E664 | Here's What You Need To Sell Your Clinic

In this podcast episode, Doc Danny shares a fascinating case study of a physical therapy client's practice that was successfully sold for a higher-than-expected multiple. The client initially approached Doc Danny with a busy practice that needed to expand and become more systematized. Over a period of three years, they worked together to achieve significant growth and prepare the practice for sale.

One of the key strategies implemented was the focus on generating recurring revenue streams. By incorporating wellness and training programs, the practice was able to secure 30% of their revenue from these sources. This not only helped to cover overheads and payroll but also made the business more attractive to potential buyers.

Another important aspect discussed in the podcast is the need for marketing independence. The owner recognized the limitations of relying solely on their own efforts and trained their staff to take on marketing responsibilities. This included teaching workshops and creating valuable content to attract new clients. This shift not only diversified the marketing efforts but also showcased the practice's ability to operate successfully without the owner's direct involvement.

The practice's consistent year-over-year revenue growth of over 20% was a significant factor in attracting potential buyers. This demonstrated predictability and stability, making the business an appealing investment opportunity.

Doc Danny also emphasized the importance of strong systems and data management. By implementing reputable software, the practice was able to track and report metrics such as leads, clients, and retention easily. This not only provided valuable insights but also increased transparency, which is essential for potential buyers.

Furthermore, the practice was structured to run passively, with clear processes in place even when the owner was not involved. This further showcased the business's ability to operate independently and added value to potential buyers.

In terms of financial management, the practice ensured clean and organized accounting with comprehensive financial statements such as profit and loss statements and balance sheets. This provided clear visibility into the financial health of the practice over multiple years and further strengthened its appeal as an investment opportunity.

Overall, the podcast episode highlights the key takeaways from this case study, including the importance of building recurring revenue streams, marketing independence, consistent growth patterns, strong systems and data management, and financial transparency. These factors combined to position the practice for a successful exit, allowing the owner to step away from daily operations profitably.

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Podcast Transcript

Danny: 

Hey, real quick, if you're serious about starting or growing your cash based practice, I want to formally invite you to go to Facebook and join our PT entrepreneurs Facebook group. This is a group of over 6, 000 providers all over the country. And it's a pretty amazing place to start to get involved in the conversation.

Hope to see you there soon. Hey, are you a physical therapist looking to leverage your skillset in a way that helps you create time and financial freedom for yourself and your family? If so, you're in the right spot. My name is Danny Matei and over the last 15 years, I've done pretty much everything you can in the profession.

I've been a staff PT. I've been an active duty military officer, physical therapist. I've started my own cash practice. I've sold that cash practice. And today my company physical therapy business helped over a thousand clinicians start growing scale their own cash practices So if this sounds like something you want to do listen up because i'm here to help you.

Hey, what's going on? Dr. Denny here with the pt on shore podcast and today We are talking about a business case study I'm going to kind of take a 30 000 foot view on a business case study with a client of ours who is Um in the process of selling their practice for um Higher than expected multiples. Uh, and I'm going to talk about why they've been able to do this, the, the keys to getting to the point where they've been able to do this.

So I'll just have to set the sort of, I guess, the backstory of this. So this is a client, um, that we've worked with now for, uh, it's going on the third year. Third full year and this client had basically gone from, uh, at the time we started working with them, they had a pretty busy, busy schedule. It was like, uh, in the process of where they needed to hire and really, um, expand, uh, into a standalone space, build some, some, uh, employee, you know, um, structure out, build some administrative structure out.

And, uh, and, and get to a point where they weren't the one doing everything. This is, this is many people that they ended up working with us. This is kind of the stage where they come in. So they've sort of proved the concept of it. I mean, some, some people are just, they haven't even started. Right. So that's a completely different, uh, program that I'm talking about.

If somebody's just looking to start, that'd be more something like we have something called the clinical rainmaker program, which is rebuild, or just looking to start a practice, or maybe they've just got going, uh, and they're really trying to scale that up to, you know, somewhere between eight to 10, 000 a month and really make that where it's their, it's their full time, it's their full time business, or maybe be able to leave a full time job, uh, and start that as a side hustle, or maybe go all in and try to do that faster.

But, uh, this is different. This was somebody that is in our, within our mastermind program. And in this last three years, the steps have really been. You know, uh, take a busy clinician, move them into a space that they can expand. So finding the right space, negotiating the right leases, the right build out, uh, set up.

Um, and, and also this is one of the smartest entrepreneurs that we work with. And I just want to tee this up by saying that this is, they're going to be successful no matter what, which is, we're very fortunate that we had a chance to actually be able to even, uh, you know, help mold what happened with this person.

