Even if you are years away from closing or selling your practice, the following steps will help strengthen its performance now and facilitate a smoother transition later.
Craft a solid business plan. Creating a business plan is the necessary first step in charting a path to successful practice. In addition to helping you set goals and make good business decisions, your business plan will help you paint a clear picture of your practice to potential buyers. Additionally, having a business plan demonstrates your seriousness as a small business owner and the care you have taken with regard to the business aspects of your practice.
Determine the best legal model for your practice. There are a variety of choices for the legal organization of your practice, each with advantages and disadvantages. If your practice is currently structured as a sole proprietorship, you may want to consider other models that can better protect your personal assets and facilitate transfer of ownership in the event of a sale.
Although some practitioners choose a general partnership model when bringing a colleague into the practice, it is important to take steps to adequately protect yourself. Not only are your personal assets at risk, but you also take on responsibility for your partner's actions. Opting to create a corporate structure adds complexity, but limits your personal liability and can streamline the transaction via the sale of stock to the buyer (an approach that may also provide you with tax benefits).
Join and actively participate in professional associations. Your state, provincial or territorial psychological association (SPTA) is a valuable resource for practitioners in many ways. As it relates to selling your practice, the SPTA represents the practice community from which prospective buyers will most likely come. Joining your SPTA can facilitate developing close connections with your colleagues at the local level, which can help you spread the word when you begin the process of putting your practice up for sale.
When you actively begin your search for a future buyer, word-of-mouth communication through your network of professional contacts often produces the best results. You might also consider placing a notice in your SPTA newsletter or on their website. Another valuable resource for identifying potential buyers is your SPTA's Early Career Psychologist (ECP) representative. ECP's, defined as being within seven years post doctorate, are a target audience that may be interested in the opportunity to join an existing practice and learn the ropes, with a plan to take over ownership of the practice in the future (see "A win-win approach to selling your practice," below).
Market your practice. Having a well-developed network of professional contacts and referral sources can open the door to a variety of professional opportunities and help you reach those who could benefit from your services. When it comes time to sell your practice, the years of network building can have the added benefits of helping you spread the word to potential buyers and actually increasing the appraised value of your practice.
For a practicing psychologist, much of your competitive advantage comes from your own professional image and reputation. While not inherently problematic, relying on the value of your personal involvement can negatively affect how much your practice is worth when you transfer ownership and are no longer present. This has the potential to drastically reduce the price you can command for its sale and leave the buyer with a floundering practice that was otherwise thriving before your exit.
Your marketing efforts should, therefore, work toward building the name recognition of your practice and transferring your positive image and reputation to the business entity itself. This will add to the "goodwill" value of the practice. When selling your practice, as much of the value as possible should come from goodwill and other intangibles, which are considered capital gains and taxed at a lower rate than regular income.
Have the right players on your team. Your accountant, financial advisor, attorney and other practice consultants can serve as trusted advisors and help you think through the business and legal issues related to selling your practice. By developing strong working relationships with these experts, you can create a long-term strategic plan and take the necessary steps to streamline the process and maximize your financial gains when the time comes to sell your practice.
Get your financial house in order. When you sell your practice, part of determining the value will involve looking at its financial performance over the past few years, so don't wait until the last minute to shore up your practice finances. Work with your accountant to develop a solid understanding of your financial position, monitor trends and manage revenues and expenses in a way that improves your bottom line.