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Empowering Women in Chiropractic - Does the Economy Affect Selling Your Practice

about lcw chirosecure practice growth May 31, 2024

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Hey everybody, Dr. Randi Ross here, CEO of Premier Practice Consultants. Thank you for joining me here today. And I want to thank ChiroSecure for inviting me to share some information with you. Make sure to check out their website. Great company, unbelievable support team. You won't be disappointed by utilizing their services.

Today we're going to get ahead and we're going to talk about something that keeps coming up a lot.

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Hey everybody, Dr. Randi Ross here, CEO of Premier Practice Consultants. Thank you for joining me here today. And I want to thank ChiroSecure for inviting me to share some information with you. Make sure to check out their website. Great company, unbelievable support team. You won't be disappointed by utilizing their services.

Today we're going to get ahead and we're going to talk about, something that keeps coming up a lot of questions I get. I talk to a lot of people every week. Some people are ready to start selling. Some people just want to learn about the process. Some people are buyers. So I get a lot of questions that I will hear over and over again.

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Whenever I do that, I like to bring to one of these classes. Some of this information, because if, one and two and ten and twenty people are asking the same questions, probably a lot more people out there that are thinking the same thing. So people are asking me a lot about, how does our economy affect the ability for us to sell chiropractic practices and what kind of impact does it really have?

So one of the myths that I want to put to rest just to start this whole thing is that people will tell me I've heard chiropractic practices aren't selling, not a good time to sell this and that. Everything you hear becomes like a telephone game. A lot of times it's people that maybe they just, for some reason, didn't have a positive experience, or there could be so many variables and so many factors why they're saying that to you.

And it may or may not really be pertinent to you in your particular situation. So I am here to tell you absolutely 1000 percent we represent a lot of practices all over the country. And I'm here to tell you that yes, practices are selling. If someone's telling you that, you really need to dive a little bit deeper into, what is their information based on.

And some of the kind of follow up questions that I get for that is how is the economy, having an impact, or does it have an impact? One of the most common questions I get is, I've heard that bank interest rates, are really high for buyers and is that playing a role? Because obviously our economy is impacted by the interest rates that set by the Fed.

We have no control over that and neither do the banks. So the answer to that is a little bit of yes and a little bit of no. If someone's servicing a loan, let's just say they're buying a practice for 500, 000. They're buying a 500, 000 practice, there's a good chance they're taking somewhere between a six or even as high as a 700, 000 loan out for all kinds of working capital equipment and things they might want to buy.

That's another call. The point is that in 2019 or 2020, I would say, Interest rates on SBA loans because that's how the majority of chiropractic acquisitions take place is through SBA loans was somewhere hovering around four and a half percent, four and three quarters. I don't remember the exact number.

And now they're anywhere from 10, 10 and a half, 11, 11 and a half, even maybe as high as 11 and three quarters for some buyers. So the difference to service a half a million dollar loan. from, 4 or 5 percent to 10 or 11 percent is quite a bit of money. So I will tell you that now and then there are buyers that will say, ah, the interest rates are too high, not something that I'm going to look to do right now.

But that's really a small percentage because anything else in life, everything has ebbs and flows. And just as interest rates went up, eventually they'll come back down and those loans that are being serviced will cost less money for those particular buyers. But it really becomes what I refer to as the cost of doing business.

So yes, the interest rates can have an impact. Sometimes it can impact what a lender will be able to lend to a buyer because those rates are higher. And it costs them, they have to pay the bank more money every month. So they might have A little bit of a gap in qualifying. That's probably more of what we see than people don't want to buy.

But there are other options when it comes to the economy. If it is a little bit of a drag for some reason you can owner finance. We do all, we set up owner financing for very short term. You're not locked into it like a bank for 10 or 20 years. We do it at a lower interest rate, so it's a little bit more affordable, we're not giving it away, it's a little bit more affordable for the buyer, usually around 7 or 8 percent, but again, on a large loan, it could be quite a bit of money and there are different safeguards that are put in place, to protect you.

I know a lot of people, like me, No way. I don't want any part of owner financing. I don't want anything to do with that. Blah, blah, blah. Sometimes if you want to sell and that's the easiest and the quickest way out, it might be something that is an option for you. So it's some of the ways, like anything else in business, you have to adapt to what's going on in certain situations.

Same way you do in your practice. You might do things a little bit differently because of, the economy, different ways that you're drawing business in different ways that you might have profit centers to make up for certain other things. When it comes to representing a practice for sale, we have certain ways that we can, get around a process.

But for the most part, the economy is not changing the ability of practices to sell. There are dozens of other reasons that impact the ability of a practice, to be able to sell. But what I really want to impart to you here, if you're a seller, you're someone that's thinking, Hey, you know what? I want to be out in two, three years.

But maybe I should hang on. Maybe the economy will change, next year or a year from now or four years from now. That's a really bad model to follow. First of all, as we've talked about here before, it can take quite a bit of time to sell a practice from start to finish. We're looking at 12 to 24 months in most situations.

Some cases even more with, again, depending upon a whole lot of things. So if you're in that kind of era of, hey, I'm looking to be out of here in two to three years, don't not start the process because you're waiting around for the economy to change. If anything, start the process, do everything you can to grow the business and have you have it showing progress and still on an uphill swing to make it more attractive to a buyer.

So even if they do have to pay more to service a loan they're still very attracted, to what you're buying. And also that variable that we just discussed that we can have a whole another class on is all of these private equity privately funded. They've different variables that they're using.

And it is something it's been in healthcare for a few, quite a few decades, and they are now all dipping their toe into the chiropractic segment. So for many people, If you meet their qualifications, they're not going to a bank. So it's a whole lot different on how they service things and what they do with this kind of pool of money that they have.

And we can actually do a class on what to do with your practice and how to attract those kinds of investor buyers. That's it for today. I hope this helps you if you're on the fence, not understanding how the economy can have an impact on your practice. I never want you to stop doing what you're doing or wait for, it's like people always say, there's never a great time to have a, a baby when you first together and you're thinking about when should we have a kid?

It's like that. If you're, again, if you're ready to hang it up and thinking in a couple of years, you'd like to be finished and on the other side of practice. Then don't let people telling you now's not the right time because of the economy have an impact on you moving forward.

The economy will not impact the ability for you to sell in your practice. That's it for me today. Dr. Randi Ross, CEO of Premier Practice Consultants. I hope that this was helpful. You can always send questions and we can then develop a class around certain things that a lot of people are asking.

Thank you for listening. But for now, thank you for letting me spend a few minutes with you. I hope that you have a blessed day.


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