But they're just very, very smart, incredibly hardworking. And. Everything that they've done is like, that's a hundred percent on them. I'm going to talk to you about some of the, uh, the, the decisions that were made, how they were made and why this, this, uh, individual has been able to get, you know, a, uh, an, uh, lender of intent or, uh, basically a.

Purchase price where someone is going to say, yep, I want to buy your business, uh, for this amount and enter into an agreement in order to do so with it within a three year period for just honestly, like a pretty significant exit. So stage one. We get bigger space, build it out, start hiring staff, start replicating the individual themselves.

What's the magic about that person, right? Why are people working with them? Starting to make it to where you're replicating your, your productizing a service is what they call it, right? So you are making that a consistent service that other people experience with people that are not the founder, right?

That is a very, very hard step. That's the step that typically takes people the most time. So when you go from being busy and time poor to then having to build a space out, take on additional overhead, take on additional, um, uh, loans, uh, in most cases for equipment, maybe for construction costs. And it's a sketchy transition.

People get scared there. It's, you become less profitable for a period of time. Um, and moving to a point where you're able to fill that with the right people. So the hiring process phase, like find the right people, building your comp models out, like these are all things that just really slow people down and that we help people with.

Every single day, which has been awesome because we can accelerate this process, speed this process up, uh, with all these sort of vetted processes and systems that we've now been able to test in, you know, over 500 practices within, within, um, just, just the people that we've worked with in the mastermind.

So we see what kind of offers people saying yes to. What kind of things, um, from a comp model standpoint, do you need to build in a regionally? We can see what differences are in terms of where people are at, what they're asking for, what kind of benefits they want, all kinds of stuff. What kind of price for square foot you should be paying, what kind of build out location, uh, what kind of layout you should have, what kind of equipment sourcing, all of that.

Um, we can really speed that up quite a bit, but still that person has to do it to take on that risk. And it is a, is a challenge. So step one, they get, get to that point, right? Step two is where you're building your staff out and it depends what your longterm goals are. Right? So you might be building your staff out and be incredibly active in the day to day.

You love treating patients. You want it. You probably need to drop your treatment hours down to some degree, but you may just really love it. You want to be involved in it. What you don't want is that you have to be involved in it. There's a big difference between I get to treat patients because I want to treat patients and I have to treat patients because there's no other way that the clinic's going to work without it, right?

So being able to build to where you're building a Business and a brand, and not just building a reputation of one amazing clinician that is the founder of the business that everybody wants to see, and nobody wants to see anybody else. That is a difficult, difficult phase to move past. You have to find great people, you have to spend a lot of time with them, training them up to be amazing clinicians just like you, and you have to mentor them and lead them.

And, and again, that's time intensive and that takes a while. There's no other way to work past yourself besides building a small army of people that are awesome in the same, uh, you know, ways you are not necessarily exactly like you, like they can still have their own style and their approach or whatever, but you need to understand like you're building a repeatable service that people are expecting.

So there needs to be certain elements of that that can be, uh, delivered. Uh, at scale when you're not involved, that is really, really important. And then the last phase or the final phase, if you really want to get to a point where you can either sell or autopilot, an entity is that you need to be able to work your way out of basically everything to where you don't even need to be in the clinic.

So that requires very clear systems, you know, proven systems in the business that requires people in place that are going to be, you know, running the administrative side day to day. Uh, of the clinic as well, that requires great staff that is consistent. Uh, that's professional that are making, you know, a great living, but also are bought into the culture of the business.

Um, and that's where we see the need for things like, you know, really robust digital, uh, infrastructure. So tracking. Things, your data, most clinics, most, most of the clinics that I work with, their data tracking is awful. And like, listen, I'm not a guy that just loves data. I'm not nerding out on data because I'm, I'm a numbers guy.

Like it, when we ran our practice, it, I was, it was a mess until my wife. Came in and organized the crap out of it. Like it was an absolute mess. I didn't appreciate transparency in these numbers and Transparency in decision making until I actually saw the difference and it really came down to the difference in my own stress the the difference in my own mental bandwidth and I wasn't improving because I wasn't trying to remember everything or wasn't taking hours to sift through stuff to see what we were doing or where things were working or not working in and ended up guessing a lot, uh, to, to, to make decisions in the business where what I really needed was data.

I needed clear information that allows me to make a logical decision. It's no different. And this is where it's like so funny to me that there's this parallel that seems to be a drop off with us as clinicians and understanding this stuff or appreciating it. But. If you were to just do an evaluation with no structure, with no system that you're kind of following to make sure that you are being thorough, that you're not missing anything, that you are actually ruling out the right things and ruling in the right things.

You would not be as good of a clinician as someone who's doing that. Now you could say the soft skills matters as much your ability to communicate with them, your ability to have empathy, to listen, you know, and, and, uh, communicate with them in a way that they understand that I completely agree that is a huge part of it.

