The Importance of Practice Valuation

To many Optometrists, their Optometry practice is probably the largest asset they own. Many never think of valuing their practice because they think that a valuation is only needed for when they want to sell the practice. A business valuation is the report practice owners should do on regular basis; if not annually or every three years, it should certainly be done everytime an upgrade to the business is made (adding personnel, adding equipment, assets, or investing in new departments, …).

The best scenario is to have a proper practice valuation made every year. Ignoring this part of the business can have serious costs and implications. Without proper valuation you may end up paying thousands of dollars if not tens of thousands of dollars for an overvalued practice you are buying or sell your practice at an extremely low price.

If you own your business, a yearly valuation will help you in better decision making and planning. Being able to accurately measure your practice valuation will allow you to improve it. What is measurable can be managed and improved. Your focus should be on working to increase the valuation year after year and not just getting preoccupied with increasing sales.

The reasons to get your business valued regularly include knowing at any time what your project is worth and when is the right time to exit the business, partially exit, restructure, invest, acquire a business, separate from a partnership, create a partnership, create a bonus program to employees, avoid being underinsured, and never miss a buy-out or a buy-in offer that seems great.

Business valuation is the most important business number that you should be knowledgeable of. Not being aware of the practice valuation impedes business growth and leads to wrong decision making.