Buying a dental practice can be a very exciting experience but it can also be very overwhelming, When it comes to starting a practice mane dentists will choose to buy an existing and established practice verses starting a brand new practice. When acquiring an established practice you also acquire things like patients, staff, and equipment. While this is all very helpful it doesn’t alway equate to success.
There are several things to consider when acquiring a dental practice. You need to evaluate how likely you will be able to grow professionally in your practice. Ultimately you want to be in a practice that both professionally fulfilling and a financially sound investment.
To help you navigate this process we have provided a list of tips to help make some big decisions.
When first looking at buying a dental practice you want to take your time looking and not rush into the process. You will want to find an already operating practice that reflects how you want yours to look. The more similar to what you want the less change that has to occur.
You want to look at the and observe the dentist and what kind of employees and patients they have. Is this the environment you are looking for?
Make sure they’re also practicing the kind of density you want. The fewer changes you have to make the better. You do not want to have to purchase all new equipment and staff to fit your need when you could find an established practice that better fits what you want.
So if it isn’t obvious already, you will need to find a way to purchase a practice. When you are approaching a bank you will need to come prepared with all types of information. You will have to know how much money you need, and when/how you will pay them back. This will require you to crunch all the numbers in regard to the costs involved and setting up a business plan for your new practice. These are some very important first steps you need to accomplish in order to get the finances you need.
You will also want to consult your figures with a business advisor. They will help make sure you haven’t miscalculated anything or been too optimistic in your forecasting.
A lot of what we are about to mention are important aspects that should be taken into consideration when creating a business plan.
When it comes to the location of the practice there are a lot of things to consider. First you want think do you stay in your current city or state? There are some states that are more attractive to dentists than others and moving could offer a better chance for employment or higher pay.
Now if you aren’t planning on uprooting your family then you obviously want to look closer to home.
Once you have narrowed down a location you also want to look up how many dental practices are in the area. Keep in mind that the average number of dentists per 100,000 citizens is ~55. Now this number can vary from state to state but is still something to keep in mind.
You will also want to consider possible walk ins. As you establish your practice it will help to have a location that receives a lot of pedestrian traffic. You also want to consider the total number of parking spaces. There should be enough parking for both your patients and your staff.
You will also need to consider and understand the aspects of the business. This includes:
The number of patients
Highest yielding procedures
Financial records and cash flow of the practice
Statistics of the business
You will want to talk to an accountant about the finances. They can help you understand if it is a concern financially.
It also helps to know why the dentist is selling their practice. Is it for a legitimate reason? If not, then you will want to steer clear because you don’t want to invest into a sinking ship.
You will want to do some investigating. Doing market research and finding out about your competition is very important. You want to know who your competition is, what are they doing, how successful they are, and if they are very successful then what is the key to success.
You also want to find out your growth potential. You also want to figure out how much it is going to cost you to reach out to potential clients. What is it going to take to get new clients in the door? How much is that going to cost, how much time is that going to take? All of these things are very important.
You will also want to look into the finances of the previous practice. You will want to know recent profit and loss statements, recent balance sheets, income tax returns, fee schedule, percentage of revenues used for overhead, employee expense breakdown, break down of revenue by procedure,
So at the beginning of this process you want to determine how much square footage you will need. Like how much space you will need for a waiting room, bathroom, reception area, exam rooms, x-ray room, storage space, and a break room. You will want to figure this out before you even start looking for an office. Depending on your preferences you might also want to include a private office, a consultation rooms, or even a sterilization area.
The number and type of rooms will vary from one practice to the next. It is a good idea to research other dental practice layouts and see what you like.
Once you have a practice space in mind, and have started to look at practices you will want to see what equipment comes with the business. Does it come with everything you need or will you need to purchase more? This can greatly affect your budget. You want to consider everything and not just dental tools as equipment. Things like instrument management systems, business management software, call tracking systems, etc. are all considered equipment.
Also want to consider the security measures in place. This is especially important because you will be collecting cash. Now you don’t need a heavy duty prison security but a home security system will work.
Now you obviously need a license to practice in your state. You also need to make sure your new practice has all the required permits it needs. Whether you’re retaining the existing offices or moving into new ones, you want to make sure everything is operating within the law.
You can also consider joining certain professional memberships if you think that will be necessary or benefit your practice. Laws and regulations vary from state to state and you want to be sure to research what all you need and think about how long everything takes before opening.
Consider a Partner:
While it can be difficult to find someone with the same vision there are definitely benefits to have a business partner.With a partner you will have someone to share the load with. This can include things like time and finances. Also having a business partner is much different than just another employee because they have joint interest in the practice. They are more inclined to put in extra hours needed to grow the business. They have a lion in the fight and will [hopefully] put in the work needed to be successful. It is also great to have someone to bounce ideas and concerns off of.
Appraise the Facility:
You need to know about the practice facility itself. You want to do a site visit as well as an equipment valuation. This should be performed by an independent vendor. You also want to make sure the space is appropriate. Is the lease affordable? Can you expand if needed? What are the lease terms? Can you purchase the property? These are all things your want to know before you even make an offer.
Now that you have read some basic tips and things to consider you are ready to purchase a dental practice. After you have found a place that meets your needs you will still need to make on offer, secure financing, sign the practice sale agreement and lease, and complete the purchase. As you can see a lot of important factors go into this decision. Make sure you are being properly advised. Practice Advisors 360 is the nation’s leading dental advisory company. Contact us today at (844) 360-8360 or visit us online at practiceadvisors360.com