Regardless of whether you are in the early stages of owning your dental practice, you are bringing in a business partner, looking at how much insurance you might need to buy for your practice, have an established practice or you are ready to expand or sell your practice, knowing where you stand vs the market is essential to running a successful practice. By following these 3 (three) simple steps, you will be on the road to optimizing the value of your practice.
- Discover – You need to discover where your practice is relative to the market on an annual basis. To do this you will need to have operational, financial, market, and asset information available. Conducting a valuation on an annual basis allows you to understand where your practice stands against your competitors and the current market value of the practice. The valuation also can be used to review current market trends and conditions along with determining where you stand against key performance indications (KPIs) specifically aligned to the dental industry and compared your results with practices of similar sizes. Waiting until you are ready to sell a practice or expand a practice is too late. Optimized and efficiently run practices, discover, monitor and improve their practices on a regular basis.
- Monitor – Once you have discovered what your specific values are for the KPIs and where you stand vs the market, you want to monitor these KPIs throughout the year ideally on a monthly basis. Do you know what these KPIs are and are you currently monitoring theses at this time? If not, conducting a valuation which provides you these KPIs on a regular basis can be very effective as well as having a process whereby you can calculate these results monthly should be considered.
- Optimize – Now that you have a process in place to monitor your practice KPIs, the last and final step is to create a plan to optimize these KPIs within your practice with the knowledge provided in the analysis above. Look at the KPI and what levers drive the results and create a plan on how you might want to optimize your results. Continue to monitor the progress against your plan to see if the changes you are making do in fact deliver the results you are looking for. Sharing the KPIs, results, and outcomes with your staff should be top on your list. Everyone who has an impact should be measured on how they are affecting these results. Consider aligning the KPI results with performance incentives for your staff. Celebrate positive progress on a regular basis and create a team that is focused in supporting this process.
Whether you are looking to sell or buy a practice in the near future or not, monitoring your practice value and KPIs on a regular basis can be the key to optimizing the value of your practice when it’s time for you to retire. Since you spend the majority of your life working in your practice, why not make the most of this time and be sure you are getting the most out of the valuable asset you are growing and the efforts you and your staff are making. Using KPIs will allow you to not only measure results to see if actions taken create the value you intend or review what changes you might need to make in your operations. Spending money wisely on these improvement areas and seeing results will result in striking “gold” when it comes time for your retirement!
To get started, Neri Capital Partners is happy to help perform a practice valuation which includes the measurement of key dental practice KPIs. We have a specific practice valuation plan whereby this process can be completed quickly on an annual basis for one low price. For more information feel free to reach out to Lynn Anderson, email@example.com, 404-931-5103 to learn more. Here are a few addition articles which explain why valuations matter to any small business owner. Good luck with optimizing your practice!