00:00:04:08 – 00:00:53:05
Welcome to Shorr Solutions: The Podcast. I’m your host, Jay Shorr. I’m the CEO and founder of Shorr Solutions, a national and award-winning consulting firm, assisting aesthetic and surgical practices with their operational, administrative and financial success. I have an amazing team of practice management experts and clients across the U.S. and as an industry expert with firsthand experience owning a multi-million-dollar cosmetic dermatology and plastic surgery practice. Listen in as I lend you my expertise and best tips to successfully manage and grow your aesthetic practice. I will also be bringing in guests along the way, so get ready to be equipped to operate your aesthetic practice strategically and profitably. Welcome to Shorr Solutions: The Podcast.
00:00:55:16 – 00:01:46:20
Welcome once again, everybody. And right about now, we’re into the festive holiday season.
So Happy Hanukkah and Merry Christmas to all of you. And welcome to another episode of Shorr Solutions: The Podcast. And I’m your host, Jay Shorr. Today, we’re going to be speaking about something that has plagued our industry or has been a great benefit to our industry, and that is selling our practices to private equity and venture capital. So timely enough, today’s episode is going to be around the Top Ten Tips to Prepare Your Aesthetic Practice for Sale and Getting the Most Value.
So we’re going to go through ten tips real quick so that I can share with you my top tips and pearls for how to get ready to do that.
00:01:48:00 – 00:05:03:02
So first of all, tip number one, you have to streamline your esthetic practices, operations with policies, protocols and procedures. And a policy is a means of guiding an organization to a desired outcome. A procedure is a written set of instructions that describe the approved and recommended steps of a particular act or sequence of events and procedures. Supplement policies to describe how the policy will be implemented and met. Because you can have a policy, but it’s the procedure and the protocol in how you do it, because you can have a playbook and it’s like you have a plan, you have a play in the huddle, but it’s how you effectively execute that.
So let’s have some examples of what policies and procedures are. Well, code of conduct, how do you perform within your organization? Do you have a code of conduct? How you’re supposed to act? What is your recruitment policy? How do you market to get a new candidate? How do you recruit? How do you hire? How do you train? How do you incentivize?
And most importantly, how do you retain? Next, do you have an internal email policy that is very, very important or else you can get infected with viruses or you have staff emailing people and receiving emails from companies that are sending you spam. Do you have a mobile phone policy or do you let people in your office just run rampant with phones, walking down the hallways in your office, texting with those obnoxious ringtones when the family or friends call them?
Do you have a nonsmoking policy? This is very important to me because we’re in the aesthetic and health care field, and there’s nothing worse than having somebody running out for a break. A quick cigaret or smoke break and coming back smelling of cigarets. It’s not a matter of the cigarets that I’m offended by, even though it is. It’s the smell and what we as a health care organization try to promote.
Do you have a drug and an alcohol policy? Zero tolerance items. For those of you listening to me and other podcast. We spoke about zero tolerance, interminable offenses. Now you have to be very careful because in the state of California and many other states, recreational marijuana is legal. So somebody who might partake in that on a recreational practice unfortunately will test positive if they ever come to test to have it take a drug test, although they may not necessarily have been under the influence at the time the drug test was taken.
Differently than alcohol is that if you’re under the influence in a couple of hours when your blood alcohol concentration level drops, you will no longer be under the influence. So it’s a really sticky widget right there. And then do you have safety and health policies? The do’s and don’ts of making sure that you provide a safe and efficacious workplace for you, your staff and your patients.
00:05:04:05 – 00:06:24:17
Tip number two Do you analyze your P&L profit and loss? It’s not P-N-L, like a lot of people say it’s the P and the ampersand sign and L profit and loss statements to identify where you can reduce expenses to increase your net profit. Every dollar of revenue only yields a certain percentage of profit, but every dollar of expense that you cut is a 100% profit dollar.
It’s simple math Buyers want to see increased revenues and profit in order to get their return on their investment. Example Shark Tank. Probably one of my favorite shows. They ask a series of typical questions. What did it cost you to produce that? How much did you sell it for? What is your gross and net profit and what is your cost of client and in our case, patient acquisition?
Because we really have to know to identify those increases of revenues and decreases of expenses to increase our EBIDTA. EBITA, whenever you want to say tomato, tomato and what does that EBIDTA/EBITA mean? It’s the earnings before interest taxes, depreciation and amortization. Many people also referred to that as the bottom line.
00:06:25:19 – 00:09:18:02
Tip number three, you have to increase your patient base to boost revenue by increasing your brand awareness.
