o.d. to o.d.

It's Time to Start Thinking About Succession Planning

Regardless of where you are in the life cycle of your practice, you should keep an eye on that final sale.

BY WALTER D. WEST, O.D., F.A.A.O., Chief Optometrie Editor

Flash! Nothing is forever. These words have never been truer than with the independent, small business you own … your practice.

Early in the process of starting your own practice, or purchasing an existing practice, the thought that you would create or add value to that business and then one day sell it certainly must have crossed you mind — at least I hope it did. Sure it did. That's part of the life cycle of a business and one of the reasons you invest your time and effort in not only practicing optometry but in managing, investing in and nurturing your business.

It's never too soon

So, when should you begin thinking about selling your practice? Just before you start it or just before you purchase it isn't too soon. Think about it. When you're deciding how much to invest in the start-up of your practice or determining the value of the practice you're considering buying, you're identifying your financial investment. This is the time to start making some projections as to how much you can grow your investment, sell it and ultimately harvest the fruits of your labor.

In many cases, however, thoughts of the sale begin to fade as soon as the practitioner acquires the practice. All to often, from the very beginning, the owner focuses his attention on cashflow and day-to-day profitability to the point that the ultimate value, the future sale of the practice — and long-term profit — is either over-looked or pushed into the background for 25 or 30 years. Only when it's time to retire from practice, does interest in the value and sale price of the practice become the center of the O.D.'s attention. At this point, however, it's generally too late to make the most of the sale — that is unless you're willing to delay your retirement to prepare for putting it on the market. I would argue, it's better to have the freedom to choose this alternative rather than have it forced upon you by poor planning.

Have you lost sight of value?

How do you know whether you've lost sight of the importance of the value of your practice? Many behaviors are associated with an owner's lack of investment, but most commonly it's this: The owner stops investing in the practice.

This lack of investment can take on many forms. One is that the owner begins to reduce the time he or she spends on the business. Oh sure, you've worked hard all those years to get to the point that you don't have to work so hard, but realize that the time you're taking away from your business may be reducing or limiting its' the growth.

Second, I see owners stop updating furniture, fixtures and equipment. Also, they cease adding new technology and forego necessary aesthetic improvements to their facility. Their rationalization is that by not performing these upgrades, they are increasing their net percentage, or adding to their bottom line. This just isn't the case.

From freedom to shackles

Many O.D.s in their 25th to 30th year of practice contemplate selling their practice, taking their profit and either pursuing a second career or retiring. Unfortunately, many of them are shocked to find that selling their prized possession is difficult — that it's not worth what they thought — and they now feel shackled to the practice they were ready to leave. OM