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Wellness Capital Management is pleased to offer an in-depth complimentary 30-minute Wellness Business Consultation.

 

I Am The Buyer Of Your Business Or Practice

You may not know who I am right now, but our future relationship is one I am planning for. I hope you are as well.

Sooner or later, we are going to meet. Let me tell you about myself. I am busy preparing my business plan. Perhaps I am an executive in a corporation preparing to leave my current position. Maybe I have recently lost my job in middle management and am looking for a new start with immediate income. I could be a recent graduate of Bastyr University or Duke University School of Medicine and am looking to join a Naturopathic or medical practice. I could be a young physician in a large practice who wants a different situation. Or, I could be a "doc-trepreneur" looking to expand my current practice to include spa, non-medical esthetics, body work, or alternative medical services. Maybe, I am your competitor or colleague who knows of your business or practice and wants to grow to a second location.

How will we meet? I may have answered an ad on BizBuySell or the local commercial listing service. Maybe I read an article about your business in a trade journal. Perhaps your business is posted on an association website or I have received a letter from a business broker. Maybe we have some common friends or I have contacted some of your colleagues or competitors who know that you might be interested in transitioning out of your business or taking on an associate or partner.

I've been saving my money, doing my research on the area, evaluating the competition, defining my prospective clientele, and checking out the industry standards on profitability. I am trying to create my vision of my perfect business or practice in terms of facility size, location, patient care philosophy, and financial performance. I've identified areas where I want to locate my business and done research on the competition around your location to see how I can differentiate my future business from those already in the market. If I've really done my homework, I have learned the methods of how businesses are appraised for sale. I'm prepared to see how your business compares when I apply the Gross multiple ratios of 35-65% and the Adjusted Net Income multipliers of 2 to 5. In addition, I've been to my banker to see what I am capable of financially.

Oh, a couple other things. I'm trying to be as objective as I can and will stick to my defined criteria for buying a business as closely as possible. If I don't have my ego in check and am looking for a deal that benefits me and not you, I may make you angry or frustrated. As I know that these are challenging times, defined as a "buyer's market"; I may exert the energy that I am entitled to a great deal - on my terms only. Even though I have never owned or operated my own business or practice, I am certain that my vast experience makes me eminently qualified to run a "small" business like yours. Further, my over-bloated arrogance may cause me not to respect the effort and success that you have achieved. I don't know what it takes to grow a business from start-up to $400,000 per year. I've never done it before, but it can't be that difficult can it? Even though you have been in business for several years and have a great reputation, I need to feel that I can improve your business in terms of operations and profitability. Hopefully, I won't act like too much of an idiot and treat you disrespectfully or diminish what you have accomplished.

I have my own insecurities as well. For me, this purchase or merger has to be a feasible business decision. Behind all of my puffery, I can't afford to make a bad decision and I am terrified of losing money or making a bad deal. But this is a new relationship and I have questions, lots of questions. I need to know about how profitable you are, how much debt you have, what your role in the business is. I'll get a little bit nosy too, wanting to check your credit and what liens, liabilities, or skeletons may exist. This isn't about trust; it's about being an intelligent and informed buyer.

Another one of my insecurities is that I know that it's tough to sell a business when the business is you. In order to show value, there needs to be income to the business that is not dependent on the personal efforts and performance of the current owner. Hopefully, I will be a respectful buyer who appreciates and values what are selling. Somewhere early in our relationship, I need to decide if I have the capability to become "you".

So let's be honest with each other. Your business has value if you have positioned it correctly. Are you ready to enter into this relationship? We both know that you have done your homework as well and the way you have planned your transition is impressive. You have anticipated my insecurities and needs and have presented your business or practice as successful, profitable and growing. This helps your business stand out against the competition and makes it attractive to a buyer like me. Together, we can identify opportunities to grow and improve its past operational and financial performance. If this relationship is to work, we both need to acknowledge that you are selling your accomplishments and performance; the business as it stands today, not the business that the buyer will create with their efforts and involvement.

How have you positioned your business so that it has value that is attractive to a buyer? Your business has to have scalable income independent of you. You know that frugal buyers will view the net income of a business as cash flow, available to service debt that they would take on to buy the business. This is the cash flow available to an investor if the business were run by an absentee owner. For this reason, discretionary, non-cash, and one-time expenses should be added back to adjust Net Income. Your business is more attractive if a buyer knows that the Net Income they are looking at includes a reasonable salary for the owner if they are actively involved with the business. Organized books and records and operating systems make a business attractive as well. Once a seller makes the decision to sell, it is imperative that they don't take on a short-timers attitude. They need to run the business and make investment decisions as though they plan to keep the business forever. This way, the transition of the business or practice to a different owner is a natural and organic part of their business plan.

 

So, it's nice to meet you. If we are to take this to the next level, are you as prepared to start a relationship as I am or does it sound like a relationship that just doesn't work out? Do you need relationship counseling? As always, if we can answer any questions, please don't hesitate to call. The first conversation is always free. 

Call 888.727.5489 or e-mail us atMonte@WellnessCapital.com.

 

ProKnowledge Workshops from the Day Spa and International Medical Spa Association 

I'll be presenting "Budget Intensive – An Advanced Business Planning Workshop", "Good Debt, Bad Debt. Know the Difference" and "Using Consumer Data to Deliver What Your Clients Want NOW!"

I am also honored to be seated on a panel discussion called "The Fusion of Well Being: What the Future Holds" with my colleagues Dr. Tamyra Comeaux and Alfredo Carvajal.

To learn more about the ProKnowledge Workshops, visitwww.ProKnowledgeWorkshops.com. I hope to see you in Nashville, Minneapolis, or Portland!