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#966: Planning For Your Practice Exit
Even if retirement is a long, long way off, it’s important to have an exit strategy ready to go. Tiff and Britt discuss both the emotional and business sides of things of making sure your practice is in order, including debt awareness, numbers in different scenarios, passive income possibilities, and more.
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Transcript
The Dental A Team (00:01.588)
Hello, Dental A Team listeners. I'm so excited to be here this morning. I don't know what time it is while you're listening here, but today it is a beautiful sunny Friday morning that I'm recording here with Britt. The one and only when I get her on these podcasts, I just soak it all up because I don't schedule her often. It's few and far Between. She's a busy lady. So, Britt, thank you so much for being here with me this Friday morning, and we are just kicking off the weekend in the right headspace.
And I'm so excited to chat these contents with you today. How are you, Britt?
Britt (00:33.486)
I'm doing great, Tiff. Thanks for having me on. You know, it's always like hangout time for us consultants, even though, yes, hopefully are providing value to all our listeners. That's our ultimate goal, but it's fun for us to get to chat about these things.
The Dental A Team (00:46.145)
I agree. I agree. had asked Kristy yesterday, I just messaged her, I'm like, how are you doing? Our consultant, Kristy, you guys know her. And I'm like, how can I support you? Like, how are things going? And she's like, I just missed my Tiff time. And my response was, we've got podcasting soon. So.
Britt (01:01.518)
Exactly.
The Dental A Team (01:07.913)
I like our one on ones. You guys, tell you to do monthly one on ones just so you know, we do monthly one on ones in our company. And then our podcasting time. I'm like, gosh dang it. actually, for a virtual company, I think we do fairly decent, but I love these podcasting hours. I'm excited today because just in case no one understands or knows this already, if you know, no BS, Britt is gonna call you today.
Britt (01:09.537)
you
The Dental A Team (01:34.209)
You know, Brit, you know that she's got a, like this business sense that she just knows. Like, you know, there's just things in life you just know. You just intuitively know, you're like, I don't know, it just makes sense to me. That's business for Brit. And I love watching you just work in that zone for our company, but then also for the clients that you've worked with and helping us consultants just learn so much more about that business side.
And today, your idea was so brilliant. That's what I'm saying, like your business. I'm like, leadership. And she's like, actually, let's talk about this. And I really wanted to bring Britt on today to pick her mind on how you doctors, you practice owners can really start preparing for your exit. know Dana and I've talked about this before and really talked about, even if you don't think, you're like, Tiff, I'm not.
I'm not leaving, like I just started. You're like fantastic, but you should always be prepping and planning for your exit because you just need never know when you're going to be like, I want a sabbatical and you're up and I don't want to my practice anymore. So you should always be prepping and planning for that. And my ideas, know, Britt's like, no, let's talk about this. I think it's brilliant. So we really, really want to take a look at the business side and how you can not only prep emotionally with your
leadership team with your ops manual. We already talked about a lot of that stuff on another podcast and Britt here is gonna bring us some information on really how to prep the business side. How do you prep your finances? How do you make sure that your practice is sellable? What are the pieces that that actually entails? And how do you make sure that you have it in order? I love to tell doctors all the time, evaluate your practice constantly, because you just wanna know. It's like never knowing the value and the worth of your home. I know my...
My lending team and my realtor team, they send me evaluations of my home every six months by email. And it's just really cool to see where the market's at. And so I think taking that mindset and applying it to your business is also really fantastic. So Britt, I'm excited for today. I know the listeners are excited today. I actually, know personally because I hear it and I think you need to hear this today.
Britt (03:20.834)
Yeah.
Britt (03:41.358)
Thank
The Dental A Team (03:41.983)
I actually hear from a lot of our listeners and a lot of my clients who listen how excited they get when you do come on. So I do want you to know that. I know it's not your favorite space. know you don't love that on a public forum, but I think it's really fantastic and you just bring such a wealth of knowledge. what do you see being like the biggest pieces that's like, let's start easy, let's start simple.
Britt (03:51.214)
Thanks, Ted.
The Dental A Team (04:09.099)
and then expand and really dive into like nitty gritties. So where do you see on like an umbrella scope of overarching, this would be a really great place to start to really start prepping your business for an owner's exit, whether they're dental or not.
Britt (04:23.33)
Yeah. So I kind of have the mindset, right? There's always, lots of things that go through my head, but working with clients and I tell them this, I'm like, ultimately, I always want you to be thinking about your business as like, it is truly an asset to you and what is the value of that asset that you have for, you know, so that it can be worth as much as possible whenever it is that you decide to sell it. So like even starting from the beginning of your career,
The Dental A Team (04:49.622)
Mm-hmm.
Britt (04:53.07)
Kind of knowing long-term goals even. I think we've seen probably to have plenty of people who even fresh out of school go into a lot of debt, like they're already in debt and they go into a lot of debt when it comes to purchasing a practice. like even when you're going into purchase a practice thinking about, right, what are my long-term goals? How long might it take for me to pay this off?
The Dental A Team (05:06.755)
Thanks.
Britt (05:13.762)
you know, how much value equity am I going to have within this business even? And just start having that in mind because I think it helps to guide your decisions knowing that like, yeah, sometimes we're going to make a big investment and say, yeah, I'm in this for the next 15 years for sure. No problem whatsoever. Awesome. Take on something that you know that at the end of 15 years that you're going to be able to have it in a spot to where great, that's going to be a fantastic asset. And then whether I actually want
The Dental A Team (05:23.9)
Thank you.
Britt (05:42.966)
to move on or retire in 15 years or whether I decide to stay here, totally fine. You're in a fantastic spot to have the ability to make that decision, whatever way you want to go. So I think starting from the beginning, always thinking of your business in that way. And so of course, that's what we do with a lot of practices, right? Like ultimately, when we want to grow it, we want to grow your bottom line, right? Profit at the end of the day. And when it comes to thinking of the value of your practice, kind of like
debt to EBITDA multiplier, right? So like ultimately when you sell EBITDA is the thing we want to focus on. And so really making sure that we're driving that profitability while you're still able to live a comfortable life, obviously, and take care of everything you need in the practice, but always working to grow that profit and grow that EBITDA so that your value of your practice, you kind of always have an idea of where it's at.
