- Kissing Frogs
There is a famous Brothers Grimm story about a princess who found her prince by kissing a frog. From this story, the saying "you have to kiss a lot of frogs to find a prince" has come into common use, as a way of saying that the pursuit of any prize may take multiple attempts.
- In dating: you may need to meet a lot of suitors to find a life partner.
- In recruitment: You may need to interview a lot of candidates to find the right hire for your business.
- In finding an apartment or house to live in: you may need to go to a lot of inspections AND
- To find the right practice: you may need to look at a lot of practices.
Many dentists who are looking for a first practice to buy start off with a pretty fixed view of what they are looking for. It needs to be in certain suburbs, have x number of surgeries, have a turnover of between $X and $Y, be a preferred provider, have a price of $X, etc. They start looking and ignore practice after practice that doesn’t fit their narrow criteria, focussing on finding the practice of their dreams - “their prince”.
There are several problems with this approach.
Firstly, there are attributes in some dental practices that are “off the page”. Many attributes that are important cannot be assessed from P&Ls and software reports alone, like street exposure or walk-by traffic, busy complimentary neighbouring businesses and new residential developments being built nearby. The true value of many great practices cannot be assessed in its entirety from behind a computer screen. They need to be visited to have the full picture.
Secondly, there is a good chance that the practice that a first-time buyer buys will not look like the practice they started out looking for. Their criteria for the right practice when they start looking will probably change after they have looked at a few. When I was buying my house, I thought I knew exactly what I was looking for, when I started looking. Over the next weeks and months, my success criteria morphed as I looked. My budget increased, the suburbs that were acceptable changed, parking became more important, etc. I have seen the same thing happen when dentists start looking at practices…they get a different appreciation for what they really need to be looking for. They adjust their expectations of where the practice should be, how many surgeries they need, how much they need to spend, if parking or windows in the surgeries are important, etc. Why is this?
- The people who best understand how to identify good practices and what they are worth are those who have looked at many practices. This gives a buyer an education in how to assess them.
- People who are beginning to look for a practice think that it will be obvious when a great business comes along. A prince should look like a prince, right? The truth is, not always. There are diamonds in the rough and great practices sometimes hidden under rough facades. A buyer’s dream practice may be one of them. If they are too narrow with the practices that they will look at, they may miss out on a great buy.
- When buyers start looking, their immediate preferences are often the same as a lot of other dentists’. There are practice types and suburbs that are “trendy” for a time and are in high demand from dentists. This doesn’t mean that they are better opportunities, but the increased demand does mean that they demand higher prices.
Practice Sale Search regularly has ordinary practices that get more attention than they deserve from buyers, because they “fit a profile”, and great practices with huge potential that get too little, because they do not.
There is no such thing as a practice that is great for everyone.
The challenge for dentists looking to buy is to look past what everyone wants and find a practice that is right for THEM - a practice that reflects an assessment on their own personal strengths and weaknesses (demographic appeal, clinical range, ability to produce, availability, etc).
If buyers can look past the popular choice, the lower demand will mean that they can generally find better deals.
Realistically, if a buyer wants to give themselves the best possible chance of finding the right practice for them, it is a numbers game. Buyers need to be looking at a lot of practices…even (especially) ones that don’t fit neatly into their initial success criteria. By exposing themselves to a greater volume of opportunities, they will get a better education in what is important and give themselves the best possible chance of uncovering the best possible practice for them to buy - their “Prince”.
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