Adding Value to Your Practice, Part 2 Overhead, marketing and review of valuation methods feature A s I mentioned last month, chiropractic practices generally sell for less than the fair market value of a compa-rable small business, all other things be-ing equal. It’s largely due to supply and demand. This begged the question: are there legitimate ways to increase the value of a chiropractic practice so that buy-ers would be willing to pay at least fair market value, (i.e., 25 to 30 per cent more than the histori-cal averages for chiropractic practices)? I suggested a good place to start would be improv-ing your Internet (local) presence, and then went on to talk about the DC refreshing his/her own approach, staffing issues and develop-ing and maintaining good office systems. I’d now like to discuss other areas where DCs can focus efforts to improve the value of their practices, and then outline various methods that are employed to valuate a chiropractic practice. Dr. John Whitney graduated from CMCC in 1957 and practised in Guelph for 30 years. He has also been a practice management con-sultant and practice appraisal spe-cialist for over 20 years. Dr. Whitney has trained over 5,000 new gradu -ates to successfully enter practice in Canada and the U.S. OFFSETTING OVERHEAD Have you ever thought of how little time, compared to other small businesses, chiro-practic offices are open for business, and, furthermore, actually attending patients? A straw poll on hours of operation from among our clients showed an average of between 22 and 27 hours a week that the practice was open and the DC was seeing patients. That means, for most of these people, the office is sitting idle for approximately 60 hours a week! A fully equipped chiropractic office can potentially sit idle up to al-most three times as long as it is active. I wonder how that 60 hours a week could be monetized? It seems a shame to see it empty all that time, generating no revenue. Yet, much of the office overhead is still there whether it’s busy or not. Recently, I was talking to a group of Life University students who were apprehensive about going into practice because of the high cost of startup, yet found the idea of be-ing (poorly) paid associates unattractive. It doesn’t tax one’s creativity to see there exists a potential for the new grads to lease space during the downtime of our offices, thus providing a win-win situation: the new grad has potential for building up a patient base without shelling out immediately upon graduation, while the DC already in that practice can monetize his/her downtime. Furthermore, as a practice appraiser I can tell you a two-or three-doctor practice, all else being equal, holds much more value than that of a solo doc. The other DC should be an independent contractor (IC) or a sublessee (SL), not an employee. However, in order to mentor (and monitor) an IC or SL, I suggest you hold joint staff meetings in most cases – unless the IC really has his/her act together. Some ICs are quite solitary, preferring exclusivity to “their” days and hours; others amicably mix it up. There are several variations on the theme that you and your ICs can work out. www.canadianchiropractor.ca John Whitney, DC 30 • CANAdiAN CHiROpRACTOR | MAY 2011
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