MAXimise The Value of Your Dental Practice – 5 Focus Points

February 13, 2021

If you are an entrepreneur, one of your goals will be maximising the value of your dental practice. This not only gets you top dollar but also attracts potential buyers. What prospective buyers are looking for in an investment is something that can MAXimise their return and minimise their risk.

 

To increase the value of the business while reducing the risks and demonstrating an increased likelihood of growth involves using value drivers. Value drivers can be anything added to the service or product that increases its value. This makes the service or product more appealing to the consumers and differentiates it from the competitor.

 

To MAXimise the value of your business, you need to improve the value drivers. Here are the 5 value drivers you need to focus on:

1. Your team

To increase the company’s value, retaining and motivating top talent is important. Your team needs to have the skills and drive to grow the company. This includes appropriate employment agreements and incentives in place to ensure that they stay in the company.

2. Recurring revenue

If you want your company to remain in business, you want a large portion of the revenue to be stable and recurring. This makes the company more desirable to prospective buyers. Also, having multiple revenue streams, different ways for the company to earn money can reduce the risk that the service or product might fail. If you can demonstrate predictable earnings, the value of your business will increase. Also important is to equally spread the income amongst revenue performers.

3. Customer diversification

What will be the impact on your company if your largest client left? If your answer is “significant”, it sends a message that your company is a high-risk investment. Building a diversified clientele is critical. The general rule is that there shouldn’t be one customer accounting for more than 10% of your company’s revenue.

4. Realistic scalability and growth plan

Your company’s value depends on its growth plan in the future. You need to have a realistic plan demonstrating the potential for profitability and growth. This includes ensuring that the business is scalable, having new services and products in the pipeline, etc. These opportunities for growth will be used for estimating your company’s growth potential in the future.

5. Financial systems that can withstand due diligence

If there is a prospective buyer for your company, they will scrutinise its performance during due diligence. This includes reviewing past performance and the quality of financial information. All your company’s records should be detailed and accurate. The financial statements should be audited by accountants. Having quality and reliable financial systems can help in managing your business and protecting your assets.

 

Focusing on the above-mentioned value drivers will improve the market value of your company, increase its profitability and prepare it for the future.

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