Many articles and seminars on dental practice transitions make it sound as though every practice will eventually find a buyer. Unfortunately, that’s not always the case.
If you practice in a small town, you should not count on being able to sell your practice.
Smaller communities are often wonderful places to practice dentistry and raise a family, but there simply are not enough dentists moving to them. Younger dentists often prefer larger metropolitan areas, where there are more career opportunities for spouses, larger social networks, and a wider range of lifestyle amenities.
As a result, dental practice sales in smaller communities can be much more challenging than many owners expect.
When a Traditional Practice Sale Isn’t Possible
Sometimes a dentist who cannot find a buyer will instead pursue a chart sale. In these arrangements, another local dentist takes possession of the patient records, the selling dentist encourages patients to transfer their care, and the purchasing dentist pays a fixed amount for each patient who schedules at least one appointment.
While chart sales can provide some value, they generally do not produce the same financial outcome as a traditional practice sale.
Don’t Build Your Retirement Around Selling Your Practice
The real point is this: not selling your practice is a very real possibility.
You don’t want to find yourself approaching retirement financially dependent on the proceeds of a practice sale. Instead, your goal should be to accumulate enough wealth that, even if your practice doesn’t sell, you remain in a strong financial position.
If you are able to sell your practice, that’s simply icing on the cake.
Build Financial Independence Long Before Retirement
Reaching that point takes time and consistent planning.
It means saving 10% to 15% of your income over many years and redoubling your efforts if you’ve gotten a late start. It means investing simply and sensibly in excellent businesses, high-quality bonds, and perhaps low-cost index funds.
As retirement approaches, establish an appropriate asset allocation and avoid investing so aggressively that an ill-timed recession significantly reduces your retirement savings.
Finally, consider working another year or two on a reduced schedule. In many cases, practices don’t sell for so much that you couldn’t generate an equivalent amount by practicing a little longer while easing into retirement.
The Bottom Line
Whether you’re practicing in a large city or a rural community, retirement planning should never depend on the assumption that your practice will sell.
The strongest retirement plans are built on decades of disciplined saving and investing. If a practice sale ultimately adds to your retirement nest egg, that’s a welcome bonus—not the foundation of your financial security.
If you’re planning for retirement or beginning to think about a future dental practice transition, Collier & Associates can help you evaluate your options and develop a strategy based on your long-term goals.