Originally posted by MediHoldings - learn more about practice valuations or buying and selling here.
A dental practice valuation is like your annual health check-up. It allows you to undertake a thorough, multi-faceted appraisal of your entire business enabling you to establish a benchmark against which you can measure your performance and business growth year on year.
So how much is your dental practice worth? We’re sure it’s a substantial amount, but every practice is unique, which is why a tailored valuation may be necessary. Here are some benefits of regularly valuing your dental practice.
IDENTIFY AREAS FOR IMPROVEMENT
By understanding how your practice performs against key benchmarks, you can set realistic goals and targets, as well as develop strategies to achieve them. It allows you to plan your financial future with confidence.
UNDERSTAND HOW YOU CAN INCREASE YOUR PROFITS
Valuations can help you determine if your dental practice is worth as much as you think. If you are looking to sell your practice, it is important to analyse profitability as this is the key component driving your value. Where profit is high you may be able to sell sooner than planned! Or where your profit is lower than expected you can clearly map out a strategy to increase profitability over time.
INVEST IN AND ENHANCE YOUR BRAND
Deciding whether to reinvest profits in your business is not always easy. Regular valuations can be used to guide the decision-making process when it comes to investing, whether that be through purchasing equipment, adding a surgery or engaging in strategic marketing activity to enhance your brand.
PREPARE FOR THE FUTURE
A valuation can help you develop a strong plan of action 5 to 10 years before you even think to sell or retire. This plays a key role in wealth planning and it can make the difference between selling your practice and having it become unsaleable. In doing so, you will protect the equity in your practice for your family, should the unexpected happen.
THE BOTTOM LINE
An up-to-date annual business valuation helps dentists know where they stand so they can make informed decisions that affect the future of their business. The bottom line is that business valuations are an important part of any practice’s financial planning strategy. They can help partners make more informed decisions about their business and its future, whether that is selling the practice or passing it on to the next generation.