The Dental A Team (06:14.327)
Mm-hmm.
The Dental A Team (06:25.564)
Yeah.
Britt (06:37.216)
I would say check in from time to time even to say, great, how much debt do I still have left? What would my practice be worth? What could I walk away with maybe as far as selling it? What the value would be to me? I think those are some things just to kind of think about in the background and start to look at some of those numbers. The other thing I think it comes down to is sometimes I'll have clients come to me or even on sales calls come in and they're like, well, think I want to sell. I'm not sure. I want to be able to retire. And I'm like, have you
Do you know what you need to retire? Like, do you know what you want that life to look like? Because honestly, that's even the first step. So I know, all right, will the value out of this practice that I will have in 15 years based on what I've paid off, what it's potentially worth, is that enough for me to have the life that I want? Or am I going to get that point and be stuck? I think that's ultimately, I don't want anybody to feel like, my gosh, I'm stuck.
The Dental A Team (07:07.269)
.
The Dental A Team (07:15.204)
Thanks.
Britt (07:31.852)
and they have to keep going and they're not happy. I want you to be happy in the position and feel like you've got choices. So I think that kind of overarching view of things. So ultimately, always think about your business as an asset, right? Make decisions accordingly, financially on that end. And then also have an idea of when you might want to retire, right? Or how long you may need to work in order to retire in the fashion that you want to be able to retire.
Because again, that's just, I think, mindset for you and also mindset around decisions you make for the business. Because if I might want to sell at that time or I might want to transition to associates and still be an owner, cut back days, whatever it may be, if I kind of have a point of where I'm wanting to sell, I'm to make some decisions accordingly along the way to where I want my like peak value point to ultimately line up with when I might be ready to sell.
And so that's going to impact how much debt am I taking on, right? At what points do I want to move to another big building that's going to put me in a bunch of debt? Or I'm so close to that point, let's just crank up however much we can make this practice worth so it's ready to sell when I want to. Those are some of the big picture things in my mind that kind of play into long-term view.
The Dental A Team (08:29.337)
Mm-hmm.
Britt (08:54.606)
current decisions even from the get go of buying a practice and then as you make decisions, you know, along the way throughout your career, always making sure that you keep that
The Dental A Team (09:05.269)
Sure, thank you. Question, said to really be watching your EBITDA, will you, for the public here, just explain why and what EBITDA is and how they should be evaluating that monthly in comparison, right? Because we look at overhead and we look at profit, but then EBITDA is like the separate piece that you need to know, but it's not the profit debt. It's not all encompassing that you actually need to know to move forward with your...
today, but it's Ibara. Will you explain the difference there? Because I think a lot of people get stuck on Ibara, number one, and the definition of it, but then a lot of people get stuck on only focusing on that, but then they miss these other pieces over here and vice versa, look only at these pieces and never at Ibara. So can you just explain what Ibara is and how it plays a role coinciding with overhead profit and the month-to-month movements, but not being your sole focus?
Britt (09:59.522)
Good questions. And there's some other like detailed things I'll talk about when it comes to like when you're actually starting to like get more to that point where you're thinking more seriously. Some things I play around with even on the PNL, I'm playing around with numbers to start to prepare yourself for what that will look like. And like even a yes, there's a long term definition of it, which I think we get lost in. But ultimately, right.
The Dental A Team (10:22.522)
Mm-hmm.
Britt (10:24.97)
It comes down to what are the true operating expenses for that business. So it is not your debt. It is not some of the other fancy terms. It's not taking into account taxes. Right. But truly day to day operations of the business. What does that cost? So think of it in that way. Some things to think about. Right. Some of our private practices, Dr. Own, Single Dr. Own.
Right, we'll say overhead and then doctor pay usually falls below the line. When it comes to thinking of EBITDA, ultimately you're gonna have to replace yourself. That's gonna be part of operating expenses. And so that's where I'm like, all right, when you start really thinking about it, shift some things around, because like your, know, things that you might have running through the business that you like, parts of being a business owner that you pay for through the company, along with your.
The Dental A Team (10:57.671)
.
Britt (11:16.968)
know, accountant's advice that you're following those rules. I start to pull those things out because that's not really within your overhead. And then I start moving above the line as if you are paying yourself as an associate because that's gonna be an expense of running the business, which is gonna give you a good idea of like, what are the true operating expenses? And then...
The Dental A Team (11:34.446)
Okay.
Britt (11:42.786)
depending on kind of what route you want to go, whether it's like, I'm prepping to sell, then great, let's work with your accountant, clean some things up ahead of time, clean them up. So then you've got good financial statements when you go into the actual like true valuation phase of getting ready to sell, that it's all like really clean and easy for them to see what the EBITDA is and what the value of the practice is going to be.
And so you might need to shift some things around and work with your accountant so that you're prepped for that. So it's not like, a month ago you started moving some stuff around and it looks kind of sketch. So let's get ready for it farther ahead of that. And then also knowing what direction you want to go. So whether it's just you that you're going to have to replace. So moving you above the line, paying you as an associate above the line, technically. And then if you're wanting to say, hey, what if I replace myself? And these are even some numbers.
The Dental A Team (12:27.08)
you
Britt (12:38.456)
that I also just recommend you play around with just to know your options. So it's not a, yes, there's feelings, but like also make a smart decision behind like the financial pieces on it as well. So if you're saying, Hey, what if I did just bring on an associate, right? And even have them just run it and take my place. yeah, I run some of the business stuff. All right. Well, what if I paid myself as a CEO of the practice?
and then paid an associate, like what would my numbers look like in that scenario? Or if it's like, yeah, I'll run it, I own it, I'll just pay an associate and then I'll just take distributions, what might that look like if I go that route? So that's where I like to, ahead of time, and even sometimes way ahead of time, I tell doctors, just cause you start like looking at some of this doesn't mean that you have to make a move. Cause you know, they're not sure, but I'm like, I'd like you to know your options. And again, I don't like you to feel stuck. So,
The Dental A Team (13:08.328)
you
The Dental A Team (13:28.296)
Hmm.
