Empowering Women in Chiropractic - Selling Your Practice to an Associate?

Click here to download the transcript.

Disclaimer: The following is an actual transcript. We do our best to make sure the transcript is as accurate as possible, however, it may contain spelling or grammatical errors.  We suggest you watch the video while reading the transcript.

Hey everyone. Welcome. Thank you so much for joining me here today. I'm Dr. Randi Ross. I'm the CEO of Premier Practice Consultant, and I really wanna start out by thanking ChiroSecure for giving me the opportunity to come and share some really important information with you here today that we need to start thinking about.

So why don't we go ahead and go right to the slide so we can get started. I often hear people say when they're thinking of the future at some point, most of us are gonna sell our practices somewhere down the road, some sooner rather than later. And I often hear a strategy that everybody thinks is a slam dunk and it's I'm gonna bring an associate in, I'm gonna train him, and then I'm just gonna sell him my practice.

Sound simple, but. Let's see. Is it really the effective exit strategy that everybody thinks it is? So we just said it sounds logical. People hire associates all the time, and you think I'll train 'em for 12 months, maybe 18 months, maybe a little bit longer, and then they're gonna know my practice, they're gonna know my business.

And then it's just a simple walk over to the bank. To do the paperwork, get that all processed and sell your practice to them. But there's so many things that really go into selling a practice that process doesn't address very often, that it can really lead you to a huge disappointment. And I have this conversation all the time with coaches in the profession, and everyone's very well-meaning, they think.

This is a great way to do this. This is where you get to really hand-pick who you are gonna turn your life's work over too often. But again, there's so many things that you need to understand that A, we often don't think about or because we haven't experienced it, we don't really understand some of the pitfalls that can take place so many times.

I can't say many enough in this. Your thought process doesn't work out, and then what happens is, You've hired an associate, you've invested time, energy, and money in them, training them because you think they're gonna buy my practice and this is gonna be my exit strategy. And I'm gonna say more than 50% of the time, I don't know an exact number.

I can just go by what I know. And the people that I talk to, I'm gonna tell you that doesn't work. And there are so many reasons why it doesn't work. And then the bad thing is, That now you are left starting from the beginning all over again. So if in your, we always say it takes 12 to 24 months to sell a chiropractic practice.

I tell people when you are minimum of three years out, you should start the process, at least if you're working with a company like ours. But even if you're trying to do it yourself, you should start the process cuz it does often take that long. So if you've taken the time to find an associate, which we all know that's a challenge in and of itself, but you find someone that you like, that you trust, that you wanna take under your wing, you wanna pass that baton to you.

Invest 12, 18, 24 months in them thinking, okay, telling your family, I'm ready to retire. And all of a sudden they might not be as interested as they were initially. And there can be a lot of reasons for that. I sometimes say there are reasons why some people are associates and not practice owners. It could be that they simply just don't have the money to purchase your practice, or I think the most common one that I see is they think.

You just taught me how to run a practice. Why do I need to pay you for yours? I'm just gonna go to the next town over, spend a fraction of what you wanna charge me for your practice, and I'll open my own practice. And I'm telling you, this happens frequently. So what I wanna do is prepare you as best I can.

So here is something that you need to understand if you choose to go this route and use this as an exit strategy. , at least do the best preparation that you can. Preparation meets opportunities. So let's see if we can at least save you a little headache. In the end, you have to treat this hiring of an associate very differently than if you are hiring an associate just to be a part of your practice, because they need to have different and more important factors that make them a qualified candidate.

So you have to vet them. What I mean by that is if you are actually hiring them to take over your practice, there are things that you should do and there are things that you should know before you do that. First of all, you should know their credit. If you are ultimately a year from now, 18 months from now, 24 months from now, gonna sell them your practice and they have a credit score of 500, guess what?

Unless they have a lot of cash to buy your practice. They're not getting a loan. You should know that's different than an associate that you're just hiring to pay a salary to. The other thing you wanna see is proof of funds. This is important. Do they have any money to buy you practice 12 months from now?

Because if they don't, why are you hiring them to be part of this selected exit strategy that you've chosen? . Ask them to show you proof of funds. There's nothing wrong with that. You want to see 20 to 25%. The reason for that is if they're going to go to a bank, that is most likely what they're going to need.

Now everybody says, oh, you can do it with 10%, or This one's offering 5%. I'm telling you, I do this all day long. You want someone to have 20%, 25% is even better. If they have no money and you have a practice that's gonna sell for $400,000, guess what? Again, you are barking down a bad strategy for your exit because they're not going to get a loan even if you.

Decide to take a chance and risk that you're gonna owner finance, you still have to get money upfront. You, they still have to have skin in the game. That's very risky to owner finance. We do them and we do them very successfully, but there's very specific strategies to protect your interests. So understanding that I would make them talk to an SBA lender, someone that you know.

And say, if they were coming in to buy my practice today, would they qualify for a loan? Maybe they just say yes, maybe they say no, but they tell them what they can improve upon over the next 12 to 24, 18 months so that they become a viable candidate for that type of process. Attorney documents. If you are really in this for, they're going to buy your practice.

They should be comfortable signing something. And again, I'm not a lawyer, I'm not gonna give you legal advice, but you can talk to any attorney that does this and they would be able to draft something that acts as a preliminary document. It may not lock someone in a contract, but at least it shows that everyone is acting in good faith.

And these are the things that are so important. Again, remember, you're not just hiring an associate. You're hiring an associate that will ultimately purchase your practice. These are two very different hiring practices, and this is where people run into problems because they don't understand that they should be vetting that candidate very differently than a candidate that they're vetting to become an associate That's just a part of their existing practice.

So there are so many moving parts to this, and if you choose to do this on your own, , that's totally fine. There are plenty of people that do it successfully. I just want you to know that we offer free consultations if for any reason you just wanna call me and bounce something off of me, you have an idea.

You have your own buyer, you have your own associate. I will talk to anyone. I'm here to support the profession and all the chiropractors within it but this is something really to consider. Very importantly because I can tell you that I very often get calls from people that tried this, and then now they tell me it's two years later, associate decided to back out or went to a bank, can't get a loan, they don't wanna own finance, and now we're looking at another 12 to 24 months before they can retire.

And it can really be devastating. Do yourself a favor. Do your homework, do things properly. Remember, an associate just to work in your practice is one type of hire, an associate that you would like to ultimately sell your practice to is a second kind of hire. Don't be embarrassed or afraid or feel uncomfortable about asking for a credit report or asking to see proof of funds.

This is important for you to know this is your business. If this is how you're gonna move forward, you want to make sure that you're setting yourself up for the highest chance of it being successful. I hope those, these notes that I've shared today are helpful. Remember, can always call me, reach out to me.

I'm here to talk to you and share any pieces of information that I might know just from doing this all the time. I wanna, once again, thank ChiroSecure for giving me a few minutes. To spend with you here today, and as always be well be successful.

​