But if you take that and you apply a systems driven approach that is repeatable, that is a hard combo to beat as a clinician. In the business, you need that systems driven approach in order to have consistency in what you're doing. And you need those soft skills to be able to communicate and lead your team.

You need both, just like you need to be a great clinician. It's the same thing. You're just using your skillset in a slightly different way. And you need to appreciate the importance of transparency. In your numbers and the organization that is required in a business that is extensive, extensive in order to actually be able to, uh, run a business without you being directly involved in every single decision because your staff can make the right decisions because they can also see everything that's being tracked and the transparency of everything.

That's really important, right? So over the last three years, this individual has gone through all these phases. They have gone past themselves as a sole provider. They've been able to scale to multiple providers in a standalone space that is, you know, predictable in a great location, and then build out great digital infrastructure, data collection, decision making and organization to the point where this person could take any other person that has.

Even like the littlest bit of business information, and they could go through their entire month, year, last couple of years of their data and transparently show where the business is, where it's trending and you know, how it's run. That is really, really important. Like if you don't have that, I'm going to stress this real quick.

If you don't have that, no one, no one is going to want to buy your business because they're buying a complete mess and then they're going to have to. Clean that up. They're gonna have to fix that. So if they are going to buy your business, it's going to be at a massive, massive discount for what you probably could sell it for.

If you actually had a well run organized. Business. So even if you want to get to the point where you maybe you don't want to sell your business, maybe you just want to be involved forever, which is cool because these are great businesses to be involved in, but maybe you don't want to be as active. So we would consider these what they call like autopiloted entities where, you know, you can go on vacation for a month and the clinic is still going to run, still going to do just fine.

You know, it's still going to be profitable and Hey, maybe it'll even grow right during that time. Fair possible if you do it the right way. So building something to that point allows you to have decisions, flexibility in terms of options. Of whether you want to actually follow through with potentially looking for someone to buy that business or you hold onto it and it cash flows and it's easy for you to manage and it's fun to be a part of, and it's a great business to own.

Awesome. Like, you know, that's basically where we had our business as well. When we went and sold our business, it was a business that wasn't taking a massive amount of our time. It wasn't taking a massive amount of our energy. It wasn't stressing us out. It was very transparent, very well organized, something that we could predict what was going to happen on a monthly basis with the business.

And, you know, it was one of the reasons why it was very sellable and we were able to actually sell it. So there's a few things that I think are, I guess, hurdles that you need to get over or really check the box. Uh, Metrics from what I've seen with really this case study, a handful of other businesses we've helped sell and even looking back at, um, you know, at our own practice and the ability to sell that as well, that if you're working towards this or if nothing else, you're just working towards trying to build a really, uh, consistent business.

These are a few things that you really got to keep in mind. So the first thing is. That you want to have at least 30 percent of your revenue be recurring. So in a brick and mortar, you know, physical therapy practice, like we had, that's not that common to see any recurring revenue in the physical therapy industry at all, like zero, because they're just getting.

Hospitals and doctors, they're taking them through as many visits as they can at their insurance, uh, says that they can have, and then they discharge them, right? They're just turning and burning through all these people. And on the backend, there's no reason for them to come back because that's not their business model.

And frankly, they may not know what to do with them ongoing anyway. Well, for us, what we found was. The ability to get somebody in the door to help them. That was great. We love getting people out of an injured state, back to things they like to do. What we didn't expect was how much people would want us to then take them, help them get to the next level of things that they wanted to accomplish.

You know, like to, to get somebody back to be able to run without their knee, uh, stopping them from putting miles in is one thing, but for them to be able to effectively run their first half marathon and do so in a manner where they're not hurt. Where they feel great, where they're, they're efficient, where they are, you know, building the areas of deficiency that are going to pop up along the way.

Like that's a goal that a lot of people have, they want help with proactively being able to achieve these things that they have. And I didn't really. No, uh, that people would pay for that. In fact, I, I had no idea. Uh, I would just discharge people the way that I'd been taught my entire clinical career, you know, get them in, discharge them, like be efficient, be as efficient as you can.

Because I came from a socialized system, right? I came from the army. No, he's coming back in there for continuity service visits. What the heck? I'd be like, dude, get out of here. We've got a three week wait for anybody to even come back for a visit. Like we're short staffed as it is, man, you're, you're bottlenecking our system.

Get the hell out of here. But in the civilian world, right in, in the open market, people will tell you and they, and, and they'll, they will want to do these things and it's really important to them and you've just helped them with something that's been very frustrating for them. And if you have the knowledge and the ability to help them achieve a goal that they have.

