Is the Value of Your Practice Invisible?

Hey, everybody. This is Dr. Bob Hoffman for The Masters Circle Global, and I have an interview you’re definitely going to want to pay attention to today. We get to speak with Dr. Randi Ross, who’s the head of Premier Practice Consultants and what Randi does better than anybody else in our industry. is she knows how to value your business and even more important how to sell your practice.

So I just want to welcome you on Randi. You’re a dear friend. You’ve sold so many of The Masters Circle doctor practices where the doctors were so happy with the process, the ease of the process. Welcome on to today’s call. Well, thank you so much for having me. Always a joy to be here with you. Thank you. So Randi, it’s been my experience that most doctors overestimate what their practice is really worth, even if they’re thinking of it at all.

And yet you have to navigate that because the buyer wants to pay less than it’s probably worth. And the doctor selling wants it to sell it at a value more than it’s worth. How do you succeed at that, man? I My, my hat’s off to you . Um, it can be a challenge, uh, and, you know, a little bit of a delicate dance.

to get people to understand, you know, what the real value is. And unfortunately, people listen to other people that really don’t have knowledge in our sector. You know, when you’re talking about other kinds of healthcare, whether that’s dentistry or conventional medicine, or even PT, you know, the, the numbers play out a lot differently of, of how a value comes about.

And unfortunately in chiropractic, this is just reality of the situation. Our values do come in a little bit less than other specialties. So what I do is the first thing is I do a report and that report allows me to gather the data. About the practice and look at it as a whole picture. Yes, we’re looking at the financial part, you know, the numbers, the raw data that will come up with a numerical value, but I want to see the other elements of a practice that is unique to chiropractic, because those are things that people will ask about that.

I have an understanding of presenting as a valuable part of this practice now, does it always add monetary value? Not always. But it will often be one of those things that tips the scales on a buyer pulling the trigger. So a perfect example of that is something like what EHR program does someone use?

And there are still a lot of people out there that don’t have or utilize EHR. an EHR program set up. And for some buyers, that’s a huge deterrent because they know they’re going to spend 15, 18, 20, 000, whatever it comes out to, to get that EHR program running for them. So again, there are, there are elements that we collect that go beyond the numerical value that can sometimes bring value added in another way.

You know, it’s based on how much revenue does your practice taking? How much money do you spend to run that practice? You know, and I could have two practices, Bob, you know, both make let’s just call it 500, 000 a year. But one gets away with their overhead at 200, 000 and one spending 400, 000 on their overhead.

That’s not a big stretch to guess on which one is more value. You bet. So, you know, we have to really show the, the, the doctor, the seller, the owner, you know, here’s why this is the value for your practice. And don’t listen to your accountant because they don’t sell chiropractic practices. And there are other factors.

There are many factors, more factors than we have time to get into today. But it’s how long have you been in that practice? How many new patients do you average? What kind of retention and, and compliance do you get with your patients? What kind of reputation you have in your community? Um, is your equipment leased or owned?

What’s your overhead is the staff staying for the transition or leaving with you? There are so many different factors that go into that And yet your job and you do an amazing job at this is actually creating a proper valuation of that practice By going through all those numbers and all that information and coming up with what is a reasonable and fair and equitable price for that practice.

And what kind of response do you get from the seller doctor when you show them that, that report that you put together? And, and if I remember Randi, you actually do three different ways of valuing the practice to get to what the average is. Yeah, we actually use four formula that are basically used by the banks because when I price a practice I want to price it at what I know a bank will fund it.

Otherwise, we’re kind of spinning our wheels. And, you know, when I show that to, um, to, uh, to a client, Uh, it’s met with mixed reviews. Some people are, you know, are very open to, uh, Understanding that this is what I do and I have your best interest at heart. Like I always tell people, I want you to get the most money.

So that’s how I make the most money. I mean, it doesn’t behoove me to tell you practice for less than it’s worth, but you have to be realistic. Some people totally push back and want a lot more. So if I just said for argument’s sake, you know, practices probably on the market today would sell for 300, 000 and they say, well, I think we should list it for 400, 000.

I would very respectfully tell them I’m not the right representative for you because I know that that’s way above, you know, and, and the theory of, well, we have to leave room to negotiate. Well, yeah, but you’re going to scare buyers off. You know, if the negotiating window is this far. People will, everyone’s like, well, people will make offers.