Britt (13:35.114)
Know your options, know what you can or can't do on your personal and financially what needs to be done. And then look at the numbers and be smart from there. So yeah, EBITDA gets scary, work with your accountant, they can kind of help you with some of that. But really think of it as what does it take to run the business? That's ultimately what we're looking at when it comes to that overhead expense and playing around and looking at EBITDA.
The Dental A Team (14:01.514)
Awesome. Thank you. I think there's a few pieces in there that I want to acknowledge for purposes of like professionals. You're mentioning accountants, things like that. A lot of the stuff that you've mentioned, I think there's three professionals I can think of off the top of my head immediately that are going to be key in making sure that you are lining things up correctly. Because like you said, even if you're doing it for six months, they still could be like, well, why are you doing this? Right?
Britt (14:03.726)
you
The Dental A Team (14:28.426)
So it's kind of like when you go to buy a house and they're like, well, where did this money come from? And you're like, well, my grandma gave it to me because I was buying a house. And they're like, that's weird. So can you afford the house? Right? So it's kind of like that where it's like, well, where did this come from? So the three professionals I can think of, right? Number one, consultant, obviously, because they're going to be able to, like Brittany's doing right now, steer you in the right directions and give you advice off of things that we've seen before, we've done with practices before, and really be able to do the checks and balances on all spectrums.
then you have your accountant, your CPA, your lawyer, right? All of that space right there that accountant, CPA, they're going to be able to tell you what it needs to look like. And I guess there's probably four, right? Because then you've got your broker to do your valuation, you've got your evaluation team there. But then also, I think a financial planner would be really, really beneficial in all of this because they see your finances from a different point than the CPA does. So when you combine a CPA and a financial planner, I feel like that's the magic sauce because the CPA is like,
Britt (15:10.968)
Okay.
The Dental A Team (15:27.807)
black and white, like this is what it looks like in a finance planner. It's like, well, if we play with it like this, like we could make it look like this. And then doing it in conjunction with your CPA really can like level some of those things out. But then you also mentioned, making sure earlier, earlier that you know your retirement and like the length of time that that is. So your financial planner, your CPA can help with that. Absolutely. But I think from a financial planner standpoint, they have better resources and tools than the CPA actually has access to.
Britt (15:32.366)
Okay.
Britt (15:41.612)
Mm-hmm.
The Dental A Team (15:57.683)
And so when you plan for that and then you work with your CPA, you plan for your retirement, you're like, okay, this is what it needs to look like. My financial planner's got that. My CPA is gonna make sure that that money gets to my financial planner because he's making sure she's making sure that it's all coming in. I think all of those spaces right there really help to dial that in. And then.
with the going back to the EBITDA, I wanted to get that out there because I know there's a lot of spaces that people are like, wait, who can, who would do this for me? Is that you? And I'm like, I don't do that, but I can tell you who to go to. Right. So those are the people I would tell you to go to if you had asked us. Now, going back to the EBITDA, you mentioned, Britt, a few times, pay yourself as an associate. And I wanted to clarify on that because when you're owner doctor, you're like, this is my collections. Everything is your collections, right? Everything that goes into
Britt (16:24.974)
Yep.
The Dental A Team (16:45.074)
your QuickBooks, everything that goes into your account is your collections because you own the practice. But to clarify, we're paying yourself as an associate, how would you pay an associate, right? You're not going to pay an associate based off of what hygiene has allocated over to them or what you have allocated to you. So you're going to look and correct me if I'm wrong, Britt, but when you say that, my brain says, okay, I'm going to pull my production. So if I'm the operating doctor,
I'm going to pull my production and my collections separate from the practice full collections because that's what I would be paying an associate on would be that 20 % or not 20 % probably, sorry guys, 32 % or whatever. Sorry, associates, I do love you, but 20 % popped in. But that 30 % of my produced collections, I'm going to pay off of that.
Britt (17:27.148)
No.
The Dental A Team (17:36.299)
not the total practice collections, which is what we're looking at our EBITDA from. So I want to make sure that that clarifier is there. And that's what then would go like, quote unquote, above the line to see. So I think overhead, we talk about being like your true overhead is if you sold the practice, this is what a doctor would take on. So it's not including your loans, it's not including your owner pay, but then your EBITDA to say like what they need to collect to be successful would include that doctor associate pay. Is that right, Britt? Am I?
Britt (18:05.838)
So you are accounting wise, accounting for yourself and yes, just you based on your collections, right? What it would cost to replace you. That's what you're moving above the line. And I'll add this caveat to it. Exactly how you get paid that amount and additional amount beyond that, because yes, you'll take more than that, right? As the owner.
The Dental A Team (18:06.005)
Clarifying that, okay?
Britt (18:32.088)
how you pay yourself, whether W-2, whether taken as a distribution, right? That can still be paid to you in whatever way you would like it to be paid to you based on working with your accountant for what's gonna be most beneficial tax-wise. But I want it to be accounted for above the line to replace you. And then with that, I also wanna make a note on this. As you run some numbers, if you're looking to completely replace yourself,
Usually our owner doctors are really good producers and finding associates. We love our associates, but them coming into this new practice, not having been there as long as you have been, usually their production is not going to be the same as yours. So that's where I'm like, play, play around with some numbers. And that's obviously I love to do this because like, so work with a consultant, right? We can run through some of this stuff with you.
The Dental A Team (19:01.388)
Yeah.
The Dental A Team (19:16.203)
Thank
Britt (19:26.446)
Again, I like you going in with eyes wide open because we've worked with some doctors, right? And some, everybody has it at times. like, well, I should just sell it. And it's like, whoa, whoa, hold on. Let's see what this asset is worth. Even if you cut days back and bring in an associate, right? What can you still be making where some of that is even passive income or work yourself out of it?
The Dental A Team (19:36.063)
Yeah.
