Powering Your Practice with a Business Valuation


One of the biggest misconceptions we hear at BizEquity is that business valuations are only necessary when an owner is preparing to sell his or her business.

The truth is, business owners should always understand the value of what’s likely their largest asset. Throughout the business lifecycle, business valuation plays an important role in critical financial decision-making, including business development planning, tax strategies, employee incentive programs, and ensuring adequate insurance.

For business-owning healthcare providers like physicians, dentists and orthodontists, who may be facing significant student loan debt while getting their practices off the ground, business valuation can be a determining factor in whether they’re able to obtain necessary funding for:


  • Purchasing equipment and technology
  • Buying or renting real estate
  • Hiring new staff members 
  • Increasing marketing efforts
  • Improving patient care
  • Acquiring another practice

With an accurate business valuation, healthcare providers can achieve the following:

 
Prepare for Funding Options
Before you can even apply for funding, you need to assess your practice’s current financial situation and determine how much funding is needed. Business valuation provides insights into the current market value of the practice and its potential for future growth, which can help you determine the amount of capital you’ll need.
 
Attract Investors
With an accurate estimate of your practice’s current valuation and potential for growth, you can more efficiently attract venture capital or private equity investors. 

It’s important to understand that working with VC or PE firms typically requires the business owner to give up something in return. “For instance, with venture capital you’re probably giving up seats on the board, and some decision-making power. With private equity you’re giving up some equity in your practice in exchange for that funding,” explains Julianna Andrews, MBA, CFP, principal and co-founder of Atlanta Financial Associates.

Obtain Loans
Your practice’s business valuation can also help you secure a loan from a bank or the Small Business Administration (SBA). While there are differences in eligibility criteria, term flexibility, repayment periods and interest rates between these types of loans, most lenders will use business valuation to determine the amount of funding they’re willing to offer, as well as the terms of the loan. 

Improve Business Performance:
Finally, business valuation helps practice owners identify opportunities for improvement. A comprehensive business valuation provides business owners with clear direction on areas of under, over and average performance, helping to guide better strategic decisions, business development plans and long-term goals.

 

Ultimately, growing your healthcare practice depends on knowing what it’s worth today. But typically, business valuations have been prohibitively expensive and time-consuming, costing up to $8K and taking two months or more to complete.

BizEquity streamlines the valuation process into seven easy, online steps, significantly reducing the cost and access to critical business knowledge. To learn more about starting your on-demand business valuation, click here.