Like most independent business owners in Canada today, eye care professionals are presented with both the challenge and great fortune to own a valuable business that generates very good cash flow. Sounds like a great proposition – so why would this be a challenge? The challenge is that very few of these professionals actually know how much their asset is worth and how it should factor into their financial planning. We all know that the market today is vibrant and practices are often selling for higher than ever values, but with a sale comes the loss of income. Selling too early can actually cost you money. At the same time, selling too late can lead to a declining business and a fall in income – ultimately costing you money and causing you to work longer. An appraisal is a snapshot of both your business as an asset and an income stream.
What is an appraisal going to tell me?
- The most important thing you want to know… what is my business worth?
- Both the positives and negatives of your practice as deemed by the market.
- Help you to identify where you are in your ownership cycle.
- Provide you with the necessary information to maximize both your earning potential as an owner and then sale price as a vendor.
To be clear, we often perform appraisals and then advise our clients to continue to own their practices. As long as they are happy owning their business and providing eye care, it is in their best interests to continue drawing income from their business. As brokers, this doesn’t help us in the short term, but often leads to more valuable business and higher sales prices down the road.
The key here is, owners don’t know where their practices fit as an income producer or as a saleable asset until they take the first step and have their businesses appraised. Until then, we are all guessing and speculating and hoping the odds fall in our favour. As gamblers know, when things are left to chance, the house always wins. In the end, what eye care professionals don’t know about their practices hurts them financially.
Consider this – ROI Corporation Brokerage has been professionally appraising professional practices for almost 40 years and has performed thousands of appraisals. Every two years, ROI Corporation Brokerage is professionally appraised by a third party appraiser. We are very much qualified to appraise our own business except for one issue; we are completely biased, making the appraisal irrelevant, invalid and inaccurate. We practice what we preach.
Bottom Line: Two industry experts present arguments why eye care professionals should have their businesses/practices appraised regularly at every stage of the their career.
Timothy A. Brown is the President & CEO of ROI Corporation Brokerage, a company that specializes in professional practice appraisals, brokerage, consulting, locum placements, associate-ships and practice financing across Canada. He can be reached at 905-278-4145 or by email at firstname.lastname@example.org.
David Rourke is a sales associate with ROI Corporation Brokerage, operating in the province of Ontario. He can be reached at email@example.com or 647-519-5775.