Tag: ROI corporation

It’s Time to Mend the Nets: Practice Advice for Turbulent Times

Human Resources, Managing Others, Webinar

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Practice Advice for Turbulent Times

“When fishermen can’t go to sea, they mend their nets.”

 There are plenty of tasks related, and even essential, to the success of your practice. This quote reminds us of the importance of forward momentum, which in turn can ensure you return stronger than ever, ready to meet the challenges ahead.

Eye Care Business Canada have teamed up with BMO Bank of Montreal and ROI Corporation, Canada’s largest health care business brokerage, to provide a live webinar series that will help you make the most of these challenging times and help prepare your future.

We are offering complimentary educational webinars on three topics of particular relevance to these trying times, delivered by industry experts. Audience is invited to put questions to the speakers.

The Webinars will be co-hosted by Jackie Joachim, COO of ROI Corporation and Dr. Glen Chiasson, Host of Eyes Wide Open, a Canadian podcast for eye care professionals published by Eye Care Business Canada.

Keeping Employees Engaged and Motivated
The closure of offices has been a wake-up call for the importance of a strong culture. It is crucial that practice owners do not succumb to the panic. Employees look to their employers for leadership and model their behaviour, especially in times of crisis. The focus of this session is to help you keep your employees calm, engaged and informed. Practice owners will benefit from the tips and tools to keep their teams motivated while the office is closed.

Presenter:  Nava Sarooshi
Motivating teams to achieve results is Nava’s passion. She has run various workshops and consults with teams who are looking to achieve higher performance. Nava is also the President of MDP Corp, a temporary personnel placement agency.

Thursday April 2, 3PM (EDT)  

 CLICK HERE TO REGISTER NOW    

Managing the Practice’s Financial Health During Troubled Times
As a typical “black swan” event, COVID-19 took the world by surprise. Understanding the potential impact on the value of your practice and managing the financial risk associated with office closures is critical. This session will help you focus on the financial factors, especially as they pertain to the practice’s profitability and value.

Presenters:
Romal Bryce, Head of Healthcare Initiatives BMO
Romal oversees BMO Canadian Business Banking’s go to market strategy in the field of healthcare professional financing. He has been a financial services professional, primarily at Bank of Montreal, for 20 years He has held various sales, underwriting and risk-related roles in both retail and business banking.

Jackie Joachim, Chief Operating Officer for ROI Coporation
ROI specializes in assisting healthcare professionals in the Optometry, Dental and Veterinary spaces appraise and sell/transition their practices.

Monday April 6, 3PM (EDT) 

CLICK HERE TO REGISTER NOW

Key Legal Issues Affecting Practice Owners
This is the time to look at all the legal factors that affect your clinic. This session will discuss the importance of key documents such as associate and employee agreements, partnerships, incorporating and leases.

Presenter:
Artem Kobzev,  LLP Tax Chambers
Artem’s practice focuses on providing individuals and closely-held corporations with a broad range of legal services, including personal tax planning, corporate tax planning, estate planning, business succession planning and asset protection. He frequently works with owner-managers to develop and implement the strategies and structures that will enable them to meet their specific needs.

Wednesday April 8, 3PM (EDT) 

CLICK HERE TO REGISTER NOW

We look forward to e-meeting you at the webinars.

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Protect Yourself from Spam and Scammers

Finance|Wealth, Resources

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Spammers and scammers are attacking everybody. Typically, I receive up to 10 scam/spam emails a day, and fortunately, my office uses a defense system that captures about 99% of them. But recently, one slipped through my inbox.

A spammer had perfectly mimicked my email identity and my email signature. Emails came to my office staff using my exact email address. There were a few clues that made us realize later that it was a scam; however, at the time, I was away and the scammers told my staff that I demanded a payment of tens of thousands of dollars be made to one of our regular suppliers.

