Whether you plan to sell your practice in 5 years or 40 years, analyzing the metrics that affect you practice value will likely pay dividends in the long run. Gary Glassman, CPA offers the following areas to consider now to build a solid nest egg for retirement.
- Cash is king – Today cash flow is the name of the game versus gross revenue. “The better the cash flow, the more your practice will be worth,” advises Glassman.
- Be realistic about real estate – Selling the practice without the real estate can lower the value of the practice and can be a stumbling block to a sale.
- Monitor your ROI – Don’t let the valuation of your practice dip into low- or no-value territory. A low- or no-value practice is one with an ROI <8%.
- Entity type matters – Is your practice set up as a sole proprietorship, a LLC or an S corporation or C corporation? Your practice entity can make a big difference on how much cash you walk away with.
To learn more about how these 4 areas can impact your nest egg and what steps you can take now to maximize practice value turn to page 12 and 13 of the Fall 2016 issue of The Team practice magazine.