No, that’s not a good mindset. Yeah. They’ll make offers if you’re like, you know, 10 percent maybe above of what they think the value is. But if you’re really being excessive in what you want, you know, Bob, I always use the example to people’s like my little trade line, do you want to sell your practice or do you want to list your practice?

Because they’re two very different things. Um, and some people will wrap their mind around what I’ve presented to them and what I’ve shared with them as what the market value is for their practice. And some people won’t. And that’s okay. And they’re, you know, free to find someone that will, you know, offer them what they’re looking for.

I just know what’s realistic and what is doable. Yeah. You’re so busy. It’s not worth your time to waste your time on a practice that’s not sellable. And it also becomes a bad reflection on me and my company because then people I’m, I’m known in the industry as, Oh, well, you’re that representative that over inflates everything that doesn’t serve me.

So my hope is that the people who are watching this, who are starting to consider is getting to that time to sell practice. To maybe retire or semi retire or to move on or to change career choice You’re the go to person. They should be contacting you But there are other people watching this that aren’t yet at that level, but they have no idea What their practice is really worth And what steps could they be taking over the next year or two or four or five to increase the value of their practice?

And that’s why you also do practice valuations. Could you speak to that just a little bit? Yeah, and I think that anyone that’s in practice should have a practice valuation. It’s a great snapshot of really the overall picture of your practice. And you might have, you know, you might be in practice five years thinking, well, I’m not going to retire for like another 20 years.

It’s, it’s a good guide the way you do your taxes or you do stats with your clients and you do analysis of the practice. This is another one of those tools. And like you just said, it’s a great way to really look at it and say, okay, where, where can we do better or what can we add or something I talk about a lot lately are the trends in our profession.

What are the trends? Am I following them? That will keep the value of my practice at the most whenever I get there. And the other really important thing to know, Bob, and for everyone listening, is whether it’s, you know, retiring, retiring, moving, um, you know, bringing in an associate, whatever. Sometimes those choices are not always ours.

So if you’re on top of things at all times, if something does happen, that’s a little bit out of your control, you’re just prepared and being prepared always meets with better opportunities than scrambling when something happens. And those are those. Unfortunate calls that sometimes, you know, you or Dennis and me or other people when a doc got sick, can’t work anymore, or unfortunately passed away.

And they’re not always what we all think about. Oh, they’re in their 60s or the 70s, like all us old people. No, unfortunately, those things happen.

You know, I would say the people that work with me on a regular basis. We do a baseline valuation. Then we do a yearly update. If God forbid, something happens to them. I have their practice on the market in 24 hours. So it’s another element of what we do that is for those elements. Yeah. And Randi, it’s consistent with our chiropractic philosophy about being proactive, not being forced into being reactive.

And it doesn’t matter if you’re 30 years old or 40 or 50 or 60 or 70 or 80. This is something everyone should be thinking about and being proactive about. So this is a great little snapshot. There’s so much more you and I could be talking about, but if someone wants to reach out to you, and I hope everybody watching this wants to reach out to you, how do they get in touch with you?

They could just visit our website, Premier Practice Consultants with an s .com and you could see on there multiple ways to contact me. Uh, you could just call me (770)748-6084. I usually answer the phone. If I don’t, I’ll be texting you back while I’m on the phone on a call. We’ll get back to you shortly.

And, and sometimes you just have certain questions that you’re not sure. Are you ready? And I have a lot of those conversations, Bob, where people, you know, you might send me someone or people that just come our way and they’re like, well, I’m thinking about it. You know, how do I know when to start? You know, what do I need to be?

Making sure that I’m watching what do I need to be preparing even if it’s two or three years from now So it’s not always a conversation where you’re instantly hiring me Sometimes it’s just a conversation to help you be better prepared and have a little bit more knowledge Than you did before that call great advice great advice for those of you I just want to point out that dr.

Randi Ross and Premier Practice Consultants Have been gold sponsors of The Masters Circle for years a dear strategic alliance of ours Because they are the company we recommend and endorse They have the most integrity. They’re the most effective. They do the best job and I am proud of our relationship with them So if you’re watching and listening to this, please get in touch with Randi Do the valuation of your practice.

It costs a few hundred dollars, but it’s worth its weight in gold. You get a sense of where you are, but more important, you start to learn what steps you need to be taking now to make your practice more valuable tomorrow. Randi, thank you so much for your time today. I greatly appreciate it. Always here to help.

Thanks.

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