The spammer had duplicated an invoice that one of our suppliers had sent to us by email several months earlier. The invoice appeared authentic to my staff members. They proceeded to process the cheque. The next day, I returned from my out-of-town trip and was asked, “Tim, why was it so urgent that we had to pay that supplier bill yesterday?” I responded, “I have no idea what you’re talking about.”

The staff member showed me the emails that had been sent demanding a payment be made the same day. I looked at the emails, which appeared legitimate, but noticed a couple of words that I don’t use. One was “muchly,” as in, “muchly appreciated.” I have never used that word. It is grammatically incorrect. That was one of the indicators that the emails were part of a scam.Fortunately, we were able to stop the cheque from being deposited, and then we made
additional precautions and updated our internal security measures to prevent any such similar scams from happening again.

This was very close to being a major financial setback. Three of my staff members actually approved this cheque being deposited. Shortly after, I received another scammer email from one of my clients that appeared legitimate. His actual signature, his actual cell phone number, his actual website and some of the awards he has won were all contained in the email. The message said that he was away and wanted to get a Google gift card for his nephew and asked if I could help out by buying the gift card and emailing it somewhere for him to access.

Obviously, it was a scam and I laughed and called my client to tell him that he had been scammed. He laughed as well and said “I have to thank the scammers because I’m getting calls from people I haven’t heard from in a long time. I’m reconnecting with old friends and buddies and this is a great thing.”

Ironically, in this case, the scammers and spammers unwittingly generated a little bit of humour. It’s easy to laugh off when people can easily recognize these as scams perpetrated by amateurs and hacks using blind and rotating fraudulent email accounts to extract money illegally. But sadly, some scams are effective and they often prey on senior citizens. I have advised my father and other senior members of our family to be careful about telephone scams by people pretending to be nieces and nephews on holiday pleading for money from an older family member.

Security measures can be implemented by you, the company host of your website domain or your email provider. We can set higher security measures with our email, but of most concern is a junior staff member who might be duped and unable to recognize a sophisticated scam for what it is. This is especially true of a scam directive that has been (supposedly) dictated by the employer (read: boss) or other high ranking senior officials in the company. We need more scam (and spam) education, and we should all practice safe email!

TIMOTHY BROWN

is Chief Executive Office of ROI Corporation Canada’s national professional practice and brokerage firm.

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Traps to Avoid When Selling Your Practice

Buying-Selling A Practice, Practice, Resources

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Recently I have met with a number of vendors who tried selling their clinics privately. These were not good experiences for a multitude of reasons. The number one reason people do this is to not only save commission but more importantly to try and keep the sale quiet. There is a definite fear that going to the market will mean EVERYONE will discover that your practice is for sale.

Ultimately, owners want to sell to the right buyer, a person who will treat their staff and patients well. In general, most buyers also want a smooth transition. After all, they have purchased your practice and want to ensure it succeeds.

However, when you open your practice to one or a selected group of potential buyers, there are risks associated. Some potential buyers can be quite crafty particularly when they start poking around your office. Most will often conduct the first bit of research before you even know he/she is interested in buying your practice. He/she may pose as a new patient calling for an appointment, visit your website or even come into your office to get a feel for things. This may cause staff to wonder if the clinic is for sale.

Without an experienced broker, you expose yourself and your practice to various pitfalls of a private buyer.

  • Due diligence is a stressful time – to put it crudely, it is “the owner’s proctology exam”. Unfortunately, if you manage this process yourself, you will quickly find out what it feels like when a stranger pokes, prods, and looks inside every inch of your practice. You are asked to produce many documents and then, you need to answer questions as to your reasons for doing business the way you do.
  • Using an advisor who is not familiar with the industry can also negatively impact your sale and stigmatize your practice. There are many times where our appraisal is used in a private sale. Buyers then call us to clarify certain points because the person representing the owner is not providing correct answers. I am definitely not insinuating that the individual is intentionally misleading but the reality is if you do not know the market by default, you will lose a potentially good purchaser.
  • It is never good to have one person representing both the vendor and the buyer. Relationships are extremely important. However, when the party who is introducing you to the buyer will continue to have a relationship with that buyer post sale, it is natural that the advisor may push a little harder for the buyer’sinterests. This is exactly why we choose to represent vendors only. We believe you need someone in your corner fighting for you.

