have been able to shine some light on a few blindspots in your practice and outline an action plan to get you and your practice in top shape and ready for any opportunity that presents.From my perspective your practice is supported by 3 Foundational Systems that must always be monitored, analyzed and optimized to maintain a successful and growing practice:1. Finance- all things relating to and dealing with money; financial statements, accounting, banking, fee schedules, financial policy for patients along with insurance plans and networks.2. Property, Building, and Equipment- all physical assets you can put your hands on; building, location, dental equipment and supplies, computer workstations and servers, technology and imaging systems.3. Business, Software, and Human Capital- all things personnel and patients interact with; practice management software, EMR, insurance billing and collections, web site and patient portal, online reviews, practice systems, policies and Standard Operating Procedures.Keeping all three of these areas optimized is necessary to achieve operational efficiency and the highest level of profitability. Remember, If you need help here, or in any other way with your practice please reach-out to us here at OmniStar.There you have it! I hope that this information has created a few “Ah-Ha” moments, or stimulated some additional questions you can direct to your advisers. Hopefully, you now have a better understanding of the many puzzle pieces that must come together for a successful practice transition. We welcome your questions here at OmniStar Financial. Our Team is highly experienced and will help find answers to your questions. We welcome the chance to help you optimize and grow your practice and your profitability. Our contact information can be found on our website [OmniStarfinancial.com](http://omnistarfinancial.com). You will also find a link there to sign up for our newsletter.Be sure to check our show notes too.Please share this podcast if you found it helpful, and leave a review on iTunes too. We welcome your feedback and suggestions for future podcast episodes. You can always find me, your host, David Darab, at my twitter handle, @ddarab.Thank you so very much for tuning in and listening. We are very grateful for your time and attention and so very pleased to have you in our audience.