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What are Blinks? Quotes or excerpts from articles that provide some insight related to owning a practice.
Train people well enough so they can leave, treat them well enough so they don't want to.
Sometimes people think they are paying me to handle their transaction. They are actually paying for what I know and how I negotiate… my 45 years of experience.
Buyers love potential, but they only pay for history. History is WHAT they are buying; potential is WHY they’re buying it.
It’s far better to buy a wonderful business at a fair price, than to buy a fair business at a wonderful price!
No business is perfect and no business will match all of your criteria. You will have to select those criteria that mesh most closely with your parameters. After you become the owner of the business you will use your skills, talents and knowledge to grow and enhance the business. If you wait for perfection, the dream of business ownership will remain only a dream and never be realized.
California Association of Business Brokers website
Don’t dismiss the importance of revenue to profitability. While controlling expenses is important, cutting costs to improve profitability rarely results in lasting benefit. “You can’t cut your way to prosperity.”
Selling the Dream
We sell businesses. But what the buyer is really buying is the future income of the business.
But many buyers seem to have lost sight of this. They go through extensive (and expensive) analysis of the business they are considering buying with an emphasis on the historic performance – particularly, financial performance.
Yes, this is important – to verify the quoted sales and expenses. But the truly entrepreneurial buyer will be focused on how to increase sales and profitability, how to attract more patients, how to improve marketing strategies, and how to maximize the value of the business.
In assessing a business opportunity many of the key factors will not be found in the financial statements. There are ample exciting opportunities out there for those who focus on what can be.
Edited from an article by Business Brokerage Press
Business buyers… recognize the value that the employees bring to the table. These employees are keepers of the customer relationships, they are the well of knowledge about the company’s products and competitive advantage, and they know all the gotcha’s to avoid. They are the new buyer’s path to business continuity… As business sellers, it is important to recognize this and to take necessary steps in advance of your sale to help the key employees stay.
“A Major Concern for Business Sellers…”
It doesn’t make any difference what you think your business is worth, or what you want for it. It also doesn’t make any difference what your accountant, banker, attorney, or best friend thinks your business is worth. Only the marketplace can decide what its value is.
Business Brokerage Press
Traits of a Marketable Business
Besides price, the following are very important considerations for buyers.
- Increasing Revenue – Business buyers look for operations with revenue increases in each of the last three years, ideally even in tough economic times.
- Complete Financial Documentation – Buyers want provable cash flow. They want to see these records for at least the past three years: Federal tax returns, Income Statements (“P&L’s”), Balance Sheets, payroll records.
- Condition of Premises – A neglected facility (including equipment) is a frequent reason why buyers walk away from a transaction or make offers that are significantly lower than the asking price.
- Continuity of Ownership – Buyers are concerned if the current owner has been there for less than five years.
The Business Broker (edited)
Thinking about buying the practice you now work in?
Statistically, few Associates buy their employer’s practice, and that’s a shame. Too many Associates see what’s wrong with a practice, and buy a different one, knowing far less about that one. Instead of seeing just what’s wrong, look at what’s right in your current practice. It already has…
- Enough cash flow to pay you and the owner.
- An established base of patients, many who know you.
- Staff that you know and they know you.
- Goodwill that you can count on.
You may think the equipment needs replacing, the carpets are old, and the ceiling tiles are stained. The price of the practice reflects those shortcomings. And, it is generating cash flow for you to live on and to pay your debt.
As you improve the operation of the practice, there will be funds to fix it up to your liking.
Staff training is important! A common question from doctors regarding staff training is, “What if I train my staff and they leave?” The best response we can offer came from Alan Cleinman of Cleinman Performance Partners: “What if you don’t train them and they stay?”
Buyers want a super-profitable business for a very low price and very low down payment, and then get scared because they wonder why it’s for sale.
The Business Broker
Why have more staff? … most optometric practices are understaffed and many good things happen when an additional employee is added.
- Customer service improves because people are available to help.
- Office and clinical efficiency increases with more assistants, so productivity goes up.
- Staff morale is enhanced because some of the stress is taken off everyone.
- Marginal employees improve their behavior because they realize the practice will survive without them.
- Practice continuity and security is improved as more people learn to do tasks that formerly depended on one person.
- The practice is perceived as in a growth mode by employees and patients
Optometric Management Tip of the Week
Tip #310, January 2008
Asking for help is not a mortal sin. Why is it that folks who need help the most don’t ask for it? Asking for help is not a sign of weakness or failure, but is in fact, a very positive sign. … I am continually amazed at the number of highly successful, highly organized professionals who call on us for assistance. These professionals are winners … and they have a pretty good grip on what it takes to run a business. However, they understand that in order to stay on top of their game, they have to surround themselves with experts and fellow winners. So, if you really want to be successful, ask for help. You’re known by the company you keep.
“Ten Things You Should Know About Optometry in California”