Selling a practice is not as straight forward as owners think. With the guidance of an experienced business broker, you will be challenged to take nothing for granted and look at the value of your clinic from a variety of angles, some of which may not be top of mind for you. To ensure you receive the best possible outcome, you must ensure that when you sell, the practice is positioned in the best possible light and that the terms, which are important to you, are negotiated properly. I always tell owners not to let what may be the biggest transaction of your life turn into something you think will be “obvious” to a new owner based on a quiet and private sale. You deserve to maximize your sale, exit ownership with dignity and to have no regrets.

Jackie Joachim, COO ROI Corp

JACKIE JOACHIM

Jackie has 30 years of experience in the industry as a former banker and now the Chief Operating Officer of ROI Corporation. Please contact her at Jackie.joachim@roicorp.com or 1-844-764-2020.

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Is EBITDA the Best Way to Calculate the Value of Your Practice?

Finance|Wealth, Resources

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I say no. Essentially, EBITDA on its own makes for a fairly futile statistic. There is, after all, a very good reason why you depreciate and amortize assets. To simply put those charges back in to earnings may give an unrealistic measure of your finances. Many in the financial industry will use this as a rule of thumb to help obtain an estimate of value.

EBITDA seems to be very sexy these days. Everyone is talking about practices selling for a multiple of EBITDA. Although some folks do not really understand the formula and yet they feel it is a reasonable way to value clinics. There are endless variables and measurements that factor into the value of your practice. The best way to start is with an appraisal which will extract the maximum value for your practice and go to the Open Market. One buyer who offers you a price based on EBITDA is not a market. Would you give the opportunity to sell your home to only one buyer? Also, financial due diligence may reveal a lower EBITDA which means the purchase price will be reduced from the original offer.

So what is EBITDA? Simply put, EBITDA is net income (or earnings) with interest, taxes, depreciation and amortization added back. It is a quick way to evaluate a clinic’s performance without having to factor in financing decisions, accounting decisions or tax environments. It also certainly does not factor in intangible items such as location, highly valued staff, premise lease, quality of patients, various services etc. Normalized EBITDA also adds back discretionary expenses such as travel, meals etc, which we also do when completing an appraisal.

It is important to understand that EBITDA has its flaws. You should not put too much emphasis on it when looking at the strength of your practice because EBITDA does not consider risks like the potential for future growth and your mix of patients. It does not consider whether you have an assignment or non assignment practice, offer a variety of treatments, your plan for attracting and retaining new patients, excellent terms in your premise lease, contracts for staff, and other proprietary items in your clinic.

EBITDA is based on actual financial statements. Let’s assume for a moment that your year end is December 31. Your EBITDA is $500K. You are made an offer of 6x resulting in a price of $3 million. Sounds great!! However, you are currently into your new year by 8 months and your net profit will be up because you have made many positive changes (adding more services, bringing on another associate, etc.) These positive changes indicate that your expected EBITDA will be $650K which means you are leaving $900K on the table. What a lovely gift you have given this one buyer!!

We believe the best way to place a value on a practice is to use a combination of the cash earnings method and comparables. While there are certainly many valuation methodologies, we use the cash earnings method because we want to demonstrate how much a practice can produce after all the fixed expenses (staff, supplies, rent) have been paid in order to support the doctor(s). Our appraisals never place a value on a doctor. One doctor may be very comfortable living on a draw of $100k while another must have a minimum of $200k. Same practice, same revenue but different requirements of the person providing the treatment. Being in the appraisal and sale of practices for 45 years means we have the largest data base of sold practices. Having this knowledge is critical and can help set expectations for both the vendor and buyer.

