Starting a new dental practice is an exciting yet challenging endeavor.
Investing in an established practice with existing patients, for instance, is no guarantee that new ownership will pick up right up where the previous owner left off.
Complex transactions and big business decisions will determine how profitable and successful a dental practice will be. New dentists can build a financially sound and patient-first practice by carefully considering their options and taking things one step at a time. Here are some of those factors.
Value existing staff
In many cases, the acquisition of an existing dental practice means new owners will partner with previous support staff. Hygienists, billing workers and other staff members will be there during the transition. Their familiarity with office operations and institutional knowledge will be invaluable moving forward.
Get first-hand look
An in-person visit to a for-sale dental practice is essential. No one dental office is alike, after all. So, you want to take a close look at the innerworkings of all operations before making any big decisions. Putting business and cash flow under the microscope will reveal whether the practice is growing, stable or falling behind.
Asking price versus actual value
The asking price for the dental practice might not reflect its actual market worth. That’s why it’s important for new business owners to dive deep into financial research and consult with professionals who are familiar with the valuation and financing of dental practice transactions. Reviewing tax filings, records and other financial statements can shed light on real-world realities, such as how much of gross receipts go toward staff salaries.
Ask for help
Dental brokers, dental supply companies, medical accounting and other professionals can offer advice and guidance on the next important steps of establishing a new practice. No topic should be off limits but prospective owners must ask for a confidentiality agreement first. We also offer dental consulting and we can help!
The seller can offer to self-finance the purchase, but it’s not ideal. Sellers have little incentive to hire an expert third party to assist with valuation and asking price. A banker, however, will proceed with a balanced approach that’s protective of the dentist’s financial interest.
Start with offer
Given the financial complexities of purchasing a dental practice, you can expect plenty of back on forth. Property, equipment, staff, and transition details will all be considered when it comes down to valuation. So it’s important to first figure out the financial offer, preferably through a third party. Then, the future and current owners can sit down and work out the details.
Build a budget
New practices must consider all expenses, including student loan repayments. Developing a budget for a new practice leads to clarity on projected income. This information will guide owners on how big a practice they can purchase while fulfilling all financial obligations, including personal expenses.
Real estate transaction
Buying the practice and acquiring real estate for it are separate processes. Lenders will require new owners to enter into a lease with extensions or renewal options. New business owners should get their financial partners involved early on in the process. This gives dentists plenty of time to study their options and evaluate values and the overall financial and business health of the existing practice.
Adams Dental Consultant understands the complexities involved with the acquisition of a new practice. That is why we take a step-by-step approach to developing a strategic plan for this life- and career-altering decision.
We will always stay a step ahead in order to provide our clients with the necessary support. Whether you are starting a new practice or taking over an existing one, we have the expertise to analyze value, navigate process, develop transition plans, incorporate new providers and create a marketing strategy.
We are the behind-the-scene partners who work tirelessly on your behalf so you can thrive and grow as dental practice owner.
Contact us today if you need any assistance!