All sellers want to get top dollar for their optometry practice, but many of them are not.  One reason they are not getting 65 percent of gross or higher is because they have not taken the time to remove all their personal expenses from the income statement.

Owners of optometry practices can take advantage of many tax benefits. For example, many owners take family vacations during the week of Optometry’s Meeting, which allows them to write off the trip as continuing education, but also enjoy time with family. If the owner is not planning on selling the business in the near future this plan works well.

However, optometrists  planning to sell their practices in the next three years should take their personal expenses off the books. This not only cleans up the books for a sale, but reduces expenses and thus appropriately increases the bottom line. Here are four categories to consider as personal expenses.

1. Club memberships – Memberships to health clubs and golf courses, as well as clubs for hunting, fishing, poker, etc. need to be discontinued or paid for personally.
2. Car expenses – The owner may be claiming a vehicle as a business expense. Unless that vehicle goes with the purchase of the practice, all monthly payments, insurance payments, gas, and car services need to be considered personal expenses and removed.
3. Spouse on payroll – All family members that will not be replaced at an equal or lesser expense need to be removed from the payroll.
4. Travel – Sometimes convincing cases can be made for keeping travel expenses in the books, like in the scenario above. Some moderate travel-related business expenses are not unreasonable. However, sellers who complete most of their continuing education in expensive locales like Hawaii or Europe with family and friends probably need to clean some of those expenses up, especially if the amount exceeds usual and customary expenses for a weekend CE.

A seller who takes the initiative to clean the books in preparation for a sale will not only increase the value of the practice by showing a better bottom line, a seller will also demonstrate integrity and good faith. Sellers who lead in good faith are the ones most likely to close a deal.