Selling to one buyer may seem like the right decision. You will, after all, save on commission. But I ask you to consider the following: a business broker can help present your practice in the best light to maximize the sale price. We have an understanding of the key values that buyers are looking for and can assist in identifying changes that can lead to a better selling price. Even more important than the final sale price is what your requirements are post sale. If your plan is to continue working, negotiating your working agreement post sale is also critical.

In the end, I always respect and admire practice owners. It is difficult being the provider of treatment as well as employment to so many. Running a business is never easy, therefore, when you come to the point in your career where selling is the option, I encourage (or challenge) you to consider taking your practice to market. Your clinic represents your life’s work. It is likely one of your most valuable assets. As such, you deserve to exit with the maximum price and dignity!!

Jackie Joachim, COO ROI Corp

JACKIE JOACHIM

Jackie has 30 years of experience in the industry as a former banker and now the Chief Operating Officer of ROI Corporation. Please contact her at Jackie.joachim@roicorp.com or 1-844-764-2020.

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Insiders’ Revelations: Your practice has untapped potential and hidden revenue – exploit it!

Buying-Selling A Practice, Practice

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We were talking to a potential client the other day who said that he did not think his business was worth much. He never imagined that he’d sell it for a profit. We asked what his annual sales are, what his net income is and whether he had thought about establishing a transition plan. He said that his kids had planned to take over the business, but instead moved on to other professions in technology and software and felt that his “old-fashioned” business system wasn’t right for them.

We inquired further. I asked whether he had a loyal, repeat client list. We asked if he had a continuing revenue stream. We asked if he had ever thought of selling to his employees. Perhaps one of his competitors might be interested?

He was stubborn and proud. He paid nothing for the company because he started it on a bootstrap budget more than 50 years ago. He never borrowed from the bank throughout his career. He sacrificed on food, cars, the house he lived in and never overspent, living well within his means. His business was founded on sweat equity.

As we conversed, he began to reveal more and more, especially after we asked about his client list. He proudly confirmed that he had a very vibrant list: a steady, loyal clientele that had served him well for many years. We asked again about his annual revenue, which he was reluctant to reveal. We respected his reluctance to disclose his financials; as we are brokers, he must have thought we were just trying to get a business listing.

We talked more about his industry and where it was in terms of growth or decline. Eventually he related that he’s in a high-growth industry, something he knew all along yet had never exploited to its full potential. He admitted that he did not want to buy the equipment, hire more staff and move toward computerization to upgrade to the necessary technology— namely, do the things that would allow him to face his new competitors. He readily acknowledged that, while his long-term clients remained loyal to him, lately some had concerns about his slow delivery and service. They never complained about his quality nor his price, only about not getting his goods fast enough.

He further admitted that he was slow but he was good. In fact, he said, “I’m the best” and we believed him. So, what do you do? What would you do—buy his business? Is his business likely to fail because of the competition? Should he upgrade?

There are at least two mindsets on this, depending on whether we’re discussing a business or an optometric practice. One would believe this business is an easy picking to compete against. The other thinks of buying this business and doubling the revenue.

As a broker and appraiser these are the types of insights that present themselves when meeting with business or practice owners. The hidden value of the business is often uncovered with minimal effort. Practitioners or entrepreneurs regularly want to tell their stories and confide their trials, tribulations and triumphs over the years. One thing they’re not able or likely to do is tell a potential buyer how much business they left on the table. They might humble-brag about it and say, “If somebody younger or more competitive takes over, they will do better than me.” This revelation is left to the third party acting for the seller, and that’s where a broker comes in.

The truth is, every business or practice has untapped potential and hidden revenue. You can ethically exploit it yourself or a buyer can. Your call.

TIMOTHY BROWN

is Chief Executive Office of ROI Corporation Canada’s national professional practice and brokerage firm.

Jackie Joachim, COO ROI Corp

JACKIE JOACHIM

Jackie has 30 years of experience in the industry as a former banker and now the Chief Operating Officer of ROI Corporation. Please contact her at Jackie.joachim@roicorp.com or 1-844-764-2020.