Well, by all means, you should do that. And it's a great customer and it's an amazing, uh, symbiotic relationship to do so. So for us and for this practice, this was a lot of what people moved to. Like think of, think of the injury almost as the loss leader. So at Thanksgiving, which is right around the corner when I'm recording this, uh, at Thanksgiving, oftentimes grocery stores, they will, uh, sell a turkey at a loss.

So they'll sell a turkey for like, that's lower than what they're buying it for, and they'll do that on a sale because they'll make their money back on all the other stuff you're going to buy, the potatoes you're going to buy, the rolls, the, the sweet potatoes, the, uh, whatever it is that you're, that you're making, you're going to get all the rest of your stuff there, so they're going to make it back on the margins of everything else, but they're getting you in the door with the thing that they know that you need, that you want, and then you're going to get all these other things for the meal and they're going to be profitable because of that.

Well, if you look at the injury side, we're not losing money on people helping people with injuries, but it's like the gateway drug to get some in, you know, and once that once they're in, uh, then we get a chance to. You know, get them back to what they want to do, help them get out of a pain state. But more than anything, we get a chance to build trust with them.

And more than anything, we get a chance to help change their life. And I mean that like, it's, it's not, it's not an overstatement. We are literally adding years to people's lives. We are adding. Enjoyment to the time that they're here, we're adding the ability to be active and free to do the things they want with their vehicle in life, their body.

If you don't think that's valuable, how do you expect other people to feel that way? It is so valuable. In fact, I think it's the most valuable thing that we learn as clinicians, the ability to be the guide, the health and wellness guide for these people through their journey, to be able to be as independent as they would like to be, to not say no to their goals.

To not say, no, you shouldn't do that. You're too old to say that sounds awesome. Let's build a plan around that and let's achieve it. Let's do it. Like, and be excited for them, you know, be a part of the journey where they, they don't feel silly by saying, well, like, I'm in my late fifties. Do you think I can run my first half marathon?

We're like, hell yeah. You know, let's do it. Let's just create the plan. Let's, let's coach you through it. Let's make sure everything looks the way that it should. Let's be intentional about it. And let's have accountability and support you through that. That's a big deal for people. And that can lead to a lot of recurring revenue in a business.

I'm talking clients for life, as long as you're providing value to them. Like that's something that they want and they're going to seek out in any number of other places. So this recurring revenue being over 30%, it's a big marker that people are looking for because they want to see predictability in, in, in the business.

At least at least 30 percent at a minimum is what we want to see. That really offsets for most people, that's going to be their overhead and a big chunk of their payroll for the, for, you know, from a, from a financial standpoint. The other thing is marketing that's not dependent on the owner. Now there's a lot of ways to do this.

Uh, you could be the one that is doing all the content, right? So let's say you have Instagram page, you're active making content, but if you're the one doing all of it, Oh, you're, you're a liability, you know, you're a key man, risk our key person, risk, whatever, where if you were to get injured, if you were to get hurt, uh, no one else knows how to do it.

You're the face of the company. You're the brand, right? And marketing that is dependent on one person is considered a risk. And anybody that's buying a business, this is what you have to keep in mind. Anybody that's buying a business is looking for. The best return on their capital in the lowest risk possible.

The reason that physical therapy practices are quite low risk is that you guys have to ask yourself, do you foresee that injuries are going to go away and people are going to become healthier in the future than they are now, my guess. is the opposite. I think people are going to continue to become weaker.

Uh, they are going to be less healthy. They're going to have less and less need to move. And they're going, they're going to need people like us to really help them, uh, navigate through the choppy waters of healthcare to be able to understand how to take care of themselves, how to give them great information, how to hold them accountable and how to.

Like really honestly, like be the quarterback of their health and wellness. I think that is the key kind of talk about it in terms of being a human body consultant. I think that's the, the, the greatest thing you can do for people longterm is really be that advocate for them, that, that, uh, that person that can tie it all together for them and help them eliminate some of the bad information that's out there.

So. If the marketing all runs through you, that is something that needs to be adjusted. So with this person, what they were able to do and what we're able to do also is diversify that through staff members, diversify that through staff members, being a part of local marketing, developing relationships, teaching workshops, being a part of content, being part of.

Part of advertising that we were doing, things like that, that wasn't just tied to one person. And in fact, a lot of people towards the end of my practice, uh, didn't even know who I was. And it wasn't like that early on. It wasn't at all. It was like, people want to see me and they were really upset whenever they had to see somebody else.

And this, this individual was able to do the same thing. So diversify their marketing outside of just one person. Hey, sorry to interrupt the podcast, but I have a huge favor to ask of you. If you are a longtime listener or a new listener and you're finding value in this podcast, please head over to iTunes or Spotify or wherever you listen to the podcast, and please leave a rating and review.

