Growing Your Dental Business
So you are ready to open another dental practice? That’s exciting! But before you sign the dotted line, here are some of the questions you should ask yourself.
Is My Existing Dental Office Successful?
Before thinking about opening another dental practice, it is important to fully understand how successful your existing business is. We have often seen dentists who feel they are ready to expand their dental business only to find out that their existing practice still had major growth potential.
- How long has my existing business been profitable? (Must be more than 2 years)
- How much debt do I have? Is it too much?
- Would my existing dental practice remain as successful if I was here less?
If you think your existing business has reached its full potential and you are ready to expand, let us help you make 100% sure. From financial audits and profit planning to dental practice consulting we can help you make an informed decision!
Should I Open Another Dental Office?
We have often seen dentists who have worked years to build a successful practice, assume that the second or third practice will also be a success, only to fail. To assume that additional locations will be successful is a mistake dentists often make. While the failure rate for dental practices might be low, how successful a dental practice will be financially is a wide spectrum. Making uninformed decisions can have a major impact on your overall profitability.
Things to Remember and Ask Yourself:
- Will the bank give me another loan?
- Do I have the ability to manage more locations?
- The bank does not treat your second practice as a startup, it is an expansion (This has implications).
- The bank will look at the cash flow of your first practice before financing a second.
Should I Buy Another Dental Practice or Start One?
The first question you should ask yourself is how much financial risk you’re willing to take on. If you are looking to build your own empire and find the right location, at the right time for the right price, then starting your own from scratch certainly has its benefits. This is especially the case if you want to avoid buying a practice that someone else has created bad habits in.
There is, however, less risk in buying an existing practice because you have cash flow already built in. You’re taking on about the same amount of debt you would be if you’re starting one up, but you have cash flow already. So it’s just a matter of whether you can find a good practice in the right location. Our experts have seen again and again that the most important thing when buying a practice is the location.
If you want more information on whether you should buy a dental practice or start your own, we provide an in-depth discussion on our podcast, Beyond Bitewings. We also provide transition services to make sure you make the best decisions for your personal needs.
Questions To Ask When buying a Dental Office
Understanding whether you are getting a good deal, gathering accurate information on the practice, and negotiating interest rates on a loan are just some of the many decisions you will need to make.
Dental Practice Acquisition Checklist:
- Is it the right time to buy a dental practice?
- How many patients are currently in the practice?
- Where is the practice located?
- Will the location of the practice be beneficial to you?
- What is the value of the equipment?
- Are the existing staff members adequately trained?
- How was the practice price determined?
These are only some of the many questions you need to answer before thinking of buying a dental practice. We can help you make these decisions with our Consulting and Transitional services for Dental Practice Purchases.
Do I Need an Associate?
If you already have all the answers you need and you are ready to take the next step, the final thought you might have is, “how will I manage my time between the different locations?” or “do I need an associate to help me manage the new location?” What we tell our clients is this: Before you even start to think about moving to the new office, you would have needed to put in a considerable amount of time screening potential candidates or getting to know existing employees if you are acquiring an existing dental practice.
These people will be the gears of your system and if you do not choose the right people, it can seriously impact the success of your dental practice. In addition to what you will pay your staff, you also need to decide what benefits you will offer, and what you can afford. This can especially become tricky if you are purchasing an existing dental office that offers benefits for its staff that you might not agree with. We provide transitional services that help our clients through these negotiations.
We also recommend that you spend the majority of your time at the new location, at least during the initial stages to ensure operations are running smoothly. Even with the help of an associate, balancing your time between multiple businesses can certainly be exhausting and frustrating at times. This is why coaching programs, team building, team accountability, office management, etc. are so important for the long-term success of additional locations. We provide Practice and Staff Management Consulting services to help guide you on your path to success.
What Is the Dental Practice Failure Rate?
To become a general dentist or specialist requires many years of education and a significant amount of financial investment. That’s why it’s understandable why the question of failure rate is asked so often. Dentists should feel confident in their future success as they are in a promising profession. The failure rate of dental practices is less than 3%. That being said, the risk of mismanaging funds or not adequately planning for financial success remains. That is why most dentists make use of a dental CPA to ensure the highest probability of success.
Should I Buy or Lease a Vehicle?
If you’re going to use that vehicle for more than 50% for business, then you should buy it. If it’s less than that, then leasing it will probably give you a lower monthly payment, which will benefit cash flow. Keep in mind that the IRS does acknowledge that doctors use their vehicles for business to some degree. However, they’re willing to accept somewhere around 25%, but not 50% or more unless you own multiple practices, which requires you to drive to various locations. If, however, you own one dental practice, we can justify a deduction of about 25% of the vehicle’s operating cost, and leasing it will then provide you a lower monthly payment. If you have multiple practices, you can justify greater than 50% business use, and you would get a bigger deduction than by purchasing the vehicle.
Are Dental Practice Management Consultants Worth It?
If you own a dental practice, you know that it’s a job that requires you to juggle many responsibilities. From maintaining your practice and dealing with human resources, to tax compliance, staying competitive, keeping patients happy, upgrading equipment and so much more. The reality is that not everybody is cut out to juggle all of these things while also being a good dentist. And even if you are one of the few dentists that can “do it all”, how do you give it the time it deserves while also seeing patients and perfecting your craft?
Unless you’re prepared to hire an in-house team to run your business, you’ll have to look elsewhere for guidance and support. A great place to start is with a dental practice management consultant.
A dental consultant helps dentists improve their practice by providing advice, training, and expertise. This includes:
- Coaching Your Team
- Building Patient Relationships
- Identifying Behavioral Styles
- Team Building
- Partnerships that Thrive
- Implementing Incentive Programs
- Case Presentation/Verbal Skills
- Effective Telephone Techniques
- Patient Loyalty
- Team Accountability
- Office management
- Patient interaction
- Staff training
- Equipment purchases
- Finances and billing
- Maintaining an Effective Hygiene Program
- Scheduling to Goal
Dental Practice Consultants are most useful when you are starting up a new practice, looking to expand your dental empire, or going through other transitional periods such as adopting new management software, onboarding new staff members, or selling your dental practice. Dental practice consultants can also be used to help you improve your practice efficiency and evaluate weak points.
At Robert Edwards & Associates PC, we are lucky to have renowned dental practice consultant Dr. Sharon Tiger, who has decades of experience in helping dental practices make the best decisions to ensure success.