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The Wisdom of A Seasoned Staff Consultant

Human Resources, Managing Others, Practice, Resources

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There is a resource reference in the summer issue of Profitable Practice magazine entitled A Startup’s Secret Weapon: Retirees by Liz Brody. Recent U.S. Bureau of Labor Statistics reveals that people 65 and older lead the way as the fastest growing segment of the American labor force. For the most part, these people have exited their former jobs and careers for retirement. Many, it seems, want more than a sunny beach, an afternoon nap or satisfying round of golf. They are not ready to go quietly into retirement and believe they have much to share given their previous experiences.

As a consequence, there are a number of companies today (YourEncore, Empowered Age, Patina Solutions, Work At Home Vintage Experts etc.) that are staffed with these “retirees” who bring expertise from a wide variety of business jobs and careers. They act as consultants as characterized by Liz Brody “who have been there and done that”. Their clients are often young millennial-aged entrepreneurs with startup business problems. These young gurus often face a business impasse they can’t seem to bypass and are stymied. While they are often superb risk takers and decision makers, they realize they need help and that more brain power and another pair of eyes is required to get them mobile again.

All entrepreneurs try to invent a new product, service or process or at least apply an innovation to an existing one. In doing so, they are repeating a journey that many others have taken before them—a few successfully and the many who got hung-up along the way. Health care practitioners are constantly searching for new and better ways to deliver health care service. Many find a successful track of operation either by perseverance or by enlisting the aid of others.

The above scenario got me thinking about my own company, which my father started and eventually sold to me. Recently my dad and the company received recognition for 45 years of distinguished service to the practice sales industry. In my case, he was always there in the background giving me the wisdom of his experience. In addition, the company had—and still has—a number of senior associates (retired dentists for the most part) who left dentistry to start a new career in practice sales. This core of elders was invaluable to the growth of our company and allowed us to be successful by avoiding many of the impasses all businesses face.

To my mind, no matter what business or health care practice you are in, it is wise to seek out the advice and ideas of both the young and old. Health care graduates today are schooled in the latest procedures and technologies and bring a contagious enthusiasm and a refreshing willingness to share with and learn from their older peers.

TIMOTHY BROWN

is Chief Executive Office of ROI Corporation Canada’s national professional practice and brokerage firm.

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Two Ways To Lose And why customer care is still the be-all and end-all when dealing with clients

Differentiation | Business Strategy, Practice, The Patient Journey

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I have been a long-time, loyal client of a local dry cleaner. A new owner (who I quite like) took over the service. However, it soon became clear to me that a pre-existing, long-term employee was not happy with this new owner.

One day, when collecting my clean clothes, the new owner was absent and the employee in question told me she disliked working there and asked if I knew anyone who was hiring. I suggested she send me her resume.

Our firm happened to be hiring and we interviewed her, but her qualifications were inadequate for our position and she was not offered a job. Since then I have encountered her again on a number of occasions and she remains unhappy and is unpleasant when dealing with me and other customers.

It’s possible she’s mad that we didn’t offer her a job. I hesitate to say anything to the new owner because this is a convenient location for me and I want to remain a customer. Yet, it is difficult to go to this business because of this employee.

Is this the fault of a bad new owner who doesn’t treat his employee well? Or, is this a disgruntled employee who’s angry she was not offered a job and free her from an unhappy situation? I don’t know the answer, but I know I’m not happy and may move my business elsewhere, despite the inconvenience.

When a business sells, a new owner brings new policies, procedures and an ownership style that might not suit some employees. They may become resentful about the changes being implemented. That resentment may negatively affect the new business. It’s a given that customer care and service is what makes a business successful. All it takes is one employee not providing the required customer care for a business to fail. My advice to the owner would be to terminate her, even though she was an ideal employee at this dry cleaner for many years.