This is actually very helpful for us to get this podcast and really help them develop time and financial freedom. So if you would do that, I would greatly appreciate it. Now back to the podcast,

you want to see a history of year over year growth. This is really in any business. Um, if, if you do any sort of, um, investing into publicly traded companies, so this could be stocks, you know, mutual funds, whatever. But if you're looking at individual company, one of the, what, one of the big sort of like compelling reasons why people would either invest in a company or not invest in a company is that they're either seeing year over year growth mean the company's growing.

So let's say year one, this company that we're talking about, let's say they made. 200, 000. And then year two, they made 400, 000. So they had a hundred percent growth year over year. That's pretty good. But can you hold that? Let's say they go from 400, 000 to 800, 000. Now all of a sudden you've got a lot of people's attention because you've been able to double your business now multiple years in a row.

And it gets harder every year when your business gets bigger, it gets harder to double your business. When your business is bigger, it's easy to double it when you're making 10, 000 a year. To make 20 is not that much harder, but when you're making half a million dollars to go to make it a million in a year, that's very difficult to do.

That means that you have a strong history of growth. You have a compelling story that people see of a fast growing company that they want to be a part of. No one wants to catch a business at the top. They want to catch a business as it is going up. That's what they're looking for. So the multiples you're going to get on a sale of business are dependent on.

The history of the business, uh, as well. So they want to see that. So you need to be able to show that your business is growing and that it is doing so in a predictable manner year over year. And it's not just flatlined or even worse going down. And if it is, uh, flatlined, there needs to be a damn good reason why.

Maybe you're intentionally doing that. You know, maybe you're just focusing on profit and you're trying to keep your, your, uh, overhead as low as you possibly can, because you want to hold onto that as a autopilot entity more. So that's fine. But if you're trying to go to an exit. The year over year growth is going to be really important.

You want to see at least 20 percent net profit. That means hands off profit. That's not work that you're doing in the business. You want to see that business can make 20 percent net with you doing nothing. So let's say that business was doing half a million dollars a year. In revenue, you being a passive partner within that business.

Maybe you're obviously you're like a part of it to some degree, but maybe you're not seeing any patients at this point, you're helping manage relationships, all that stuff. You want to see that that business is at a minimum making 20 percent profit. So if you're making a half million dollars a year, that business needs to be at a minimum making a hundred thousand dollars in net profit in order for someone to see that business and say to themself, okay, I'll invest in this because.

No one's going to buy a business to then step into the business to then run the business. And that becomes their job. They're investors. They want to buy the business to invest in it. So other people will run it and they will get a return, a passive return or as passive as possible. Uh, a return can be, and this can actually be a really good strategy for people that are, they have a lot of money that are looking to buy a business.

Because if you think about it, if they're buying a business and they're getting a 20% Cash on cash return, basically if they were to buy it in cash, say they bought this business for half a million dollars and they're getting a 20 percent return on their money. So if you, if you took 500, 000 and that 500, 000 paid you a hundred thousand dollars every single year.

It would take you five years to earn your money back, right? To actually get to the point where you're net even. And then after that, it's just all compounding from there, right? It's just return on top of it. So when we look at things like return on investment and all of that, like it's really important to understand that the net profit is what people are looking for because they want to know what their cash return is versus if you took, let's say you bought a house, let's say you bought a house for.

500, 000. Now say that house was worth, you know, or that house could be rented, uh, for 3, 000 a month. Okay. Uh, in that year, you're going to make 36, 000 from that 500, 000 purchase price versus a business. It's going to make 100, 000 and it doesn't even include the taxes you have to pay on that house and whatever upkeep and maintenance.

So really it's probably going to be closer to 30. So the reason that a lot of people are looking to do this, just so that you're aware, there's a lot of people out there looking to buy businesses like this. It's because if they bought a house for 500 grand, they're going to clear 30. If they buy a business for 500, 000, they may clear a hundred.

Which one do you think they want? Obviously the hundred, but they have to make sure that it's not going to, they're not, they're not buying a hand grenade that's going to explode on them because it's a mess of a business. The next thing is, uh, organized data and business tech stack. So, uh, we started working with some private equity, um, investors about, uh, I guess it was about 18 months ago, like, uh, just in terms of people that we were learning from.

Uh, learning like what we need to know with these businesses, how we can actually help businesses organize themselves to be able to sell. These are people that work with like huge businesses. So for us, it was kind of dumbing it down, simplifying it for smaller businesses, like these, uh, cash based practices that we primarily work with.

So, but the principles are the same. They're just sort of like. Uh, on a smaller scale. And one of the things that they said that I thought was really interesting was if there's any business that they see that has a technology risk, they are, they call it pencils down, meaning they're not writing an offer on something that has technology risk.