Britt (19:50.702)
what could the passive income look like for you with like, yeah, you're going to have to do some things in the business, but for how much time is that worth it to you? that's where I'm like, play through all the options, like get creative with it. There's a lot you can do. That's not your traditional, well, I'm retiring. I have to sell it. It's a different landscape these days. So there's a lot of options out there. I'll also make a plug for, I think most brokers we know and talk to brokers know it's like a, it's a, there's a long like,
The Dental A Team (20:10.443)
Yeah.
The Dental A Team (20:18.992)
Okay.
Britt (20:20.718)
period of getting to know a broker, right? Because you'll reach out to him and it's like, I'm just trying to get an idea. And good brokers know that and good brokers are going to help to talk you through pros and cons and work with you through things. so knowing that like, hey, you can engage that relationship at an early point to get the value of your practice. And just to kind of understand the landscape of what's going on, especially knowing, right, depending on your area, depending on your type of practice.
The Dental A Team (20:48.22)
Mm-hmm.
Britt (20:49.55)
They will know what practices are most attractive depending on who you might want to sell to and how long it might take in some areas to find a buyer, again, which is just good information to have a current market to know. It adds into your timeline, right? And a lot of times we've got our doctor owners that'll be like, yeah, I think I'm ready to like retire. And that's where I'm like.
The Dental A Team (21:07.404)
Go.
Britt (21:14.702)
Like it's going to take a little time and I want you to know things ahead of time so that you can be prepared for it. And when you're ready to go, you've got all the information to have it work out as beneficial to you as possible instead of being like, well, I'm done. Let's figure it out. Let's go. And you start to make rash decisions and that asset is it, you don't take advantage of it as much as you think. Like it is, but it's just not as valuable as it could be. So yeah.
The Dental A Team (21:33.388)
Yeah.
The Dental A Team (21:37.038)
It's no longer an asset, yeah.
Yeah, yeah, yeah, I think that's great advice. I'm thinking like, because I have had that where doctors are like, I'm done, I'm out, I got to get out of this. Like, I'm like, well, if you're in the got to get out of this phase, like, that is just not the place to be living in. For either side, right? Like, you need to get out of that. I see that. But also for if you're offloading the practice, like this is going to be, this could be a really sketchy situation. So I think
for dentists and practice owners or business owners in general, earlier, when we first started, you said, always think of the long game. So I think when you think you're five to 10 years out from retirement, your financial planner should have this information. You should know when is a good timeframe for you to retire. And when you're five to 10 years out from that, think this is right when you should start.
moving all these pieces into place and at least have that knowledge because you don't want to even get two years out and be like, all right, Tiff, I got two years. And I'm like, shoot, I got a lot of stuff this goes into two years. Like it just takes, I think it just takes more knowledge and you really want to go into it from the sounds of all these pieces you put together today, Britt, thank you for that. It sounds like you just want to go in with the most amount of knowledge possible to make the best decisions possible because they're no longer
an emotionally based decision. Now they're a black and white, this is what's best for me emotionally, physically, mentally, financially decision because you've gathered so much information. So yeah.
Britt (23:12.672)
it helps on the emotional side of things, right? Sometimes even just knowing, hey, if I go five more years, right, the value difference of this is gonna be X, Y, Z. Is that worth it to me, right? And it may not be or it might be, right? So again, it just kind of, and sometimes I'm like, for that, yeah, I can do five more years for that dollar amount. So yeah, it just helps you to be able to make the wisest decisions, I think.
The Dental A Team (23:26.083)
Yeah.
The Dental A Team (23:34.319)
Yeah.
The Dental A Team (23:41.551)
I love it. Thank you. So if we had to give them three steps that they could take today to push forward towards just even the knowledge, what do you think those top three items would be?
Britt (23:52.61)
Yep. I would say have an idea and it doesn't have to be set in stone when you might want to retire or start to step back from the practice. I think that would be number one thing, which along with that then comes like knowing what you need to retire. like plan for that. Have an idea of a timeframe. Again, it doesn't have to happen, but you've got an idea of that timeframe. I think
Make sure you're looking at your financial statements and looking at it not only from a sense of overhead, but look at it from a sense of value. So looking for that EBITDA, what's that profit kind of number? What is the value of the practice? And then use that information to help make decisions in the practice. So you don't find yourself in a situation while I've made so many, like I've gotten in debt on so many things.
Even if you sell the practice, you've still got your debt that you need to pay so that you can make smart decisions with it. I think those would be my top three things. And then as you get closer, right, to the time when you're like, you know, I'd like to know the value just because I'm probably heading towards that within the next decade even. Then there would be some other steps, but that would be my main three for anyone, no matter what stage you're in going into buying a practice, having owned it for a while. Those would be my top
The Dental A Team (24:47.034)
Mm-hmm.
The Dental A Team (25:12.786)
Awesome, thank you. You guys, this was a chock-hole of a ton of information. I hope if you're driving, you have saved this or you do save this so that you can go back through and take some notes. If you weren't driving, I hope you were feverishly taking notes because there was just a ton of information here. Thank you, Britt.
Britt (25:14.264)
Bye.
The Dental A Team (25:30.161)
I knew you would come to the table with just so much with that business brain of yours. So you guys go take a look at these pieces. And if you've done some of them and you're past those three steps we just gave you, then pull out other steps from this conversation. Make sure you've got those professionals on your side. Make sure that you reach out when you do need help. Or you guys, if you ever need a recommendation.
For professionals too, we work with a lot of companies side by side simultaneously with them. We talk with them on behalf of clients and with clients. And so just know we have these resources for you. Just reach out and we are happy to help you. As always, come stop by if you're not yet a client of ours or you're just looking for information on your practice on goods in the beds and the hot ticket spots. Our team is always here to help.
really dial in biggest issues or biggest spaces of work for you, whether you're a client or not. So please reach out. [email protected] or TheDentalATeam.com. You can sign up right there as well to chat with our team to really just evaluate where you're at with your practice. And as always, leave us a five-star review. We love to hear how much you enjoyed this.
content and we love to see what you enjoyed the most of so we can recreate that and continue on those paths. So everyone, thank you so much. Britt, thank you so much for being here with me today and we'll catch you guys next time.
