Buying a dental practice can be thrilling and overwhelming at the same time. Most dentists choose to acquire an already-established practice for their patients, but having a large patient base doesn’t guarantee success. There’s a lot you need to consider before making any final decision. Read on to learn more.
1. Budget Your Expenses
Budgeting for your expenses is one of the most important things you can do before purchasing a dental practice. You must consider several things, from your salary to the loan payment (if you plan to take one out) and other expenses like recruiting an associate or other personnel. Determine the size of the practice you want and how much revenue it needs to bring to meet all expenses. When discussing financing options with your banker, you can provide them with this information.
You should also account for the cost of any dentist you intend to keep on during the changeover. Like with any other business, taxes will make up a significant chunk of your expenses, so include them in your budget. You may also need to make investments to keep up with technological investments and keep patients happy and comfortable.
Another thing you may need to account for in your budget is insurance for your staff. The Bureau of Labor Statistics estimates that 40% of U.S. firms provide their staff with long-term disability insurance. Doing the same for your employees may result in higher employee retention rates, which is good for business.
It also makes sense to plan for the cost of the products and accessories patients will need. For example, High Tide Dental advises using 18 inches-long waxed floss to get food out of your teeth. Stocking up on such items will be good for business and make things easier for your patients.
2. Determine Practice Value
When selling your dental practice, determine its economic value first. Doing this helps them set the number they’ll finally present to you. Doing the same before making an offer during negotiations is also in your best interests.
Imagine for a second that you’re the seller and you’ve owned the practice for 15 to 30 years. It’s your source of income and your main tie to the community. The grandkids or even offspring of your former patients are now your patients. There’s a good chance that the sale of your practice will fund a sizeable portion of your approaching retirement.
In most cases, there’ll be an emotional value besides the monetary value. Knowing what to expect will help you better plan your budget. You can also enlist the help of a professional dental appraiser or broker to have a more accurate figure.
3. Do Your Own Due Diligence
If a broker is involved in the sale, they’ll have done sufficient due diligence as the seller’s representative. Consider taking it a step further. Engage a consultant to visit the office and spend time analyzing the systems, employees, the systems, and doing a thorough chart audit and patient count.
These professionals can be helpful, not just for due diligence but also during the post-sale transition. They’ll advise you on recruiting and firing decisions and how to customize, set up, and manage your systems. Taking this approach is one of the best things you can do for your investment.
4. Drawbacks To Buying a Dental Practice
Buying a dental practice won’t be all sunshine and roses. Such a purchase comes with its fair share of risks, which you should consider before moving ahead. These include learning the laws and regulations governing operating dental offices in your region or state, taking on the debts of the previous practice owner, the possibility of having to finance the updating of systems and equipment to remain competitive, and other liabilities associated with taking over a business that has been operational for a while. Be sure to do your research, so you have all the facts laid out.
Owning a dental practice can be pretty profitable. However, before moving ahead and purchasing one, ensure you cover all your bases. Use this read as a guide for the things you need to consider.
