o.d. to o.d.

When Should You Think About Selling Your Practice?

Right from the very start, as it turns out. Avoid these mistakes when planning the sale of your practice.

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

When you first open your practice, it's likely the last thing you'll think about is selling that practice. But it should be. In fact, a profitable sale should be your ultimate goal.

In starting your practice, you look to create an asset, not just a business that allows you to live month-to-month. Then, when the right opportunity comes along, selling your practice can provide you with the financial flexibility you're seeking. Perhaps you'll be able to retire, pass on the asset, and disassociate yourself from the day-to-day operations of the practice. Yet, none of this can happen without planning. And the challenge for many O.D.s is that, even if they do plan for the eventual sale of their practice, they do not plan properly.

When planning to sell your practice, avoid these mistakes:

1. Not having an exit strategy

Setting goals for your business at the beginning is the best way to ensure you'll pick the right time to sell. You'll want to know exactly how much you would like to earn or exactly how much you can afford to lose. If your goal is to turn a 200% profit on your investment, you can sell as soon as you receive an offer in that amount. You don't have to wait around wondering whether you can get a bigger offer than that.

2. Making emotional decisions

Having an exit strategy is a huge advantage if you are emotionally tied to your practice. Most entrepreneurs who have started their own practice invested more than money. They invested a huge amount of time and made personal sacrifices. As a practice owner, you can't help but feel a sense of loss, even if your practice is selling for a nice profit.

In an effort to protect yourself from making bad decisions, however, never allow these emotions to interfere with your best judgment. Having an exit strategy is one thing, but sticking to an exit strategy takes discipline. The bottom line: Stick with your exit strategy.

3. Relying on family goodwill

A number of practice owners decide to turn the reins of their practice over to a family member. This is a tremendous gift, but it can't simply be treated as a gift. Even if you have a positive relationship with your benefactor today, you can't rely on this relationship to remain positive in the future. As a result, all decisions involving your practice should be, first, and foremost, business decisions. So, When you turn over the reigns of your practice to a child or relative, be sure you have a contract outlining the terms of the arrangement.

4. Not using a lawyer

Every practice sale should be based on a contract. Contracts are the basis of property transfer and ownership in every state, and each state has laws specific to transferring ownership through a contract. As a result, failing to execute a contract properly through the use of a lawyer can result in problems with the sale at a later date. So, when you sell your practice, legally and formally change ownership and all liability for your practice to the new owner.

From the start

Ultimately, what you gain from your practice has a lot to do with the planning you undertake on the front end of your professional career. Without such a plan, you could be risking your most precious asset. OM