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By Kiera DentEven if retirement is a long, long way off, it’s important to have an exit strategy ready to go. Tiff and Britt discuss both the emotional and business sides of things of making sure your practice is in order, including debt awareness, numbers in different scenarios, passive income possibilities, and more.
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Transcript
The Dental A Team (00:01.588)
Hello, Dental A Team listeners. I'm so excited to be here this morning. I don't know what time it is while you're listening here, but today it is a beautiful sunny Friday morning that I'm recording here with Britt. The one and only when I get her on these podcasts, I just soak it all up because I don't schedule her often. It's few and far Between. She's a busy lady. So, Britt, thank you so much for being here with me this Friday morning, and we are just kicking off the weekend in the right headspace.
And I'm so excited to chat these contents with you today. How are you, Britt?
Britt (00:33.486)
I'm doing great, Tiff. Thanks for having me on. You know, it's always like hangout time for us consultants, even though, yes, hopefully are providing value to all our listeners. That's our ultimate goal, but it's fun for us to get to chat about these things.
The Dental A Team (00:46.145)
I agree. I agree. had asked Kristy yesterday, I just messaged her, I'm like, how are you doing? Our consultant, Kristy, you guys know her. And I'm like, how can I support you? Like, how are things going? And she's like, I just missed my Tiff time. And my response was, we've got podcasting soon. So.
Britt (01:01.518)
Exactly.
The Dental A Team (01:07.913)
I like our one on ones. You guys, tell you to do monthly one on ones just so you know, we do monthly one on ones in our company. And then our podcasting time. I'm like, gosh dang it. actually, for a virtual company, I think we do fairly decent, but I love these podcasting hours. I'm excited today because just in case no one understands or knows this already, if you know, no BS, Britt is gonna call you today.
Britt (01:09.537)
you
The Dental A Team (01:34.209)
You know, Brit, you know that she's got a, like this business sense that she just knows. Like, you know, there's just things in life you just know. You just intuitively know, you're like, I don't know, it just makes sense to me. That's business for Brit. And I love watching you just work in that zone for our company, but then also for the clients that you've worked with and helping us consultants just learn so much more about that business side.
And today, your idea was so brilliant. That's what I'm saying, like your business. I'm like, leadership. And she's like, actually, let's talk about this. And I really wanted to bring Britt on today to pick her mind on how you doctors, you practice owners can really start preparing for your exit. know Dana and I've talked about this before and really talked about, even if you don't think, you're like, Tiff, I'm not.
I'm not leaving, like I just started. You're like fantastic, but you should always be prepping and planning for your exit because you just need never know when you're going to be like, I want a sabbatical and you're up and I don't want to my practice anymore. So you should always be prepping and planning for that. And my ideas, know, Britt's like, no, let's talk about this. I think it's brilliant. So we really, really want to take a look at the business side and how you can not only prep emotionally with your
leadership team with your ops manual. We already talked about a lot of that stuff on another podcast and Britt here is gonna bring us some information on really how to prep the business side. How do you prep your finances? How do you make sure that your practice is sellable? What are the pieces that that actually entails? And how do you make sure that you have it in order? I love to tell doctors all the time, evaluate your practice constantly, because you just wanna know. It's like never knowing the value and the worth of your home. I know my...
My lending team and my realtor team, they send me evaluations of my home every six months by email. And it's just really cool to see where the market's at. And so I think taking that mindset and applying it to your business is also really fantastic. So Britt, I'm excited for today. I know the listeners are excited today. I actually, know personally because I hear it and I think you need to hear this today.
Britt (03:20.834)
Yeah.
Britt (03:41.358)
Thank
The Dental A Team (03:41.983)
I actually hear from a lot of our listeners and a lot of my clients who listen how excited they get when you do come on. So I do want you to know that. I know it's not your favorite space. know you don't love that on a public forum, but I think it's really fantastic and you just bring such a wealth of knowledge. what do you see being like the biggest pieces that's like, let's start easy, let's start simple.
Britt (03:51.214)
Thanks, Ted.
The Dental A Team (04:09.099)
and then expand and really dive into like nitty gritties. So where do you see on like an umbrella scope of overarching, this would be a really great place to start to really start prepping your business for an owner's exit, whether they're dental or not.
Britt (04:23.33)
Yeah. So I kind of have the mindset, right? There's always, lots of things that go through my head, but working with clients and I tell them this, I'm like, ultimately, I always want you to be thinking about your business as like, it is truly an asset to you and what is the value of that asset that you have for, you know, so that it can be worth as much as possible whenever it is that you decide to sell it. So like even starting from the beginning of your career,
The Dental A Team (04:49.622)
Mm-hmm.
Britt (04:53.07)
Kind of knowing long-term goals even. I think we've seen probably to have plenty of people who even fresh out of school go into a lot of debt, like they're already in debt and they go into a lot of debt when it comes to purchasing a practice. like even when you're going into purchase a practice thinking about, right, what are my long-term goals? How long might it take for me to pay this off?
The Dental A Team (05:06.755)
Thanks.
Britt (05:13.762)
you know, how much value equity am I going to have within this business even? And just start having that in mind because I think it helps to guide your decisions knowing that like, yeah, sometimes we're going to make a big investment and say, yeah, I'm in this for the next 15 years for sure. No problem whatsoever. Awesome. Take on something that you know that at the end of 15 years that you're going to be able to have it in a spot to where great, that's going to be a fantastic asset. And then whether I actually want
The Dental A Team (05:23.9)
Thank you.
Britt (05:42.966)
to move on or retire in 15 years or whether I decide to stay here, totally fine. You're in a fantastic spot to have the ability to make that decision, whatever way you want to go. So I think starting from the beginning, always thinking of your business in that way. And so of course, that's what we do with a lot of practices, right? Like ultimately, when we want to grow it, we want to grow your bottom line, right? Profit at the end of the day. And when it comes to thinking of the value of your practice, kind of like
debt to EBITDA multiplier, right? So like ultimately when you sell EBITDA is the thing we want to focus on. And so really making sure that we're driving that profitability while you're still able to live a comfortable life, obviously, and take care of everything you need in the practice, but always working to grow that profit and grow that EBITDA so that your value of your practice, you kind of always have an idea of where it's at.