In any health care practice, customer care is also crucial. My son, daughter-in-law and my three grandchildren have been loyal to the same dentist for more than 10 years. Recently, my son arranged appointments for two of my grandchildren, one at 5 p.m. and another a half hour later. There was some confusion about the appointment times, but my son looked through his messages and verified the 5 p.m. arrival time. Because he’s not the most efficient at managing the kids, he arrived five minutes late and was informed that there was only enough time to see one of the children because they had given away the 5:30 p.m. appointment to another client.

Like all young families, my son and daughter-in-law are very busy. They were upset that after 10 years of loyalty and many treatments—my grandkids have had substantial work done on their teeth—the office staff would treat them this way.

It’s possible that an administrative error occurred regarding the appointments, even if they had previously been confirmed. It happens. What was upsetting was how disrespectful the office staff was to a loyal patient and his family. My son was distraught when he relayed the story and told me that he changed health care practitioners.

The result: a young couple with three kids left their health care practitioner of more than 10 years and connected with another one closer to the family’s home. The new practitioner is thrilled to now provide services to this family of five for many years to come.

Appointment times can be confusing when texts, emails and other means of communication are used. When more than one staff member is working and reworking the appointment schedule, human error can occur. But upsetting a busy young man with family responsibilities, who’s been a loyal client for years, makes no sense. I would hate to calculate the amount of revenue lost by alienating and losing the opportunity to serve a growing family of five for many years.

TIMOTHY BROWN

is Chief Executive Office of ROI Corporation Canada’s national professional practice and brokerage firm.

Jackie Joachim, COO ROI Corp

JACKIE JOACHIM

Jackie has 30 years of experience in the industry as a former banker and now the Chief Operating Officer of ROI Corporation. Please contact her at Jackie.joachim@roicorp.com or 1-844-764-2020.

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Breaking Up Is Hard To Do

Finance|Wealth, Human Resources, Managing Others, Practice, Resources

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When a trusted, long-standing associate leaves, where does that leave you?

Throughout my career, many clients have shared with me the mixed feelings sparked when a long-term associate leaves the business. It’s never easy when someone leaves a practice, especially on short notice.

I’ve heard this story hundreds of times and listened patiently while a practice owner tells me how this feels. They handpicked their associates. They recruited them right out of school. They taught them everything they know. They helped them build their career. In short, they more or less helped them get to where they are today.

And then that young protégé they mentored says, “I’m moving on.” Sometimes he or she gives a lot of notice and is honourable about it…and other times he/she gives no notice or doesn’t even show up and sends a resignation by email.

I’ve been very fortunate that this has only happened to me on a few occasions and not for many years. When it happened the last time, I had known for some time that there was some staff dissension. The company has grown rapidly and my management team has expanded to the point that not everyone fits in, particularly those who started when the business was a small and intimate corporation.

It can be devastating when your long-term business relationship is suddenly and permanently severed. Even if you have a premonition, you really don’t see it coming. As a principal you might think, “They are probably better off with me than without me, so I can’t believe they would actually leave.”

In reality, principals should prepare for the eventuality of an associate leaving. If and when an associate feels able to do so, he or she will go his or her own way. Knowing this might help in your planning process, but it does not lessen the drama and stress that follows such a departure. What’s also deflating and disruptive is the confusion that results for patients.

For the most part, patients don’t like change when it comes to their caregivers. Principals are often left with major knowledge gaps and ignorance of patient’s preferences, established procedures, financial considerations and so on. And last but not least, patient confidentiality issues and company security measures may be at risk. More stress and consternation.

The truth is people will do what they think is best for themselves and their families, and I completely respect that because my own family has been protecting its interests for many years.

It’s the sudden impact of somebody simply saying, “I’m leaving.” That’s hard to deal with-no matter how many times it happens. We’ve all been through it in dating relationships, marriage relationships, friendships or business relationships. And when you don’t see it coming is when it hurts the most.

