The 5 Milestones of Professional Practice™
Our clients progress through the 5 Milestones™ more quickly with fewer mistakes, lower costs, and better work-life balance. Leverage our knowledge to achieve your goals!
Over the last 25+ years, we have worked with many clients to reach their practice goals. Along the way, some patterns have emerged. Most professionals progress through 5 practice milestones during their careers. We developed a consulting framework using the 5 Milestones™ to help professionals navigate the stages that they will encounter in practice.
Milestone 1: Associate
Many practitioners decide to begin their professional careers working for someone else, as an associate, for a variety of reasons:
- They want to gain professional working experience.
- They don't have a desire to own their practice.
- They want to start earning immediately to pay their expenses.
- They want to start earning immediately to lower their student loan debt.
- They want to save money to help fund their own start-up, buy-out, or buy-in.
Many partnerships require the prospective new partner to be an associate for 6-24 months before being allowed to buy in. This is because of the importance of personality in a stable working professional partnership.
This “try them before they buy-in” strategy tends to work best when the legal documents are comprehensive, mutually beneficial, and signed before the start of the associateship. Too many associates have started and worked hard with a vague promise of future partnership - only to leave after often feeling used and misled.
In practice partnerships it is important to work out the legal exit before you finish moving through the entrance. We have helped hundreds of professionals navigate the process. Let us help you avoid the pitfalls!
"What I tell my students is, 'It would be wise to use a consultant from the beginning of your professional career instead of midway through or towards the end of it.'"
Gregory Hill, OD
Milestone 2: Ownership
Transitioning from associate - or student - to owner is the second practice milestone. Deciding on the ownership model that fits your goals and vision are key:
- Start Up – For when you want to create something brand new from the ground up. You get to make the decisions following your unique vision from day one, unencumbered by a history of established processes, staff or policies.
- First steps include assembling your trusted advisory team (i.e. CPAs, consultants). Then you have to:
- Decide on your state
- Pick an attorney
- Chose a location
- Complete your design
- Work on your build-out
- Engage your IT and marketing solutions
- After this, you have to recruit, interview and hire your staff.
- Next is outlining your practice and business policies, procedures and processes.
- Purchase/Buy-Out– You can decide to purchase a thriving, well-run practice, or opt for a stable (but slightly dated) practice. This gives you cash flow while you inject new vigor.
- First steps include checking under the financial hood to confirm that its current price matches its relative value.
- After purchase, you will transition into spending months learning how this established practice has been run, gaining the hands-on practice skills only gained through actual hours worked.
- As you get up to speed, the next steps will be changing the 15-20% that needs realignment to move your vision for your newly acquired practice to the next level.
- The largest benefit to this method of practice ownership is instant positive cash flow.
- Partnership/Buy-In - For when the best practice ever… is just too big for you to purchase completely. Or for when you don't want to go it alone and want to operate as part of a group. You opt to buy into a smaller piece of a larger whole.
- More so than the other forms of ownership, the “Buy-In” is the most important to understand completely…since, you will not have complete control at the end of the process.
- With this transition, the personality fit, practice governance, financial incentive alignment, and legal documents are the keys to clarity, transparency, and ultimate long-term success (see Associate).
Negotiating a competitive specialty financing package is a crucial part of each of the three ownership structures above. We have helped owners navigate hundreds of millions in loans. Let us help you do the same with our complimentary Loan Advisory Services!
"Being a practice owner, mother of three children, wife and active participant in organized dentistry, I am always being pulled in all directions, but Rob Hockett has always been there to help guide us and keep our goals always in mind to be sure our actions supported our goals both professionally and personally."
-Ann Hammi Blue, DDS, MS (President, Arizona Dental Association)
Milestone 3: Real Estate Purchase
Owning the real estate where you work is a pillar to building personal and family wealth. Over time, real estate values trend up. As the majority - or sole - tenant in a building, your wealth grows using positive leverage (loans) anchored by the consistency of your practice cash flow. Most professionals use borrowed money to purchase their primary, or secondary, practice buildings.
Whether you are planning for ground-up construction, purchase of an existing practice building, or a building “shell” purchase with tenant build-out, we can coach you successfully through the process. Learn more about our Consulting Services.
Whether you need someone to help you look at the numbers to decide if a purchase is right for you, locate a specialty real estate agent, or negotiate specialty bank financing, we are here to help simplify an otherwise complex process. Learn more about our Loan Advisory Services.
"I considered him and his team as a board member from whom I could trust and rely on for numerous business decisions. He was with me in the beginning of my de novo practice, not only with finance options and strategies for the office but with the eventual real estate purchase during our expansion phase. I'm thankful I found him early in my career."
Dr. Frank Clayton, General Dentist
Milestone 4: Expansion
When they run and manage a single site well, some licensed professionals decide to move to the next level of practice efficiently and profitability. While not strictly necessary, building another practice location (or three, four, or five) speaks to the desire to replicate and expand what you have done well on a larger scale. Many reasons professionals choose to scale include:
- To provide larger operating efficiencies, such as:
- Setting up a call center
- Bulk-buying
- Attracting better talent
- To serve as an offensive/defensive block to competitors
- To build bigger and sell to a corporate/private equity buyer
- Just to experience the adventure of expanding
It usually takes several years to stabilize a new site, so your processes, staff, marketing, and financial controls are key. You will learn that it's not just profit percentage but profit volume at this level. Expansion always requires additional capital, use our complimentary Loan Advisory Services to help you negotiate additional funding.
Metrics matter and great metrics generate a premium in eventual valuation. Let our consultants help you analyze the numbers and have a second set of eyes as you increase your practice complexity.
"Rob Hockett has been a trusted advisor for nearly 20 years. He has been instrumental in helping me obtain practice financing as I grew my practices. I recommend Rob and his associates without reservation."
Dr. Rex Gibson, Pediatric Dentist
Milestone 5: Practice Merger or Sale
After building a successful practice, there are many reasons licensed professionals decide to sell or merge. Whether to retire, relocate, manage a disability or death, or to cash-out and lower financial risk, there are many reasons owners decide to sell. Selling also does not mean you have to give up practicing. You may choose to become an associate, a minority equity partner, practice part-time or teach (or some combination).
Many owners with the know-how to build a successful practice, decide to do it repeatedly ...monetizing their expertise over and over again.
A key component in the exit process is working with an experienced team to evaluate your options. Currently, even with higher interest rates in the private equity space, it is still a sellers' market. Understanding sale and purchaser options can result in up to a 100% difference in sale price (yes you read that correctly).
Knowing how to position your practice for sale is important. An expert team is key. Work with our Senior Practice Consultants to help you think through the why, when, how, and to whom to sell.
"It was during one of our quarterly meetings that I told Rob I decided to sell my practice. His eyebrows shot up as he said, 'Yeah? Well, what does that look like?' Of course I didn't know, but he did. Over the next hour, we planned an exit strategy. Over the next week, he produced a practice prospectus. And over the next year, he arranged the financing and sale of the practice for top dollar, all without being asked. It's one of the many reasons I work with him. But it's certainly not the only one."
Drew Weigner, DVM
Wherever you are in your journey through the 5 Milestones™, let us help you progress more quickly with fewer mistakes, lower costs, and better work-life balance!
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