The Dental A Team (06:14.327)
Mm-hmm.
The Dental A Team (06:25.564)
Yeah.
Britt (06:37.216)
I would say check in from time to time even to say, great, how much debt do I still have left? What would my practice be worth? What could I walk away with maybe as far as selling it? What the value would be to me? I think those are some things just to kind of think about in the background and start to look at some of those numbers. The other thing I think it comes down to is sometimes I'll have clients come to me or even on sales calls come in and they're like, well, think I want to sell. I'm not sure. I want to be able to retire. And I'm like, have you
Do you know what you need to retire? Like, do you know what you want that life to look like? Because honestly, that's even the first step. So I know, all right, will the value out of this practice that I will have in 15 years based on what I've paid off, what it's potentially worth, is that enough for me to have the life that I want? Or am I going to get that point and be stuck? I think that's ultimately, I don't want anybody to feel like, my gosh, I'm stuck.
The Dental A Team (07:07.269)
.
The Dental A Team (07:15.204)
Thanks.
Britt (07:31.852)
and they have to keep going and they're not happy. I want you to be happy in the position and feel like you've got choices. So I think that kind of overarching view of things. So ultimately, always think about your business as an asset, right? Make decisions accordingly, financially on that end. And then also have an idea of when you might want to retire, right? Or how long you may need to work in order to retire in the fashion that you want to be able to retire.
Because again, that's just, I think, mindset for you and also mindset around decisions you make for the business. Because if I might want to sell at that time or I might want to transition to associates and still be an owner, cut back days, whatever it may be, if I kind of have a point of where I'm wanting to sell, I'm to make some decisions accordingly along the way to where I want my like peak value point to ultimately line up with when I might be ready to sell.
And so that's going to impact how much debt am I taking on, right? At what points do I want to move to another big building that's going to put me in a bunch of debt? Or I'm so close to that point, let's just crank up however much we can make this practice worth so it's ready to sell when I want to. Those are some of the big picture things in my mind that kind of play into long-term view.
The Dental A Team (08:29.337)
Mm-hmm.
Britt (08:54.606)
current decisions even from the get go of buying a practice and then as you make decisions, you know, along the way throughout your career, always making sure that you keep that
The Dental A Team (09:05.269)
Sure, thank you. Question, said to really be watching your EBITDA, will you, for the public here, just explain why and what EBITDA is and how they should be evaluating that monthly in comparison, right? Because we look at overhead and we look at profit, but then EBITDA is like the separate piece that you need to know, but it's not the profit debt. It's not all encompassing that you actually need to know to move forward with your...
today, but it's Ibara. Will you explain the difference there? Because I think a lot of people get stuck on Ibara, number one, and the definition of it, but then a lot of people get stuck on only focusing on that, but then they miss these other pieces over here and vice versa, look only at these pieces and never at Ibara. So can you just explain what Ibara is and how it plays a role coinciding with overhead profit and the month-to-month movements, but not being your sole focus?
Britt (09:59.522)
Good questions. And there's some other like detailed things I'll talk about when it comes to like when you're actually starting to like get more to that point where you're thinking more seriously. Some things I play around with even on the PNL, I'm playing around with numbers to start to prepare yourself for what that will look like. And like even a yes, there's a long term definition of it, which I think we get lost in. But ultimately, right.
The Dental A Team (10:22.522)
Mm-hmm.
Britt (10:24.97)
It comes down to what are the true operating expenses for that business. So it is not your debt. It is not some of the other fancy terms. It's not taking into account taxes. Right. But truly day to day operations of the business. What does that cost? So think of it in that way. Some things to think about. Right. Some of our private practices, Dr. Own, Single Dr. Own.
Right, we'll say overhead and then doctor pay usually falls below the line. When it comes to thinking of EBITDA, ultimately you're gonna have to replace yourself. That's gonna be part of operating expenses. And so that's where I'm like, all right, when you start really thinking about it, shift some things around, because like your, know, things that you might have running through the business that you like, parts of being a business owner that you pay for through the company, along with your.
The Dental A Team (10:57.671)
.
Britt (11:16.968)
know, accountant's advice that you're following those rules. I start to pull those things out because that's not really within your overhead. And then I start moving above the line as if you are paying yourself as an associate because that's gonna be an expense of running the business, which is gonna give you a good idea of like, what are the true operating expenses? And then...
The Dental A Team (11:34.446)
Okay.
Britt (11:42.786)
depending on kind of what route you want to go, whether it's like, I'm prepping to sell, then great, let's work with your accountant, clean some things up ahead of time, clean them up. So then you've got good financial statements when you go into the actual like true valuation phase of getting ready to sell, that it's all like really clean and easy for them to see what the EBITDA is and what the value of the practice is going to be.
And so you might need to shift some things around and work with your accountant so that you're prepped for that. So it's not like, a month ago you started moving some stuff around and it looks kind of sketch. So let's get ready for it farther ahead of that. And then also knowing what direction you want to go. So whether it's just you that you're going to have to replace. So moving you above the line, paying you as an associate above the line, technically. And then if you're wanting to say, hey, what if I replace myself? And these are even some numbers.
The Dental A Team (12:27.08)
you
Britt (12:38.456)
that I also just recommend you play around with just to know your options. So it's not a, yes, there's feelings, but like also make a smart decision behind like the financial pieces on it as well. So if you're saying, Hey, what if I did just bring on an associate, right? And even have them just run it and take my place. yeah, I run some of the business stuff. All right. Well, what if I paid myself as a CEO of the practice?
and then paid an associate, like what would my numbers look like in that scenario? Or if it's like, yeah, I'll run it, I own it, I'll just pay an associate and then I'll just take distributions, what might that look like if I go that route? So that's where I like to, ahead of time, and even sometimes way ahead of time, I tell doctors, just cause you start like looking at some of this doesn't mean that you have to make a move. Cause you know, they're not sure, but I'm like, I'd like you to know your options. And again, I don't like you to feel stuck. So,
The Dental A Team (13:08.328)
you
The Dental A Team (13:28.296)
Hmm.