I’ve reflected on it in many different ways–anger, relief and most of all sadness. I still don’t understand where the relationship failed so badly. Remember, this is a business relationship. This is nothing like being in love with someone. Yet, I have to ponder, what could I have done better? Should I have been more attentive? Maybe I didn’t listen well enough? What did I do wrong? How did I upset this person to the point of deciding to leave?

Self-reflection is a large part of this experience, but when you’re a principal/owner and a long-term associate leaves, I can tell you one thing…

It hurts.

TIMOTHY BROWN

is Chief Executive Office of ROI Corporation Canada’s national professional practice and brokerage firm.

Jackie Joachim, COO ROI Corp

JACKIE JOACHIM

Jackie has 30 years of experience in the industry as a former banker and now the Chief Operating Officer of ROI Corporation. Please contact her at Jackie.joachim@roicorp.com or 1-844-764-2020.

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Men Are from Mars, Women Are from Venus

Buying-Selling A Practice, Finance|Wealth, Practice

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I must admit that when this book first came out in the early nineties, I never read it. I still have not read the book to this day. The premise of the book was that most common relationship problems between men and women are a result of fundamental psychological differences between the sexes. Of course, there are differences. Men and women approach things completely different which is probably the reason I have never had the inclination to pick it up. Why read about the obvious??

Then I began thinking about practice values. All successful practitioners take the time to calculate the value of their clinic in the market. By determining this value, they know how much this specific asset is worth. Even if one is not ready to sell, having the valuation completed allows an owner to expand, grow and further increase the value of the practice.

Whenever I speak or write about the factors that affect value, I always make reference to the financials, the value of the actual assets in the clinic, whether the associates and staff are on contracts, the lease, and other factors. Whether you are male or female, as an owner these factors are the same and they definitely impact value.

However, when discussing values specifically with female owners it is a different conversation than with male owners. For instance, more women than men are actually surprised with the final value because the practice ends up being valued higher than what they originally thought. As women, I think we tend to underestimate ourselves and as such, the value in the business itself is not seen for what it really is.

Practice values for women will definitely be affected by age and stage. For example, if a valuation is being done during or after a maternity leave, financials are going to be affected. When we calculate value, we use a three-year weighted average. During this specific stage of life, because a woman will have worked less this means revenue is less yet expenses like rent or staff must still be paid, which means less profit or cash flow. What about when children are young and as a practice owner, practice hours must be juggled? I remember when my daughter was first born until about age 5 my time and earning capacity for my career was reduced because of the stage of life we were in. Remember, cashflow is a huge factor that affects value. Not to generalize but the birth of a child has less affect on the practice’s value when the owner is male. Another stage that potentially affects the value of a female owner is someone who is in her mid to late 50’s and is trying to manage aging parents? Again, these personal situations can affect the performance of the clinic for obvious reasons. I do wish to note that I am not saying managing elderly parents is exclusive to women, men deal with this as well. I am simply making a generalization.

The practice is a significant asset and also another child. What is key for female owners is that women must ask and know the value of their businesses. There will come a time when the decision to sell will be made. Hopefully, it will be part of the overall investment and retirement strategy. Unfortunately, there are many statistics confirming that women do not invest as much as men do.

When female owners do decide to have a practice value completed, please remember one thing. If any of these stages I have referenced required your attention, please do not be apologetic for where your value ends up. If you did take time off to raise a family or manage a personal situation, do not regret having a business that “could” be producing more. An appraisal will definitely cause any owner to reflect on their management and success to date. However, success is not only defined as the number of patients you saw or the level of revenue you achieved. Success is not one dimensional. The definition of success differs from one person to another. Taking care of one’s family, making money and maintaining your own sanity throughout are also clear signs of overall success.

The last point I wish to make, regardless of whether you are a man or woman is that you must be in charge of your finances and future. A huge step to accomplishing this is knowing the value of your practice.

