Q:  The banker wanted to know if I have an exit strategy in my business plan.   Is that what I think it is?  If so, why do I want one?

A:  Yes, an exit strategy is a plan to get out of the business.  When you’re starting into practice, you’re just worried about getting INTO the business, not getting OUT of it.  That is not something at the top of your mind these days. 
But some banks ask the question because they want to know your long-term plans.  Are you committed enough to this business to stay in it until you retire?  More likely, I would guess that the banker wants to know what you would do if the business were in trouble.  

Even though I don’t believe it’s a good idea  to focus on the negative, it might be illustrative to take a minute to think about what you would do if you needed to get out of the practice.  There are several reasons why you might want to do this:

1.  You decide you don’t really like the area and you want to move.
2.  A family emergency forces you to leave the area.
3.  You get divorced and need cash to settle up.
4.  You have an accident, injury, or health problem that forces you out of practice.

In these cases, you probably want to sell, which is a whole different strategy.  In that case, you would want to clean up the financials as quickly as possible, get your financial statements in order, and (depending on the urgency of the situation) call a practice broker.

Let’s take the most likely situation: You don’t have enough working capital to keep going.  What do you do in this case? 

1.  Sell your inventory and equipment.
2.  Tell your patients/clients you are leaving practice and give them enough time to find another provider (don’t just walk away from them; that’s abandonment).
3.  Pay your creditors off, starting with the bank, from the proceeds of the “fire sale”.
4.  Tell your employees you’re quitting practice, pay them, and let them go.
5.  Negotiate with your landlord to terminate the lease, or sell the building
5.  Finalize all financial and legal obligations
6.  Close out the checking account
7.  Close the doors
 And, move on.  Don’t look back.

Something bigger and better is out there waiting for you.  And you have all of this great experience behind you to help you figure out what NOT to do next time.