Britt (13:35.114)
Know your options, know what you can or can't do on your personal and financially what needs to be done. And then look at the numbers and be smart from there. So yeah, EBITDA gets scary, work with your accountant, they can kind of help you with some of that. But really think of it as what does it take to run the business? That's ultimately what we're looking at when it comes to that overhead expense and playing around and looking at EBITDA.
The Dental A Team (14:01.514)
Awesome. Thank you. I think there's a few pieces in there that I want to acknowledge for purposes of like professionals. You're mentioning accountants, things like that. A lot of the stuff that you've mentioned, I think there's three professionals I can think of off the top of my head immediately that are going to be key in making sure that you are lining things up correctly. Because like you said, even if you're doing it for six months, they still could be like, well, why are you doing this? Right?
Britt (14:03.726)
you
The Dental A Team (14:28.426)
So it's kind of like when you go to buy a house and they're like, well, where did this money come from? And you're like, well, my grandma gave it to me because I was buying a house. And they're like, that's weird. So can you afford the house? Right? So it's kind of like that where it's like, well, where did this come from? So the three professionals I can think of, right? Number one, consultant, obviously, because they're going to be able to, like Brittany's doing right now, steer you in the right directions and give you advice off of things that we've seen before, we've done with practices before, and really be able to do the checks and balances on all spectrums.
then you have your accountant, your CPA, your lawyer, right? All of that space right there that accountant, CPA, they're going to be able to tell you what it needs to look like. And I guess there's probably four, right? Because then you've got your broker to do your valuation, you've got your evaluation team there. But then also, I think a financial planner would be really, really beneficial in all of this because they see your finances from a different point than the CPA does. So when you combine a CPA and a financial planner, I feel like that's the magic sauce because the CPA is like,
Britt (15:10.968)
Okay.
The Dental A Team (15:27.807)
black and white, like this is what it looks like in a finance planner. It's like, well, if we play with it like this, like we could make it look like this. And then doing it in conjunction with your CPA really can like level some of those things out. But then you also mentioned, making sure earlier, earlier that you know your retirement and like the length of time that that is. So your financial planner, your CPA can help with that. Absolutely. But I think from a financial planner standpoint, they have better resources and tools than the CPA actually has access to.
Britt (15:32.366)
Okay.
Britt (15:41.612)
Mm-hmm.
The Dental A Team (15:57.683)
And so when you plan for that and then you work with your CPA, you plan for your retirement, you're like, okay, this is what it needs to look like. My financial planner's got that. My CPA is gonna make sure that that money gets to my financial planner because he's making sure she's making sure that it's all coming in. I think all of those spaces right there really help to dial that in. And then.
with the going back to the EBITDA, I wanted to get that out there because I know there's a lot of spaces that people are like, wait, who can, who would do this for me? Is that you? And I'm like, I don't do that, but I can tell you who to go to. Right. So those are the people I would tell you to go to if you had asked us. Now, going back to the EBITDA, you mentioned, Britt, a few times, pay yourself as an associate. And I wanted to clarify on that because when you're owner doctor, you're like, this is my collections. Everything is your collections, right? Everything that goes into
Britt (16:24.974)
Yep.
The Dental A Team (16:45.074)
your QuickBooks, everything that goes into your account is your collections because you own the practice. But to clarify, we're paying yourself as an associate, how would you pay an associate, right? You're not going to pay an associate based off of what hygiene has allocated over to them or what you have allocated to you. So you're going to look and correct me if I'm wrong, Britt, but when you say that, my brain says, okay, I'm going to pull my production. So if I'm the operating doctor,
I'm going to pull my production and my collections separate from the practice full collections because that's what I would be paying an associate on would be that 20 % or not 20 % probably, sorry guys, 32 % or whatever. Sorry, associates, I do love you, but 20 % popped in. But that 30 % of my produced collections, I'm going to pay off of that.
Britt (17:27.148)
No.
The Dental A Team (17:36.299)
not the total practice collections, which is what we're looking at our EBITDA from. So I want to make sure that that clarifier is there. And that's what then would go like, quote unquote, above the line to see. So I think overhead, we talk about being like your true overhead is if you sold the practice, this is what a doctor would take on. So it's not including your loans, it's not including your owner pay, but then your EBITDA to say like what they need to collect to be successful would include that doctor associate pay. Is that right, Britt? Am I?
Britt (18:05.838)
So you are accounting wise, accounting for yourself and yes, just you based on your collections, right? What it would cost to replace you. That's what you're moving above the line. And I'll add this caveat to it. Exactly how you get paid that amount and additional amount beyond that, because yes, you'll take more than that, right? As the owner.
The Dental A Team (18:06.005)
Clarifying that, okay?
Britt (18:32.088)
how you pay yourself, whether W-2, whether taken as a distribution, right? That can still be paid to you in whatever way you would like it to be paid to you based on working with your accountant for what's gonna be most beneficial tax-wise. But I want it to be accounted for above the line to replace you. And then with that, I also wanna make a note on this. As you run some numbers, if you're looking to completely replace yourself,
Usually our owner doctors are really good producers and finding associates. We love our associates, but them coming into this new practice, not having been there as long as you have been, usually their production is not going to be the same as yours. So that's where I'm like, play, play around with some numbers. And that's obviously I love to do this because like, so work with a consultant, right? We can run through some of this stuff with you.
The Dental A Team (19:01.388)
Yeah.
The Dental A Team (19:16.203)
Thank
Britt (19:26.446)
Again, I like you going in with eyes wide open because we've worked with some doctors, right? And some, everybody has it at times. like, well, I should just sell it. And it's like, whoa, whoa, hold on. Let's see what this asset is worth. Even if you cut days back and bring in an associate, right? What can you still be making where some of that is even passive income or work yourself out of it?
The Dental A Team (19:36.063)
Yeah.