Jackie Joachim, COO ROI Corp

JACKIE JOACHIM

Jackie has 30 years of experience in the industry as a former banker and now the Chief Operating Officer of ROI Corporation. Please contact her at Jackie.joachim@roicorp.com or 1-844-764-2020.

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Plan Ahead—You Never Know

Finance|Wealth, Practice, Resources

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Some of our clients are seniors and with every passing year we are saddened to hear of the illness and sometimes the loss of these highly valued clients and oftentimes they are personal friends. One such client comes to mind. He was still practicing, but reported having fatigue that day. His staff insisted that he go home and rest thinking he had a severe case of the flu. Unable to drive, his son took him home where he slept through the night. When he woke up he was still not well and his family took him to the hospital. He died that same day.

He was diagnosed with a severe case of cancer (stage IV leukemia) and there were no pre-indications that he or his family was aware of. If he did know, he did not tell anybody. If he did not know, it is probably because he was only 53 years of age, very fit, exercised regularly, led a healthy lifestyle and as a result had not seen his physician in some time.

More factors regarding his illness were later found but the bottom line is he was treating patients a few days before he died. As business advisors and brokers, we encourage our clients to examine their Will, update it regularly and designate a trusted family/friend/advisor to know where it is kept.

Next, we advise our clients to have an emergency plan for the business itself. We tell them that a Will looks after your assets after your death and distributes those assets as you have directed. In many cases, this process can take two or more months to be properly enacted by your executors. What happens to your practice/business tomorrow if you suddenly die today?

Do you have a specific individual who will take the responsibility of caring for and controlling the practice to ensure that it continues to operate? This means that patients are seen, staff, landlords, and suppliers are paid to keep the business running in a vibrant fashion. By doing so you prevent your practice from plummeting in value in your absence as the key producer?

Do you have a specific health care professional (HCP) or a group of HCPs who should be called upon to help you, your family and business advisors if an emergency arises to keep the business operating in an orderly manner?

Often, in the absence of any instruction of this nature, the staff or the family members—while in a state of shock or sadness—will shut down the practice and cancel patients’ appointments. They will have no idea when or how to re-open. Should something be said in the newspaper? Should there be an announcement to the patients? How is your practice to be run without you there to guide them?

Understandably, your practice will close for two or three days to allow family/friends/colleagues to grieve and to attend your funeral. BUT soon—it is business-as-usual for the sake of the business! It must be maintained and its value preserved. Subsequently that value will inure to your estate or to the executors in full form and fashion, as opposed to being closed and your practice starts to fail.

Why would you want to leave an asset in a state of rapid decline when all you need to do is have a Will for your business and/or an emergency plan that gives your family/executors/advisors specific instructions?

Here are the instructions you should have in place:
1. A locum be added into the business as quickly as possible.
2. A list of HCP locum names with phone numbers is available to call. Most brokers have locums at the ready for this purpose. An office manager or receptionist can be designated to do this task at this time. It does not have to be done by a lawyer or a family member.
3. The practice should be appraised immediately or if an appraisal is on file, that appraisal should be updated. Your accountant and your lawyer should have a copy of your emergency plan. Again, provide the names and contact information of the individuals designated to perform these tasks.

Delay of any of these steps reduces the operating value of your business. We (as individual advisers/brokers) would not want to leave our business in that condition. Most of us have children and grandchildren and others
to whom we wish to leave a legacy. We never want to leave a negative
declining asset behind.

Additional steps can be taken depending on the unique circumstances of
your practice/business. Consider consulting with a professional practice appraiser/broker to put an emergency plan and business Will in place. By doing so, you will preserve hundreds of thousands of dollars for your family, your church, and your charity.

TIMOTHY BROWN

is Chief Executive Office of ROI Corporation Canada’s national professional practice and brokerage firm.

Jackie Joachim, COO ROI Corp

JACKIE JOACHIM

Jackie has 30 years of experience in the industry as a former banker and now the Chief Operating Officer of ROI Corporation. Please contact her at Jackie.joachim@roicorp.com or 1-844-764-2020.

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