6 reasons to mentor associates before you sell your practice to them

We boomers are on the way out and turning over the reins to the next generation of veterinarians. Visions of long sailing trips or around-the-world golf tours cloud our thoughts and require team members to carry 18-gauge needles to prod us with when there's work to do. Unfortunately, one of the jobs retiring doctors often skip in their final days is a good transition plan. Too many practice sales go something like this: "OK, Dr. Youngblood. Get your financing in place and I'll give you my keys on the way out. And, by the way, don't mention the sale to anyone. It's bad for morale."

Dr. Craig Woloshyn

As you might imagine, this puts the new owner at a disadvantage. And it puts you, the seller, at risk financially and emotionally. Having just sold my own practice, I'm here to proselytize for a well-planned transition plan. Here are six great reasons to devote yourself to a good transition.

1 Staff continuity

A clinic's staff is as responsible for the practice's success as the associate doctors and owner. Therefore, to set up a new owner for success, it's essential to keep the team together. Team members will be responsible for much of the mechanics of the ownership changeover, and they contribute materially to your clients' happiness and retention. In short, you can't sell a practice successfully without your staff's wholehearted support. Keep them informed and they'll reward you with a seamless, efficient transition.

2 Associate success

If you're selling to your associate, hopefully you've been training this doctor in management from the start. But the busy associate probably hasn't paid much attention, and there's a lot you haven't covered. So now it's time for hands-on training in business, accounting, law, team management, client relations, budgeting, fees, and a host of other matters. If you don't step up, the associate will pick it up on the street. And your business is best explained by someone who cares—you.

A formal education plan will introduce your prospective owner to the theories and practices of the business side of the clinic. By the time you leave, no one will miss you. Business wise, anyway. Get busy on this now.

3 Client continuity

Some people claim that it's better if you don't tell your clients about the transition until it's imminent—or even at all. "Why bother?" they say. "Some clients won't even find out until three years from now when they come in for their pet's rabies vaccine. They won't miss you at all." I disagree. Veterinary practices aren't like fast food restaurants, where the cooks change daily and nobody notices. We rely on our clients' trust—they're the ones who pay our bills, after all—and our sole currency in trade is honesty.

If you announce your departure early, you present an honest and open face to your clients, which by association will extend to all your other dealings with them. The worst thing for a client to think is, "No one ever said the boss was leaving until he was gone. I wonder what else they're hiding. And I wonder who that new doctor is. We've never even met."

If clients are uneasy about your departure, you'll have time to allay their fears. Introduce them to your associates, and let them work with the other doctors while you (in the client's eyes, anyway) supervise from the background. This gives clients time to see that their pets' care will continue unchanged. You may lose a few clients if you tell them you're leaving, but you'll have a bigger exodus if you don't. You just won't be there to see it.

4 Success of the practice

Wisdom comes from experience, and experience comes from lack of wisdom. It's really not that hard to run a profitable practice. On the other hand, it's not hard to go bankrupt either. You need to teach the new buyer the difference. No one is born knowing how to make decisions about fees, payroll, capital expenses, staffing, and the myriad of other decisions that go into managing a practice. And one of the best sources of that information for your associate is you. Experience is a harsh instructor: You want your young doctor to avoid it as much as possible.

Yes, it may be true that no one ever taught you all this stuff. You learned it on your own. Your first year's income was $50,000—gross. You owned an X-ray machine and some urine dipsticks, and you had one employee. Your risk was, to be charitable, minimal. But contrast that with the practice you're selling today: gross revenue of more than $1?million, 10 employees, and enough equipment to launch the space shuttle. Your successor is at greater financial risk and has more time demands than you did you when you started. Plus, you have a financial stake in the practice's future if you're financing all or part of the sale or leasing the real estate. Your name may even be on the building, for goodness' sake! These are strong incentives to teach your associate to run the business well.

5 A better loan

If you've run the practice well for many years and teach the new owner to do so, it enhances the possibility of her fabulous success, which is what banks are looking for—lenders want the practice to succeed. They'll give the prospective owner's loan application more consideration if you yourself help craft the practice transition plan. It shows lenders that the business will be run thoughtfully and that your good practices will continue into the future.

6 Better sleep

When all is said and done, it's a great satisfaction to know you started a business that became an important part of your community, thrived for years, and then was handed over to another generation for continued success. Few people can say that. But to make sure your physical and emotional investment continues to earn returns for you, you need to pass on your collected wisdom to those who take up your torch. Sure, things will change over the years, but the values you started with will continue far into the future. That is, if you take the time to show these new kids how it's done.

Veterinary Economics Editorial Advisory Board member Dr. Craig Woloshyn recently talked his associates into buying his practice. He now owns Sun Dog Veterinary Consulting. Send questions or comments to ve@advanstar.com or post your thoughts on the community message board at dvm360.com.