Britt (19:50.702)
what could the passive income look like for you with like, yeah, you're going to have to do some things in the business, but for how much time is that worth it to you? that's where I'm like, play through all the options, like get creative with it. There's a lot you can do. That's not your traditional, well, I'm retiring. I have to sell it. It's a different landscape these days. So there's a lot of options out there. I'll also make a plug for, I think most brokers we know and talk to brokers know it's like a, it's a, there's a long like,
The Dental A Team (20:10.443)
Yeah.
The Dental A Team (20:18.992)
Okay.
Britt (20:20.718)
period of getting to know a broker, right? Because you'll reach out to him and it's like, I'm just trying to get an idea. And good brokers know that and good brokers are going to help to talk you through pros and cons and work with you through things. so knowing that like, hey, you can engage that relationship at an early point to get the value of your practice. And just to kind of understand the landscape of what's going on, especially knowing, right, depending on your area, depending on your type of practice.
The Dental A Team (20:48.22)
Mm-hmm.
Britt (20:49.55)
They will know what practices are most attractive depending on who you might want to sell to and how long it might take in some areas to find a buyer, again, which is just good information to have a current market to know. It adds into your timeline, right? And a lot of times we've got our doctor owners that'll be like, yeah, I think I'm ready to like retire. And that's where I'm like.
The Dental A Team (21:07.404)
Go.
Britt (21:14.702)
Like it's going to take a little time and I want you to know things ahead of time so that you can be prepared for it. And when you're ready to go, you've got all the information to have it work out as beneficial to you as possible instead of being like, well, I'm done. Let's figure it out. Let's go. And you start to make rash decisions and that asset is it, you don't take advantage of it as much as you think. Like it is, but it's just not as valuable as it could be. So yeah.
The Dental A Team (21:33.388)
Yeah.
The Dental A Team (21:37.038)
It's no longer an asset, yeah.
Yeah, yeah, yeah, I think that's great advice. I'm thinking like, because I have had that where doctors are like, I'm done, I'm out, I got to get out of this. Like, I'm like, well, if you're in the got to get out of this phase, like, that is just not the place to be living in. For either side, right? Like, you need to get out of that. I see that. But also for if you're offloading the practice, like this is going to be, this could be a really sketchy situation. So I think
for dentists and practice owners or business owners in general, earlier, when we first started, you said, always think of the long game. So I think when you think you're five to 10 years out from retirement, your financial planner should have this information. You should know when is a good timeframe for you to retire. And when you're five to 10 years out from that, think this is right when you should start.
moving all these pieces into place and at least have that knowledge because you don't want to even get two years out and be like, all right, Tiff, I got two years. And I'm like, shoot, I got a lot of stuff this goes into two years. Like it just takes, I think it just takes more knowledge and you really want to go into it from the sounds of all these pieces you put together today, Britt, thank you for that. It sounds like you just want to go in with the most amount of knowledge possible to make the best decisions possible because they're no longer
an emotionally based decision. Now they're a black and white, this is what's best for me emotionally, physically, mentally, financially decision because you've gathered so much information. So yeah.
Britt (23:12.672)
it helps on the emotional side of things, right? Sometimes even just knowing, hey, if I go five more years, right, the value difference of this is gonna be X, Y, Z. Is that worth it to me, right? And it may not be or it might be, right? So again, it just kind of, and sometimes I'm like, for that, yeah, I can do five more years for that dollar amount. So yeah, it just helps you to be able to make the wisest decisions, I think.
The Dental A Team (23:26.083)
Yeah.
The Dental A Team (23:34.319)
Yeah.
The Dental A Team (23:41.551)
I love it. Thank you. So if we had to give them three steps that they could take today to push forward towards just even the knowledge, what do you think those top three items would be?
Britt (23:52.61)
Yep. I would say have an idea and it doesn't have to be set in stone when you might want to retire or start to step back from the practice. I think that would be number one thing, which along with that then comes like knowing what you need to retire. like plan for that. Have an idea of a timeframe. Again, it doesn't have to happen, but you've got an idea of that timeframe. I think
Make sure you're looking at your financial statements and looking at it not only from a sense of overhead, but look at it from a sense of value. So looking for that EBITDA, what's that profit kind of number? What is the value of the practice? And then use that information to help make decisions in the practice. So you don't find yourself in a situation while I've made so many, like I've gotten in debt on so many things.
Even if you sell the practice, you've still got your debt that you need to pay so that you can make smart decisions with it. I think those would be my top three things. And then as you get closer, right, to the time when you're like, you know, I'd like to know the value just because I'm probably heading towards that within the next decade even. Then there would be some other steps, but that would be my main three for anyone, no matter what stage you're in going into buying a practice, having owned it for a while. Those would be my top
The Dental A Team (24:47.034)
Mm-hmm.
The Dental A Team (25:12.786)
Awesome, thank you. You guys, this was a chock-hole of a ton of information. I hope if you're driving, you have saved this or you do save this so that you can go back through and take some notes. If you weren't driving, I hope you were feverishly taking notes because there was just a ton of information here. Thank you, Britt.
Britt (25:14.264)
Bye.
The Dental A Team (25:30.161)
I knew you would come to the table with just so much with that business brain of yours. So you guys go take a look at these pieces. And if you've done some of them and you're past those three steps we just gave you, then pull out other steps from this conversation. Make sure you've got those professionals on your side. Make sure that you reach out when you do need help. Or you guys, if you ever need a recommendation.
For professionals too, we work with a lot of companies side by side simultaneously with them. We talk with them on behalf of clients and with clients. And so just know we have these resources for you. Just reach out and we are happy to help you. As always, come stop by if you're not yet a client of ours or you're just looking for information on your practice on goods in the beds and the hot ticket spots. Our team is always here to help.
really dial in biggest issues or biggest spaces of work for you, whether you're a client or not. So please reach out. [email protected] or TheDentalATeam.com. You can sign up right there as well to chat with our team to really just evaluate where you're at with your practice. And as always, leave us a five-star review. We love to hear how much you enjoyed this.
content and we love to see what you enjoyed the most of so we can recreate that and continue on those paths. So everyone, thank you so much. Britt, thank you so much for being here with me today and we'll catch you guys next time.