If you’re thinking of selling your private practice, one of your primary concerns likely has to do with its value. How much is your private practice worth? What can you really make by selling it? And is that monetary gain going to outweigh the hassle? You’ve heard the horror stories about failed negotiations, missing paperwork, and flaky buyers. So before you start your private firm valuation or just quietly pack your things, consider these six, often overlooked reasons why your business is worth more than you think.
1. Your Goodwill: Your private practice is guaranteed to have one asset that sets it apart from all others in the same industry, and that’s you. You and your business have a reputation, a brand, and relationships that are unique. Clients and other practitioners see you as a trusted resource to which they can turn. They know what you can provide and how well you can provide it. That reliable quality may be intangible, but it is also invaluable. By purchasing your goodwill, your potential buyer is saving a hefty penny in reproduction costs.
2. Job Value: Ignore those headlines declaring that the US unemployment rate is down to a cushy 5.6%. It’s underemployment that you care about. That rate for both Washington State and the US of A is just under a much less pleasant 13% – up from approximately 7% in the year 2000. There are countless professional entrepreneurs who are looking for the freedom that self-employment brings. Good jobs are, frankly, worth more now, especially jobs that come with the added bonus of being your own boss.
3. Mentorship & Experience: Were you prepared to practice when you graduated? Would you have benefited from someone mentoring you in a way you can now? A 2013 survey of 1,000 hiring managers found that more than three-fifths considered recent graduate interviewees unprepared to work in their chosen field. Clearly, there is a gap between the education system and the professional world. It isn’t the academic know-how that these graduates lack, but rather the organization, leadership and management skills, and general street smarts. This is something you have. You know how to run a practice and run it well. Better yet, you know how to run your practice. Remind potential buyers that they aren’t just purchasing a business, they are hiring a mentor.
4. Turning the Key: Despite the efforts of author Dr. Meg Jay, thirties are becoming the new twenties, but with the added pressure of being that much closer to forty. Young professionals are feeling that pressure, flitting from job to job, desperate to find their golden ticket. 46% of US millennials want to start their own business, only 8% have done so, and only 11% have any plans to do so within the next year. They are intimidated by the economic risk. Buying a turnkey business like yours vastly mitigates that risk.
5. Customer Base: According to Forbes, the hardest part of starting a business is customer acquisition. You already have a book of business, a list of clients, and trusted referral sources. And while you can’t directly sell your customers, you do have the records to support continuing, revenue-generating business and the option of being a priceless transition coordinator. You have ‘going-concern value.’
6. Office Space: Do you own your office space? What about special equipment, general office supplies, or even décor? Did you have to make any operation-specific renovations or upgrades? It may seem obvious, but don’t forget the book value of what you own. Packaging all of this with your business can add substantial business worth and increase the demand.
When it’s time to determine your private practice’s worth, consider these six factors. And if you’re ready to sell your practice, our business valuation services can help you.
