The U.S. workforce is undergoing a massive change in demographics as an entire generation seeks retirement—and the dental industry is no exception. A study by the Department of Health and Human Services projects that the inflow of dentists will not be able to match the future demand of the industry, likely due to the increased rate of retirement of the “baby boomer” generation.
While this is expected to result in a significant shift in the industry, panic isn’t necessary. For practicing and future dentists, this change in demographic is likely to produce two major trends in the field:
1.) A Shrinking Workforce - At first glance, the idea of a smaller workforce seems like a crippling blow to the future of density. Won’t an industry that hits a steep decline in professionals continue on a decline overall? Not in this case. In fact, a shrinking workforce due to a generation of retirees will give way to opportunity for those still in the field.
With a higher number of owners looking to sell, younger practices and group practices alike stand to benefit. Less competition aside, younger practices have the chance to acquire patients looking for a new practice following the selling of their previous dentist’s office. On the other hand, large group practices interested in expanding will have their pick of dental practices looking to sell. This is a tremendous opportunity for growth, regardless of what size practice you currently own.
2.) Sales in a Buyers’ Market - For those eyeing retirement, the buyer’s market might be hindering your chances to sell by inherently presenting more options for buyers. Fortunately, dentistry is seeing an upswing of large dental practice groups looking to grow by purchasing smaller practices, giving you more opportunities to sell than ever before. If you’re looking to offload your practice, make sure you’re ready:
- Develop a Legacy Plan - If you are considering retirement and don’t have a legacy plan in place, it’s time to start right now. It’s recommended that dentists prepare 5-10 years before they plan to retire. Whether you have an existing plan or are starting fresh, detail how you plan to leave the practice: A quick sale or a gradual transition? Also prepare your finances and savings to ensure that you won’t be feeling shorted during retirement.
- Invest In Your Practice - Most dental practice buyers are seeking strong, well-managed practices. By wisely investing in your own practice, you demonstrate positive managerial strength while promoting long-term growth. Additionally, buyers are interested in practices that are similar to their own. Update your infrastructure, technology, and customer-facing systems to make a transition as appealing as possible. Not only will this help you stand out in a buyer’s market, but these steps will also increase your value – meaning a higher selling price.
Regardless of your retirement timeline, no one said you have to prepare on your own. By investing in a team of experts, including CPAs, CFPs, and CVAs, you can ensure your practice will be on the best path to sell.
Let us know how our team can help you take the next step.