Because chiropractors tend to enjoy their profession and their daily work helping people achieve their health potential, many of us never think about the end. As a result, some chiropractors don't envision their lives after chiropractic. Instead of dreaming about what they would like to do after chiropractic and when they would like to do it, many chiropractors simply procrastinate thinking about their retirement or exit strategy. As you might guess, this is a poor strategy for reasons which we will discuss in this article. With that in mind, here are a few things you need to consider before you even begin to seriously contemplate leaving chiropractic.
Transition vs Transaction
Unfortunately, the end of your chiropractic career is much more of a transition than a transaction. Most chiropractors incorrectly view the end of their career as a transaction after which they will no longer be in practice. They figure that, when the time comes, they will sell their practice or offer their associate an opportunity to buy. While this is a possibility, the statistical reality of business sale transactions indicate that the process is much more complicated than that and that the road to a chiropractic practice sale is seldom a straight and wide path. In fact, if you default to viewing your exit from chiropractic as a simple transaction, the chances are good that you will be leaving a lot of income on the table and creating an opportunity with a low probability of success. Put another way, if you don't properly plan, you increase the chances that your sale with either fail or produce much less income than you anticipated.
To add insult to potential injury, by focusing only on the transaction portion of your exit strategy, you may not spend the necessary time creating a transition plan for what you will do with the rest of your life. While the transaction plan may concentrate on the details and terms of your sale, it does not answer the bigger questions. For example, why are you selling? Why exit now? How much income do you need to live in the lifestyle that you have planned? In fact, what do you plan to do after the sale? Sellers that fail to adequately plan or address their transition strategy create a recipe for a bad case of seller's remorse. Or worse, they set themselves up for a lifetime of post-chiropractic disappointment.
Before you dismiss transition planning as unnecessary or something that you innately already know how to do, examine these not so pretty facts about the potentially catastrophic results of a lack of planning:
Don't be a victim of your own poor planning. Spend time (or get help) assessing both your transition and your transaction strategy needs.
Default vs. Strategic Planning
The second potentially deadly hazard to exiting from chiropractic has to do with the manner in which you exit. Unfortunately, many chiropractors view the "default" exit ramp as the practice sale. While selling your practice may be the best option, it is not always the case. In fact, by not exploring all of your options, you may lose a significant amount of income. Again, procrastination is your enemy here. The less time you devote to planning, the fewer options you will have. Consider the following real-life examples from our clients (names have been changed to protect their privacy).
[pb]Dr. Bill's Delayed Exit Strategy: Dr. Bill was 68-years-old and in good shape. He wished to slow down and sell within five years. He met a doctor who was potentially interested in buying the practice; but the young doc wanted to buy immediately. We calculated that Dr. Bill could sell his practice for $500,000 immediately. However, by selling immediately, Dr. Bill would forgo nearly $200,000 in salary and compensation that he was receiving from the business each year. Instead, we offered the young doctor a chance to buy the practice at a $400,000 price (which was a bargain for him) with the contingency that Dr. Bill be able to continue to practice for up to the next five years. We worked out a compensation arrangement whereby Dr. Bill is guaranteed a $50,000 salary and then gets a percentage of his production. This arrangement guarantees Dr. Bill an extra $250,000 over the next five years plus the $400,000 sale figure. At a minimum, he makes an additional $150,000 than the straight sale at $500,000 but will likely earn much more. He's a happy camper because he gets to remain in practice, doesn't have to worry about finding a buyer and ends up making more. His young buyer is happy because he got the practice for $100,000 less than it would have sold in a traditional sale and he keeps the senior doc around for the next few years so that his patient retention is excellent and he has access to a "free" consultant!
Dr. Heidi's Hybrid Strategy: Dr. Heidi is at the peak of her career in terms of production (collecting just over $1 million per year) but, at 45-years-old, she is not ready to retire. However, she has young children and would like to spend more time with them. Because she has a strong niche practice handling families, pregnant women and children, she could easily support another DC, but didn't want to go the Associate route. Instead, we found an DC interested in ownership opportunities and set up a "hybrid" partnership strategy. The young DC bought a 25% portion of Dr. Heidi's practice and immediately became part owner. With an owner on board, this gave Dr. Heidi the freedom to take more time off without watching the practice (and her income) drop. The new owner jumped on the opportunity to be a part of this practice because she was leary about buying the whole practice due to inexperience and not enough access to capital. In time, Dr. Heidi plans to sell additional "shares" of her practice to her current partner and/or to additional partners, but she's in no rush. However, by selling off portions of her practice and continuing to work in the practice and grow it, each successive portion becomes more valuable. At her current statistics, if she were to sell the remaining 75% of the practice in a similar fashion, the total sale would be at least 3x what she could sell the practice for in one single installment.
Endless Options, If You Plan
When I work with clients on their transition strategy, I typically stress one thing: the options for how you can exit practice are essentially endless – as long as you have enough time to plan. Obviously, you can probably imagine umpteen variations on the two strategies above with different time frames, sale amounts and business opportunities depending on what your goals are. This is why transition planning is so very important. We are no longer in the era where seniors are put out to pasture and die within a few years of retirement, so there is more planning necessary. For that matter, we are not even in an era where everyone wants to work to traditional retirement age. With the popularity of books like Tim Ferris' Four Hour Work Week, the concept of micro or mini or early retirement is appealing to more and more people.
Fortunately, as chiropractors, we have businesses that do allow a degree of flexibility with respect to how many hours we work and the types of practices we run. Why not extend that same flexibility to how we exit practice as well?
Many Exit Ramps and A Few Obstacles
Another thing that I often tell clients and attendees at my transition seminars is that, as chiropractors, we all have many exit ramps to choose from in terms of how we will leave chiropractic. But each ramp presents itself with a few obstacles as well. For some, the possibility of a little more risk and a much greater reward sounds like an ideal plan. Others would prefer a lower return with less risk.
There is no right way to leave your chiropractic practice, but there are definitely several wrong ways. Failing to plan, having decisions made for you or not properly weighing all the factors of your transition are all bad ways and result in a stressful, less than successful exit. When you entered practice, you undoubtedly had dreams of what your future career would be like. Now is the chance to plan the next phase of your life – which may be even more exciting – so plan well, consider the obstacles and choose the exit ramp to a successful life after chiropractic!
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