The majority of clinic owners are planning on the proceeds from the sale of their clinic to help fund their retirement along with their superannuation. However, we have noticed that over 80% of clinic owners have no formal transition plan.
Selling your clinic is challenging, it is not as easy as selling the family home. Combine this with the lack of readiness to sell just ads to the equation. Below are five tips to increase your odds for a successful clinic sale so that you can transition to retirement.
Start Planning NOW! It’s never too early to start planning the sale of your clinic. The earlier you start planning the smoother the process is for all parties involved. Some very important items to start organising are:
1.Your lease – do you have a secure lease in place with at least 1-2 years remaining plus option periods? Can you put your hand on a current signed copy? A current lease with a minimum of 6-12 months remaining is high on the priority list if you intend to sell your practice and make it an attractive and secure offering to interested buyers.
2.The building – Alternatively If you own the building, are you paying market rent? If not, or if you’re unsure it’s important to obtain a market rent appraisal so the incoming owner knows what they will be paying and we can factor the correct amounts into our valuation calculations.
A market rental appraisal can be easily obtained by contacting your local Commercial agent such as Ray White or LJ Hooker. Also start thinking about the lease terms and conditions that will be on offer for the new owner e.g. 2+2+2, 3+3, 5+5 and CPI or % increases, outgoings payable.
Similarly, if you own the building and intend selling the premises, do you know current value and your desired listing price? Again, you can obtain an appraisal from your local commercial agent or even better a formal valuation from professional valuer such as Herron Todd White to ensure you are getting the best advice regarding your investment.
TIP: If the premises are owned by your SMSF you would most likely be paying market rent as it’s a legal requirement
3. Website – It’s an online digital world we live in. Do you have a website? Is the content up to date? It can be a relatively quick job to update staff profiles, add a blog article or two, update any trading hours or new services offered.
Don’t have a website, have you checked suitable domain name availability? It can be a good idea to check available options on a provider like Go Daddy https://au.godaddy.com/ where you can secure your domain for less than $10. Once that’s done you might like to even get a home page setup as a placeholder with some basic contact details for your clinic as a starting point to establish online presence.
4. Patient Data – if you are already using a computerised Practice Management system such as Cliniko, Nookal or FrontDesk you are in a good place. These systems take the hard work out of patient data management and reporting and offer valuable add-ons such as SMS reminders.
If you are a creature of habit and have been running your practice on a manual system for many years, transitioning to an electronic system can be a daunting thought, especially if you have a large patient database. The vast majority of practices do utilise this software technology to streamline their processes and systems and to save time and money. The initial setup and data migration into a comptuerised system can be a lot of work at the beginning but it really is a necessary investment that will save you time and money in the long run and make your practice appeal to a larger sector of buyers.
5. Financials – Last, but certainly not least is your financial data, more specifically accountant end of financial year Profit and Loss statements (usually provided in a report with Balance Sheet and other data). The last 3 financial years are the most important plus the current financial year. For the current financial year BAS statements, Interim Profit and Loss statements from systems such as MYOB or Xero are what is required. Additionally, revenue reports from your Practice Management software are often used as supporting data.