So here's what I mean by that. Uh, You could have no digital. Everything is run basically through the business owner, right? So let's say everything is just like, uh, poorly documented. Everything's on Google sheets. Everything is, uh, you know, tracked manually by this one person. Nobody knows really if what they're saying is accurate.

They, what they don't want is fraudulent. Even if it's accidental fraudulent numbers to be presented to them, to where they make a offer decision. And then once they buy that business, they realize, Oh my God, we bought a lemon. And now we're stuck with this business that we just paid a bunch of money for.

So there's a few things. First thing they want to see that there's reputable software that is the backbone of that business. Cause all businesses need some sort of technology to be able to, uh, be organized and run at scale. Like if you're not using some sort of technology in your business, like you don't have a, if you don't have a reliable CRM, if you don't have a solid website that you own, again, like it can't be a website that is, um, subleased basically from somebody else, like a marketing company that maybe built your website, but they actually own the, the actual, like.

Website itself. You may own the domain, but they own everything that's built on it. And maybe they own all your digital resources below it because they built out some sort of sub account for you. Like a, if, if a investment banker was to look at that as someone that was investing in a business game over, they're not buying it.

It's not happening because the amount of work that it would take for them to then transition all of that data to something new. Is it not worth it? It's a huge risk. Uh, and for them, those move on to something else because there's plenty of businesses they can find. They're going to be far more well organized and put together for you.

And if that's something that they highlight as a big negative, well, then it's going to be up to you to do that. And it can be a huge lift, a big pain in the ass. So make sure whatever you're building your business on, it is reputable software. Big reputable software, if possible, publicly traded software that they know is not going to go anywhere.

It doesn't, it's not a risk to them that that's going to go out of business or they're going to make some big change or whatever, like uptimes always there. You're building on something that's publicly traded. Uh, not a little tiny software. The other thing is make sure you own your website, you own the domain.

It's yours. You're not subleasing it through some of these other marketing companies that might build things out for you, but they technically own as well. You got to make sure all this stuff is yours and that it is well put together. And it's clear because you should be able to with the appropriate software, show a potential investor, your web footprint.

How much traffic are you getting? How many leads are coming through these different channels on your social channels, on your, your actual like web domain channels, content channels. How much view, uh, viewage are you getting? How much, uh, visibility is the business does the business have from a digital standpoint?

How much does it have from a local standpoint? How many leads do you have? Are they categorized? Are they, uh, are they actually like. Are you doing a good job of actually like continuing to communicate with them on an ongoing basis? What, you know, how many leads are you seeing each month? How many of those people turn into an actual like, uh, initial.

Clients like initial visits, how many of those initial visits turned into a plan of care? How many of those plan of care turn into completion of plan of care? How many of those completions of a plan of care turned into continuity? What percentage of that and what the lifetime value of a business is in a snapshot should be able to show that to somebody?

In all about 30 seconds if this is well organized enough and if it is You're going to blow the damn socks off and they're going to want, they're going to be salivating over your business. And if you can't, they're going to be pretty, uh, averse to wanting to invest in a business like this, to just keep that in mind.

But also even if you don't want to sell, this is the other reason I think it's important. If you don't want to sell your business, how much time are you saving yourself by actually doing it the right way so that you can see in a snapshot, you know, in. You know, an hour once a month, you can see where your business health is at.

That's really huge for any business owner save you a ton of time. And if somebody else can even manage that within your, your own company, now you get an autopiloted entity as well. So make sure you're building a solid tech staff on a tech stack on a reputable software. That if it's publicly traded, it's even better because it decreases, uh, the risk side to the investor and make sure that it's clear and it's very easy to see.

It's very easy to show someone else and they'd be to understand it in under a minute. Um, the last thing is, well, I say the last two things you need to have, uh, a business that can be passively run either by, uh, you or a key employee. So meaning if let's say you were to go out of town for a month, Would your, would, would your inbox be exploding?

Would, would your, you know, would you be getting blown up the whole time because all decisions run through you? Nothing happens without you. If that's the case, that's something that needs to be addressed and it needs to be addressed in a significant way. Because. You're either micromanaging everybody or you have no systems in which people can make decisions and run a business either way, not good, not something that somebody is willing to buy a business and, you know, invest in that.

And then, you know, they're the ones that are coming in, try to clean up that mess. So you need to be able to be, have yourself organized and systemized enough to where you can say, Hey, I have an office manager. I have a clinic director. I'm out of here, man. I'm going to Italy for a month. I'm going to go chill and drink cappuccinos and, and eat pasta the whole time.

Nobody email me, nobody contact me. And if you come back and your business is ruined, you're, that sucks. Obviously your business is not in a good place. If you come back and your business is humming, awesome. Then you got a business that can be run passively and you can really test this in short periods of time, right?

