I retired from private practice four years ago. I had a successful 40+ year run doing general restorative and cosmetic dentistry. I had associates, and I worked as a solo practitioner. In the end, a couple of young entrepreneurs bought my practice and I worked as an associate for four years before stepping away from the chair.
This blog is about transitioning your practice now. It’s about retirement planning.
Retirement from dentistry, done right, is not just the act of stepping away from clinical dentistry but many things need to be considered first.
There are many things that need to be considered before retiring and transitioning from your dental practice.
1. Can I get full value at the sale?
2. Can I even sell the practice?
3. Do I have adequate funds to be able to live well for the next 20-30 years?
4. What will I do in retirement?
Can I get full value at the time of the sale?
This is also tied to the question, do you have enough saved to retire? I worked with consultants about ten years before I sold to analyze my situation. I discovered I needed to increase the value of the practice by increasing the production and collections in the practice. Most sales are based on one of several evaluations, but mostly a three- year average of your collections. What that meant for me was the need to get another consultant to help me improve my systems, train my staff to be more productive, and save a large portion of my increases.
Values and production have changed in the ten years since I did this, but back then the magic number was to get production/collections above one million dollars. I am sure the ideal number is higher than that now.
The proposition is that you have to create an asset that someone finds valuable. To get top dollar, you must create something that is something of value, but also something the buyer sees as having growth potential. This sometimes means improving the physical plant or doing cosmetic things to increase value. The biggest thing you have to do is increase the total collections.
Can I even sell the practice?
I bought the records of a practice for $5000 when the aging doctor decided to retire. Unfortunately, he had ridden the practice down to next to nothing. His physical plant was old and the equipment was ancient.
I have seen several doctors just walk away from their practice. For that reason, I intentionally positioned myself to sell at the peak of production and I made my office attractive and functional. Some small rural areas may have the same problem as this dentist I bought out because it is hard to find doctors who want to live in the area.
You can discuss what you have with a broker or a dental consultant that helps with transitions to see if you have a problem practice you want to sell.
Do you have adequate funds to be able to live well for the next 20-30 years?
We are living longer. My financial planner told me we have to plan to survive until age 93. The good news is that we are enjoying a longer life.
The bad news is that we need more money and other assets to support us for more years. This is something I did not have the skill to project, so I found another expert to help me plan.
Hopefully you will have a paid-for home and other cash producing assets in addition to your retirement funds to help.
You also have to figure what your standard of living is and how much it will cost you to have a lasting income. The answer to this is to start early, defer as much gratification as you possibly can, so that you can survive your extra years in comfort.
My reality was that I did not have enough money and I wasn’t on the correct financial trajectory at first, but with planning and execution, I finally made it. At the rate I am going, I should spend my last dollar at age 93.
What will I do in retirement?
Some people are lucky enough to feel good just laying back, resting, playing golf every day and generally just taking it easy. Unfortunately, I was not wired that way. I wanted to do something that fulfilled my need to create a legacy and create more income to do extra things around the house or for my family.
I work part-time in a FQHC clinic, teach, coach and consult, along with lecturing and writing. I call that being “REPURPOSED”, not retired. That is me.
What about YOU?
As long as you have a transition plan that makes you feel good and cares for whatever your needs are, go for it.
We all will retire or die first. The sad news is that our bodies cannot continue to do the hard job of dentistry forever. Plan, Save, Enjoy!
ABOUT THE AUTHOR
DAVID BLACK, DDS, FICD, FACD
Dr. Black is an associate coach/dental consultant for Dental Practice Solutions. He is “The go-to-expert for all dentists who are thinking about transitioning into retirement or buying their 1st dental practice.
Dr. Black owned his own dental practice for over 30 yrs. There he developed an understanding of the critical importance in development of the owner-doctor’s leadership abilities, in addition to having great clinical skills. Once he built a high-level of productivity in his dental practice, he was able to sell to a group practice; and the rest of his career