Have you been putting up with outdated software because you plan to sell your dental practice? The struggle is real. Dentists do it all the time thinking upgrading is an unnecessary expense at a time when they’re already planning their exit strategy. The problem is, limping by with your legacy software can actually undermine the very thing you’re trying to achieve- getting maximum value for your life’s work. Here’s a quick look at why you might want to rethink holding off and get your upgrade taken care of as soon as you start considering selling your practice.
1. Revenue-Boosting Tools Can Boost Your Sales Price
The most you can generally hope for in the sale of your practice is 90% of last year’s revenue, per Bank of America, with some practices selling for just 70%. That’s a tough blow for many retiring dentists who have spent their lives building their practices, particularly in this economy.
A solid dental practice management system that helps you uncover production opportunities and fill your schedule can improve revenue exponentially. For example, Practice-Web has digital lists you can call on at any time to prevent patients from falling through the cracks and fill vacancies. We also have automated tools that can reduce cancellations and no-shows, plus help you market effectively. Everything we produce is designed to deliver $3-4 for each $1 you invest.
2. Buyers Can’t Get Financing if You Don’t Have Cash Flow
Even practices generating immense revenue can wind up having to close their doors if cash flow is inconsistent or sluggish. For this reason, lenders will deny applications for loans if the practice’s cash flow ratio is less than 1.20%. That means the practice must be generating $1.20 for each $1 spent, including the practice’s expenses and the doctor’s, according to Bank of America. If your practice isn’t already performing at this level, any interested parties may have trouble getting a loan to purchase it.
Your practice management system should help you maximize cash flow with streamlined billing and claims processes, plus provide reporting tools that allow you to easily track aging balances, so your team can take action and collect.
3. You Need Data to Prove Value and Opportunity
Dentists looking to purchase a practice will want to look at it from every possible angle and will expect reports that break down production by provider and procedure, as well as insurance write-offs, patient demographics, and other details. Without robust reporting tools, dentists may not have enough information about your practice to seriously consider a purchase.
Worried what your reports will show? “A shrinking practice may not necessarily be a deal-breaker if you’re able to identify untapped opportunities for growth,” say the experts at Commerce Bank. In other words, if the incoming dentist can get enough information that he or she can tell how to turn the practice around, you still might be able to close the sale.
4. Modernization Makes a Dental Practice More Attractive
True, just like some homebuyers like a fixer-upper, some incoming dentists will be ok with coming into a practice knowing they’re going to have to make major updates. However, those updates (plus an extra chunk for accepting the risk and trouble) will come off the sale price of the dental practice and offers will be reduced if the incoming dentist has to make upgrades like modernizing the software.
Practice-Web Can Help You Prepare
Holding onto outdated software may hold you back if you’re going to sell your dental practice. At Practice-Web, we help dentists address all these areas with powerful practice management tools that improve production, cash flow, profitability, and more. We’ll even handle all the heavy lifting of the transition, including data migration and training. That way, you and your team can move forward with confidence and start using your new software with ease. Ready to learn more? Start with a demo.