You could just be gone. You can say I'm going to go on a week long vacation. Nobody, like I'm basically like off limits, figure it out yourself, see what happens to your business, see what happens whenever you come back. You might surprise yourself. If you have the right people that you've hired, they're smart.

And if you empower them to make the right decisions without, you know, making them feel like you're going to rip their throat out, if they make the wrong decision, they're probably going to do the right thing and your business is going to be, you know, doing just as well by the time you get back sometimes.

It's going to do better. And it's a weird feeling. And I remember this, this person told me he went to, uh, to, to the practice that he has, and he said, I felt like I didn't even belong like the last time that he was there, it's like, I feel like I was getting in the way. Because it was, everything was running so well and it just felt like I was like a burden on everybody because I wasn't needed, you know, and that's kind of a weird feeling.

I've experienced that as well, where I feel like I'm just kinda, I'm like just talking to people and, you know, just shooting the shit with them. Uh, but I'm not actually doing anything productive cause I'm not really needed. And you know, and, but it's a great sign as well, because that means you're not needed.

And that means you have something that can either function without you and be a legitimate passive revenue stream for you for as long as the business is around, or something that you could sell for honestly, a life changing amount of money and move on to something else if that's what you want to do.

So the last thing is a clean, organized, uh, uh, accounting. Uh, plan or, or, or just, uh, accounting in place and bookkeeping that is organized. It is, it is something that is very transparent and it is done correctly. Uh, that's huge. You want to see, you know, your, your bookkeeping or they talk about your books.

So bookkeeping of the business, looking at your profit and loss sheet, looking at your balance sheet, there shouldn't be anything that is out of place. You need to have a very good bookkeeping team, a good CPA that keeps your business. Organized financially so that it's transparent for people to see, okay, rent costs, this percent of revenue, your advertising is this amount.

Your cost per acquisition for a client is this, you know, your, uh, your tech stack. It costs this much overhead for your staff costs this much benefits this much because they want to see where everything is going. And and for anybody that's a savvy investor, this is really important because they might see something weird.

They might see something and say, oh my gosh, that's strange. Like that's why is that so high? Why is this one number so high? And if that does if that's if that's something that they see and they think that They can take their own skillset and apply it to and improve it. All they're doing is they're basically finding places where they can improve efficiency in the business.

That can be a huge reason why they may or may not want to buy a business. They may view it as a value add for them to be able to increase the value of it. So if you don't have clean books, if they can't even see your, your accounting, your profit and loss sheet, your balance sheet. And it's not easy to interpret in a very professional manner.

Number one, they may find and think that you're trying to hide something when really you're just unorganized, but it doesn't look like that to them. And number two, it looks so much more professional when you can just say, Hey, here's our PNL for the last three years. Here's where our business was doing.

This is our overhead or net profit. This is all this the last three years, lay it out. And you should be able to put that on a table. And it's. It's super clear for somebody about how that business is doing. I can look at someone's PNL, assuming it's not fraudulent and made up, let's say it's real numbers.

And I can tell you if that business is healthy in almost no time, just by looking at basic numbers on a PNL to see, is it growing? Is it profitable? How much are they spending on certain, certain, uh, portions of the business that we know need to be within certain parameters and is either a go or a no go for me to look into this further, that that's it.

So if you want to get to a point where. You're able to actually sell your business and sell it. And I'm not talking just, you know, like a small, I'm not starting to turn a small amount of money. I'm not talking like, you know, 10, 000 bucks or something like that. I'm talking like a seven figure exit. Like if you want to get to a point where your business is there, it needs to follow all of these, uh, parameters on this checklist.

And that takes being intentional about how you're building a business. And the fact that this person has been able to do this in three years is really impressive. Like just to, to highlight the, uh, the entrepreneur and how, how good of a job they've done, how, how just like effective they have been at implementation of a plan.

I mean, it's super impressive to, to be able to go from 0 to then being able to exit a business for a life changing amount of money in three years and to have been profitable the whole time. This isn't an app or software that they built. They literally is a. Uh, is an absolute like, you know, cash stealing monster that is a money pit that they're dumping half a million dollars into to then to sell for a million and they net 500, 000 in a very risky way.

This is a cashflow positive business that this person has been taking money out of the entire time. And then they get to sell it at an exit for multiples. They're going to put them in a place where. They, they're, they're set for the rest of their life by the, by the time that this business sells. It's amazing.

It's so cool to see. I'm so proud of this person. And it's just such a great example of the difference between where our profession in particular, when we look at these cash based practices. 10 years ago when we started, um, athletes potential, like I thought I would just be in that business, uh, forever, just me.

And I was cool with it. I was like, yeah, I like seeing patients. This is better than what I'm doing. This is better than what I could be doing working for a, you know, a high volume in network practice. I can make more money, uh, and I'm fine. I'll take the, I'll take a trade off all day. No idea. No idea that businesses could grow past himself like this.

