Income or Asset, or Both?
Regardless if you are just starting your nurse practitioner practice or if you have been in practice for a number of years, there will come a time when you will want to move on. This is not to be confused with failing in your practice or business!
At some point you may want to reduce the amount you work, tackle new adventures all together or just move into retirement. And it is often then when the question comes up: “What should I do with my practice” or “Just how do I go about selling my practice”? However, the optimal time to think about these questions is much sooner.
You probably will agree that the majority of clinicians start practices to realize a dream, to provide a valuable service to their community and to generate income. However, few of these practices are also started with an end goal or a clear exit strategy in mind. In general, few small businesses are started with a clear idea of what will happen with the business when the owner no longer wants to run it.
At this point you may think that you are just starting your practice or that your practice is just a couple of years old and hence thinking about an exit strategy is akin to putting the cart before the horse. Perhaps, but let’s take a closer look first.
At the most basic level small businesses (or practices) are started and operated in two distinct ways: to be an income business or to be an asset business. The focus of the income business is to generate, you guessed it, income. Often no or very little thought is given to the fact that the business, by default, can also be an asset.
On the other hand, the focus of the asset business is to generate income and to grow the business into a sellable asset. Keep in mind, neither approach is right or wrong, they are simply different ways of looking at business. The big advantage however, to starting and operating your practice with the intention of growing an asset is that it will be positioned to be sold when you are ready to do just that.
Let me give you an analogy. Think of what it takes to build or to remodel a home. The finished home will be different depending if you plan on living in it or if you plan on selling it. The difference is in the intention and focus that is put into one approach over the other.
Chances are, like most businesses, you have started your practice as an income type business. If you think that you may want to sell your practice at some point in the future, don’t worry. Your business is not set in stone and you certainly can make changes in the way you operate and structure your business, so that it will be easier to sell down the road.
Over the next two issues of Progress Notes we will take a look at what is involved in selling a professional practice and what you can do to position your practice for a potential sale.
(To be continued. This is part one of three. )
©2011, Johanna Hofmann, MBA, MAc, LAc. All Rights Reserved.