January 11, 2021
Can You Retire from Your Dental Practice During a Pandemic?
Business owners who put off retirement during the last recession are now being faced with the same question: Will COVID-19 interrupt my retirement plans? Even though the economic fallout is still unfolding, banks are still lending and credit hasn’t seized up. In a recent article for The Street, Professional Transition Strategies Founder and President Kyle Francis says, “with careful planning, retirement is possible now.” Here are the key takeaways.
It would be an understatement to say dental practices were hit hard during the pandemic. While the American Dental Association (ADA) reports revenue is down in total, many practices have managed to turn a profit in the five months since they have been allowed to open up again after catching up with the pent-up demand. However, practice expenses are up as patient visits need to be spaced out and the need for extra cleaning costs and personal protective equipment continues to rise. “Planning your next move starts with projecting when your business will recover, so your pandemic retirement plan should include your best estimate of a recovery timeline,” Francis advises.
The wait-and-see plan didn’t work out well for businesses trying to recover after the economic crash of 2008. “Business owners slogged through a slow recovery, but too many didn’t take the crucial step of being ready to move fast once the economic situation shifted to more favorable conditions,” according to Francis. “If you’re planning to retire soon, don’t make that mistake; have a plan in place so you’re ready when the first green shoots appear.” The best way to assess revenue, staffing levels, customer traffic, and more is through a valuation of your dental practice.
Above all, having a plan in place will help in “knowing where you stand and what is possible can help you stop worrying about things you can’t control and address the factors where you do have influence,” Francis says. Now is the time to ask yourself who you see taking over your dental practice — someone with a similar business approach to you, a current employee, or simply the highest bidder? Additionally, financial advisers are advising dentists to hang up their proverbial hats in anticipation of an increase in capital gains tax while also considering dental practices have the upper hand when it comes to renegotiating a lease, rental rates, or other concessions as commercial real estate takes a hit during these uncertain times.
As Francis says, “Begin with the end in mind” and contact Professional Transition Strategies to start paving the way for your retirement now.