No idea that they could be sold. No idea that they could be sold for multiples like this as well. And it's just cool to see. And it's just, I feel like it's just the beginning because one of the things that continues to happen, and I've talked about this before and not to like go too far into the future, but if you, if you pay attention to anything, as far as like.

Businesses concern, which most of you probably don't like, listen, you you're clinicians. Like when I was a clinician running a practice, I was paying attention to continue education courses, trying to do the best thing I could for my patients, trying to like lead my, my staff, trying to help improve their clinical abilities, trying to be effectively able to run a business with my wife.

Like. I was drowning in just the day to day stuff, right? Not to mention little kids and all this stuff that came along with that. And now I get a chance to pay attention to a lot more higher level stuff. And I can tell you one thing that I see that I'm almost certain is going to happen over the next 10 years in particular is technology is advancing in a rapid pace.

There are many people that have very high skill technical positions that are going to, uh, they're going to have a lot of disruption in their own industry. I've seen this with, uh, you know, technology, I've seen this with even things like legal because of artificial intelligence and the ability to, uh, to be very efficient with your job in certain, in, in certain jobs.

The one thing that is going to be very hard, very, very, very hard to replace is going to be. A skilled clinician that can help somebody get out of pain face to face like belly to belly to human beings, talking to each other, solving a problem in a, in a physical sense. And you can say what you want about, you know, telehealth.

I get it. There's, there's advantages to that. And I think it's going to grow quite a bit as well, but I don't see brick and mortar clinical businesses like this going anywhere. And if anything I see. Insurance getting worse. People becoming less healthy. I think a lot of people actually post COVID are interested in, well, how can I get healthier because they know it's a massive risk risk factor for any disease if you're just unhealthy.

Right? So Like I think it's trending that direction. They're looking for people like us Insurance is getting worse deductibles are getting higher people are having to pay more out of pocket. They're informed consumers They're looking for people that are going to be valuable for them. They don't want to just be a number They don't want to be just one of three people getting treated at the same time if they're going to be paying Out of pocket with their money.

They want to get a lot of value for that. And these businesses I think are going to continue to grow. They're going to continue to grow. They're going to continue to become more and more scalable. They're going to continue to be more and more popular. People are going to continue to look for them. And the people that are best at business are going to just have an incredible opportunity, uh, for themselves, for their families and for their employees and their businesses, especially over this next decade, because the ability to replace what we do is going to be no time soon.

It would be so hard, right? Like it's not like, you know, there's robots that are right around the corner that are going to be physical therapy robots. You know, who knows when that's, that probably happens sometime. We might be dead by then for all I know, but over the next decade, I'm telling you, these are going to become more popular.

And here's the other thing. I already see this. I already see this. I get freaking emails all the time about private equity, people that are just fishing to see if, if we're wanting to sell, I mean, cause it still looks like, like we haven't. Sold our practice that long ago. So there's still a lot of things that trying to point to us.

And I get, I get emails like this all the time. They're just like, Hey, we are looking to buy businesses like this. Want to have a conversation? No, I don't. I don't know anymore. That's a good sign for anybody that is. Uh, in business, in one of these businesses, these private equity companies, they're not dumb individual investors that are, that are cash heavy, are out there.

And if they see a great business, why would they not want to get a return? Like I talked about the difference between buying a house and buying a business that's three times, three times the difference for them. Uh, to, to be able to buy a business that they feel really comfortable with. It's going to happen.

There's going to be more and more people doing that. So if you're in a place where you're trying to grow your practice to where you're going to have a sellable entity, now's a great time to do it. And you got to follow these principles in order to do it. And there's probably going to be more as, as we get better at this over the next few years.

Um, that really helped us solidify an even better way of going about this. But for now, this is a really good case study, a really good example of somebody that went from zero to, you know, a massive exit, uh, opportunity in their business in three years, did everything the right way, uh, had everything in line and probably blew the socks off of the investor that's looking to buy their business.

That's just like, Oh my God, I gotta have this business. This is amazing. And it didn't have to sell either. Totally could hang on to it, could autopilot it. Um, but at the, at this point in time, probably the right move for them to do, uh, for what their goals are going forward. So, um, hope you liked this one. I hope this wasn't, you know, too high level.

I'm sorry if, uh, if, if you're just starting, um, come back and listen to this in like two years. It's going to make a lot more sense. And I tell you what, if you are, if you're in your business right now and you're growing it. Save this one and listen to it, you know, a couple of times a year to make sure that you're on track with the right things.

If you're moving towards a business sale, because this is just a perfect example of all the things are done, right? All the things that people are looking for currently and how you can tee yourself up to have the best multiple exit for your business. If you decide that's the right fit for your family to sell.

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