So what’s a brand awareness? Who are you in the marketplace as a leader and an expert? You have a brand. How do you want to be known as? What is your brand? Email and social media marketing campaigns? How often do you do them? And are you actually reaching your target market and the proper target market? Or do you just have names on a list?
It’s kind of like Facebook, Instagram, all these things like, Oh, I’ve got a million followers. Well, that might be great for an influencer selling makeup and clothes and shoes because that will be reached nation and possibly worldwide. But in our business, how many of those people that you’re reaching will actually do business with you? Because buyers who are going to buy your practice aren’t interested in how many followers you have, unless they’re going to follow you and come in and be your patient and spend money.
Lastly, on this tip number three, SEO and SEM strategies, SEO is search engine optimization. SEM is search engine marketing. So the main difference is that SEO, your search engine optimization is focused on optimizing websites in order to get traffic for organic search results. Organic means how do you place on the pages and the spots in Google, Bing, Yahoo, whenever somebody types on a keyword to do a search.
But on the other hand, the goal of SEM or search engine marketing is to get traffic and visibility from both organic and paid search, commonly known as PPC or pay per click, which means you pay a certain amount of dollars and then that gives you a quality score. If you have a quality score before, but you pay a certain amount of dollars to have an advertisement, you know on Yahoo, Google. However, that only gives you the impression and then somebody has to click when they click and they click through, you are charged at whatever your fee was that you got as a better deal from a quality score or what you’ve negotiated.
And lastly, number four, to improve the quality of your services for more word of mouth referrals, there is no better referral than a referral from somebody who already uses your service, is a trusted brand awareness person or tells you how wonderful the practice and their services are because they can do it better than you.
00:09:19:04 – 00:10:47:22
Tip number four You have to train your team to increase your conversion rates. Your team, You as the provider. You as the doctor. You can’t do it because you’re too busy providing those wonderful services. So training your team to increase your conversion rates. What does that mean? Think conversion cascade and in a little bit you will understand what that means.
So a conversion cascade is you spend a certain amount of money in marketing, whether it is SEO, SEM, radio, TV, newspaper. Don’t laugh. The old time I spent $12,000 a month in Yellow Pages because it worked. That was the only game in town. Marketing to your call to action to contact you either by email or a phone call.
And that phone call you have to convert to a consult. Remember, we haven’t sold anything yet and you haven’t generated any revenue yet. So you spent marketing dollars to create a call to action, to a contact, whether the phone rang or an email, and then you have to convert that to a consult and then you have to convert the consult to a treatment. That is where the revenue comes in and then the treatment converts to dollars. And then it goes around in a circle all over again.
00:10:49:02 – 00:12:15:08
Yes. We’re going to take a quick break and a slight intermission. I’d like to take a moment to tell you about our conversion cascade online course. With this self-guided and powerful course, you and your team will be able to master acquiring and retaining more patients as a step by step sales funnel training, this course is designed to help you and your team attract more patients, convert calls to consults, convert consults to treatments and procedures and keep patients coming back for more. Not only will our conversion cascade online course help to strengthen and develop your team’s phone sales and customer service skills, it will also serve as a valuable onboarding training tool for each and every new team member.
Plus, in the course you’ll receive downloadable marketing checklists, phone scripts, conversion tracking tools and more. So why not sign up for the course today? It only takes less than 4 hours to complete, and you can finish at your own pace, and you’ll have lifetime access. And as a special thank you for being our podcast listener, we’re giving you 20% off.
Just enter the Discount Code PODCAST to start saving today. Click the link in our show notes to sign up for the conversion Cascade Online course. Acquire and retain more patients right now.
00:12:17:03 – 00:14:21:05
Tip number five you have to craft a strong exit plan for a maximum profitability several years prior to your desired sale. I get calls all the time from doctors who want to sell their practice and they say to me, I’d like to sell.
And I ask them, Well, when do you want to get out? And they say, now or a year from now. And I say, That’s the worst mistake you can do. You really need to start a couple of years ahead of time. And here’s why. Because if you’re able to increase your revenues, decrease your expenses, which in the end increases your EBIDTA, guess what the value of your practice private equity could be tenfold because right now they’re paying between four and six times of your earnings.
So if you increase that EBIDTA, you’re necessarily going to increase the buyer, how much they’re going to want to pay you for that. So what is it in that exit plan that you have to figure out? Number one, is your staff going to stay? because they may want to stay once you’re gone, will your patients remain? Because why does somebody want to buy a burning building if your patients aren’t going to be there. The next It gives you an opportunity to hire a new doctor or a junior associate, which I call your heir apparent.
