My biggest goal in practice is the vision of owning 3 practices that are being run by 3 well trained young dr’s(turning them into businesses) and I just coach them, cover for them on a sick day or a vacation week or when I want to see patients myself, then sell the practices off to them slowly over time at a good sell price.

@ Rick – I guess I was muddling along, trying to work IN my business instead of really working ON it … my Life’s Purpose – then Number – really put a rocket up my …

@ Richard – Definitely good advice Richard, thanks!

@ Adrian – LoL, now what kind of post are you cooking up on the ‘frugal doctor’, Adrian? Whether your a doctor, lawyer or business consultant, isn’t it about the same business principles? Live on less, reinvest as much of your income as possible into your own business to grow it (or them) additional businesses, good strong commercial RE, or stocks? Same stuff regardless of title.

I’m curious how your revelation changed your business practices? I suspect you wanted your businesses to succeed beforehand? Did you take more risks? Or was it a case of finding what you were looking for? Before you were looking for how to keep status quo, but after for how to grow to $1.5 million/year?

@Scott – It seems to me that the best candidates to buy a practice would be doctors that already have some partial ownership. If I had a practice and wanted to ease out of it I would look for a few young and talented doctors that would like to eventually run the practice. Make a plan that they can reasonably gain ownership and you can get a fair value for the practice. Then train them and insure that they succeed. Over time gradually reduce your patient count and sell interest in the practice to them.

-Rick Francis

You’re absolutely right that personality counts. Having the actual skills only gets you into the game; to do well you need to make people comfortable with the whole process. But if you can learn this it’s likely that other people can too. Hiring people with the right attitude, reinforcing the main priorities, and training them all help make the business less dependent on you.

Selling the business at the right price is another matter – you need to convince buyers that it really is different and a higher price is justified. Of course it would have to be based on solid revenues and profits, but to show a buyer that it’s not all because you’re there you would probably have to have them come in and see how things are run, show them people who are ready to keep coming back (maybe they don’t even know who you are), and show that real differentiation is done without you being involved. For bonus points you can offer to do consulting after selling the business to help deal with any issues that arise – it gives you a little extra income too.

I’ve always believed that the best way to build a business to sell is to build one you want to own forever, but following these steps should help in either case.

Trust me, this isn’t just my opinion on the matter, or a lack of reading the right books(as i’ve read just about all the most popular one’s, and been to MANY success and finance seminars, too many to count) it’s the profession’s understanding as a whole and underground establishment that 60% of the annual gross collections is a typical sale price.

Even the most elite and business savvy dr.’s know this and function accordingly. It’s not the same as selling shoes, sandwiches or providing computer or cabling service for large corporations. 90% of patients are coming to see YOU, not even your service. I never realized how much personality and salesmanship having a private practice would require. Those with the most salesmanship and “perceived energy” for what they do have the biggest practices and when they leave, the practice becomes whatever the new dr IS.

You are right about the best idea being to let a new dr buy the practice over time and share profit. That’s how i’ve acquired my practice and the owner(and my former employer) has made a fortune off of my work.

When it comes down to it you can’t just replace a great doctor with an average one and expect everything to stay the same, but if you train the person who will be replacing you you can show them how you create value. I don’t know how many doctors want to stick with conventional employment vs taking on more risk for profit. But if you find one who is happy to work for you you can remove yourself from the day-to-day operations (if you still like the actual work rather than business administration remember that this allows you to have move of an impact by potentially guiding several doctors – you just can’t do it all yourself). At that point the business runs fine whether or not you’re there.

If you have someone who wants to end up owning their own practice, you can train them and then allow them to buy you out over a number of years – during which time you would be collecting a lot of profits without much work. To put it another way some sports teams only get by because of a few stars, but others keep winning as the players change because they have a highly effective team. A team business is worth more than a “star” business.

At the start of this year I was a freelance worker, but I realized that I had an awful business because nothing could happen if I was away – which is just as bad for my customers as it is for me. This might seem normal to some, but I’ve worked hard to change things and start removing myself from the process. At that point I don’t think I’ll sell the business – why not just keep collecting money from it forever while I start something new? This kind of decision really depends on you more than the industry you’re in.

I’ll need to come up with additional ideas to go along with this for sure.

Thanks!