Selling Your Practice

Hi. This is David Kats from Therapist Consultants, and I have a tip for you. There's one thing that most professionals do that therapists do not do, even though they're professionals, and that is sell their practice at the end of their practice life.

Now, here's the tip about selling a practice. You'll almost always make more money if you practice as long as you can. Practice as long as it's feasible, but when you are really ready to quit practice, don't just close your practice, sell it to someone. Here's what you can do, you can sell it to a new licensee, you can sell it to other people. Put out information. Go to your state board of examiners and get the addresses of people within 20 miles of you. Send out a letter saying you want to sell your practice. There's going to be somebody in that 20-mile radius that wants to open a satellite or buy your practice and move out on their own if they're an associate working for someone else. Sell your practice.

Now, what's a practice worth? Well, there's a couple of rules of thumb. I'll just give them to you in general. One is six months worth of collection. If you collect $10,000 a month, your practice would be worth $60,000. Another way is to sell it for two years of your income. If you make $50,000 a year, you would sell it for $100,000. Now, it could be that they can get financing for it. They can usually get financing at the bank for $50,000 or $100,000 without too much problem. If they don't, you might want to finance them yourself and have them pay you over time. There's a risk involved there, but it's better than just closing your practice. As you get to the end of your practice life, practice as long as you can, but when you're ready to close your practice, don't close it, sell it and you'll have extra income for your retirement years.