Orthotown September 2016 - 34

practice management // feature DR. GROB SAYS ... One factor that didn't seem to enter into many Townie posts: cash-flow analysis. A business is being sold and purchased! The No. 1 reason for divorce in America is money; that should be the most important issue when people are "married" in business, as well. Townie: amalgamator22 It all comes down to cash flow. Take how much the practice makes, and subtract overhead and all your debt obligations (like student loans and the practice loan). Is the amount left enough to live a lifestyle that is acceptable? How long will it take to pay off the debt? The reality is, it's a seller's market and practices are selling for 100 percent of gross. If geography is important to you, then your only other option would be to get a side job or have your spouse work and do a scratch start. DR. GROB SAYS ... I agree with amalgamator22's comment: It's a seller's market, because of supply and demand. He's also right about cash flow-if the practice profit won't support the buy-in price, it doesn't really matter what you ask. I believe that a practice's net is more indicative of its value that its gross revenue. If you're looking at two practices that both gross $1 million a year, but one nets $350,000 and the other $550,000, which one would you rather buy? TOPIC: Telling-and keeping?-current staff Townie: drorbach I'm in the process of closing on my second office this week, and am about to meet the new staff soon. This is not your typical practice transition because it was kind of a dire sale-last-minute, with the current orthodontist staying for just a month. This is a small practice-two days a week-with not too many active patients, so I'm viewing it as mostly a start-up, although the practice has been established for many years. (It just slowed down because of lack of marketing, etc.) The owner has not told the staff anything about the transition-something I didn't agree with, but he said he wanted to wait until we closed to break the news to them. I wanted to get some feedback from those of you who purchased offices with less-than-ideal transitions-how did you communicate with the new staff, and do you have any tips to keep them calm or prevent any backlash? I don't plan on letting any of them go, so I plan to reassure them that their jobs are safe. I do have some staff from my main office who are willing to step up and commute to the second office if need be, but I'd rather keep the current staff where they are since they know the office, the patients, etc. What kinds of issues did you have to deal with regarding patients or staff when you purchased an office, and how did you manage those situations? I'm planning for worst-case scenarios, particularly with the staff. Townie: Smileman I wouldn't be so sure about retaining the new staff until you have a chance to evaluate them, and I suggest being up front with them about that. I think it's best to have a meeting in which you lay out your expectations, vision and goals for the practice. Explain that you would very much like to retain the staff; however, the next three months will be an evaluation period. If you have some poor staff members, 34 SEPTEMBER 2016 // orthotown.com you'll want to let them go ASAP. Don't be surprised if one or more of them immediately hit you up for a raise. To pre-empt this, announce at the staff meeting that no discussions about salary will be entertained until you've had the opportunity to evaluate the entire practice. I think a minimum of six months is reasonable. http://www.orthotown.com

Table of Contents for the Digital Edition of Orthotown September 2016