So he or she can end up getting to know the patients and they’ll be a trustworthy resource. Your heir apparent to take over your business. Makes it worth a little bit more. So when the answer is now, you have to start now, because what you have to increase is your operational, your administrative, your financial and your marketing plans. Failure to plan is a plan to fail. You have got to do that and you’ve got to do it now.
00:14:22:19 – 00:15:29:21
Tip number six, you need to resolve any possible potential legal issues that might hinder the sale process, whether they are civil, debt ridden, lease issues, issues with dissatisfied patients, not necessarily professional liability or malpractice, but dissatisfied patients that may come in six months to a year from now and say, you know, I’m not really happy with my procedure.
I want my money back or I want a redo. Let me tell you something. There will be hold backs when you want to sell your practice because the buyer wants to make sure that there aren’t going to be issues. And on the professional liability malpractice side, they’re going to want to know that there’s a tail because there’s different types of liability policies that you buy.
And if it’s not a policy that’s going to be able to be effectuated for when the procedure was done, but rather when the claim was made, if you’re not insured with that carrier, when the claim is made, you better have a tail.
00:15:31:00 – 00:16:16:14
Tip Number seven: Create a plan to pay off your equipment prior to the practice’s sale, because nobody and I mean nobody wants debt service when buying your business, you can use the money from your sale to pay the equipment off afterwards, but that is the least preferred method because what a buyer wants to know when they’re looking at your P&L is that all your depreciation and all your amortization and all your debt service has been done.
So what they’re buying is either good assets or they’re buying equipment that has no residual debt on there. That everything is free and clear.
00:16:17:14 – 00:17:39:00
Tip number eight, negotiate, negotiate, negotiate. Please do not rush to take the first offer. If any of you have listened to my negotiating lectures or my negotiating podcasts, it’s a wonderful way to teach you how to negotiate.
Many times you may not be in the position to negotiate, since you may not have anything special to offer. That’s the worst position to come from. So get a true financial valuation of your business before entertaining any offers so that you are negotiating from a position of strength versus a position of desperation. Now, why do I say that? Because if you allow the potential buyer to do your valuation, do you think it’s going to be in your best favor versus you getting your own? Maybe you may need a third one mean mode median. You take the high, you take the low, you meet somewhere in the middle. I know that when we value and do a valuation of a practice, I do it with good accounting principles so you can challenge it, but it’s done, tried, true and tested.
00:17:40:04 – 00:18:24:22
Number nine and the one that will be one of the most important. Never, ever, ever be afraid to walk away from a deal. There may always be a better deal in the future if and only if you’re willing to wait. Deal or no deal. This is not the Howie Mandel Show. However, if you know that you’re never going to get any more for it than what’s being offered because you’ve done your pre due diligence, then that’s what the deal that you take if timeliness is when you want to walk. But if you think that you can get more for your business, then wait.
00:18:25:16 – 00:20:07:22
And then lastly, tip number ten. I would seek assistance from consultants who specialize in exit strategies to help you. Like that guy on the right that you’re looking at and is looking right back at you. With my team of true professionals, make sure that you have an amazing health care attorney who actually specializes in mergers and acquisitions.
I have nothing against attorneys in other specialties, real estate, slips, trips and falls. However, that’s not their specialty. Health care, mergers and acquisitions is like, I wouldn’t have a cardiologist doing my facelift or tummy tuck. It works the same way in health care. It works the same way in law and have a good accountant who is going to be able to help you with your tax strategy.
Because remember, there may be some type of capital gains in your business. And although you’re going to walk away with a million, 2 million, 5 million, 10 million, there may be a tax consequence to it. So it really is up to you to have a good health care attorney and a good accountant who’s going to guide you along the way and a good solid consultant that specializes in these types of things. In the aesthetic, cosmetic, surgical medspa industry and knows each nook and cranny and the value of all the equipment.
Ladies and gentlemen, they are the top ten tips that I can offer you in preparing your aesthetic practice for sale and getting the most value. Good luck. God bless.
00:20:09:02 – 00:21:41:13
So that wraps up today’s episode of Shorr Solutions: The podcast. If we mentioned any website links, you can find them in our show notes to work directly with me and our award-winning team of consultants to increase efficiency, increase revenue and decrease costs in your aesthetic practice, schedule a free consult with us today.
We will help you establish and refine your aesthetic practice’s protocols for maximum efficiency and productivity, decrease your expenses and increase your profitability with an expert financial analysis of your business. Attract more patients, convert calls to consults, convert consults to treatments and keep patients coming back for more. With our sales training, coaching and complimentary access to our conversion cascade online course.
Recruit, hire and train new team members and manage any staff turnover with our human resource expertise plus more, head over to our show notes and click on the link to schedule a free 30-minute consult with us today.
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