As reality settles in, you realize that there will come a time when you’ll have to think about a smart way to exit your own practice. In strategizing a way to make peace—financially—with your own practice, you consider several factors. This includes things like who will pay for the dues that run the practice without the only person bringing in the revenue, when the right time is, and if you should think about exiting the practice some other time.
What is an exit strategy?
Considering leaving something you spent much of your time and effort to build from the ground up isn’t the easiest thing to do. But you must know that you can’t efficiently run a practice forever. At some point, you’ll have to take a break, and it’s going to be permanent.
You think that with the word ‘exit,’ it’d mean you’ll leave the practice all of a sudden, leave patients hanging, and jobs pending. You can’t be more wrong. An exit strategy is a contingency plan executed by investors, traders, venture capitalists, or a business owner.
The nature of an exit strategy is for the mentioned individuals to liquidate their holdings in a financial asset or to get rid of real business assets once the determined goals for either thing has been made or the asset has exceeded expectations.
On the flip side, exit strategies are also executed to close investments that perform below ideal levels or a business venture that isn’t raking in profits. This side of the coin makes exit strategy a move done to limit financial losses and not incur debt.
How does an exit strategy apply to individual medical practice?
Let’s say your practice is on neither side of the two situations that usually end in business exits. Your practice is successful, with steady revenue and a good reputation that makes it deemed to last a long time.
But the dilemma lies in your desire to halt working. You know the business is running just fine, but you want out. It could be because you’re retiring, planning to pursue another business venture, or want to take a break.
The practice you built is also a business, just like the other things considered in contingency plans. Ideally, you should have one even before you erect the practice. But that isn’t exactly one of the first few things you try to check when you’re just starting, which is very understandable.
In planning a good exit from a solo practice, the key is to give it an ample amount of time. Here are two reasons why:
- Creating a formidable practice takes time
Building a practice that can run just fine without your presence takes a lot of work. If the practice relies heavily on your skill and time, its chances of crumbling without your expertise are high.
If you built your practice with the goal of it being able to run without you in the future, you would have to have other revenue producers such as physicians and surgeons working after you leave.
By working to build a practice to proof it from future decisions, you can see it as a way to make a living even if you decide to stop practicing yourself.
- Building a medical facility isn’t an overnight process
Gathering investors to fund your venture to add a physical presence to your practice isn’t exactly something you can accomplish overnight. Finding the right investors who believe in what you do and your venture’s goals can take months to flourish.
After finding funds, it can easily take months to years to build a medical facility that will house your practice and other doctors. In looking for investors, you should think that you’re looking for partners—which is true.
Gathering a group of medical practitioners to form a partnership to own and manage the planned medical facility is your best bet. You and your partners would be your own investors.
You can lease out the space to similar medical professionals to get financial returns. You can see the facility returning a little less than half of your investment during asset sales. Why? You’re locked on a lease-earning real estate that also provides professional medical services. The location and proximity to other similar facilities won’t be an issue for the real estate has gathered multiple services in one space.
Is there an ideal way out?
The ideal way, truthfully, is to think long-term. An exit strategy, as we’ve said before, takes years in the making, excluding execution. You would have to have an exit strategy in mind even before you begin your practice. It might not sound like it negates your venture, but it doesn’t. Having a contingency plan in mind will help you breeze through the doors out of the practice.