Buying A Dental Practice
Are you thinking about buying an existing dental practice? Before you do, you need to understand what to look for when you're evaluating a dental practice for purchase and the essential steps to take for a smooth sales process. In this post, we share all of that, together with some lesser-known secrets and advice from real dentists who have done it all before.
buying a dental practice
Whether you are just out of dental school or looking to expand your practice to a new area, you might consider buying a dental practice. There are some good reasons to do so as well as some potential risks you should know about. Here are some of the biggest benefits of buying an existing practice.
The biggest issue, which could be either a pro or a con, is that you will inherit the reputation of the dentist who preceded you. If they have a wonderful reputation, that can work for you because the practice probably has a good reputation as well. It can also potentially work against you because people may worry (or even assume) that you won't live up to the same standard.
Of course, there's also the challenge of buying a dental practice with a less-than-stellar reputation. In that case, you will have plenty of room to improve but you may face an uphill battle as you work to change the public's perception of you and the services you provide.
The first step to buying a dental practice is deciding the area where you want to live and work. There are a lot of considerations that go into determining this, including schools and other amenities in the area that impact the quality of life for you and your family.
As previously mentioned, you need a knowledgeable third party to help determine what the practice is worth and what you should offer, as well as to help you navigate all the legal and financial details. Once both parties agree on a price, the major hurdle is done; the details can be worked out in the Practice Sale Agreement (more on that further down the list).
The actual Practice Sale Agreement is not a complicated document, but you will need to have your attorney look it over to make sure there are no surprises. According to a Henry Schein article on dental practice transitions, the fee for an attorney to look over the Practice Sale Agreement should not exceed $1,000.
Part of this picture of health is knowing what type of online presence the practice has. If the dental office has an updated website and is ranking high in search results because of effective dental SEO marketing, then that would be a great benefit and add value to the practice.
Cash flow is arguably the most crucial factor to consider when buying a dental practice. According to Daniel R. Whittaker, DMD, of Whittaker Family Dental in Bryan, OH, cash flow is the most important thing to consider when purchasing an existing dental practice.
To determine the cash flow of the practice, you need to pay close attention to financial data and information such as how customers are paying and which procedures are bringing in the most revenue (and if you can continue offering these procedures.)
When buying a dental practice, you need to consider not just the practice itself but also the area where the practice is located. The number of competing dentists in the area (in proportion to the population) can make or break your dental practice. The dentists we interviewed were very outspoken on this topic.
There are many ways to transition the sale of a dental practice. The transition period may last anywhere from days to months or even years. Too short of a transition period may result in lost patients and other problems, but if you take too long, the seller may reconsider their plans to sell.
When you take the time to make the right choices with your practice, dentistry will be more enjoyable. Chad Barney, DMD, who has a dental practice in Lewiston, ID, has the following philosophies on how to have fun as a dentist.
Purchasing a dental practice can be a complicated endeavor but we are here for you every step of the way! By considering the steps we have lined out below, you will be on your way to a rewarding career as a practice owner.
When you are ready to purchase a practice, one of the most significant aspect of your new business is the location of where you'll practice. You will want a location that is easy for your patients to find and ideally, a location that will do some of your advertising for you.
If you would like to continue learning about the tips to selecting the ideal location for your dental practice, read our blog on How to Find and Select the Ideal Location for Your New Dental Practice. Next, we will explore the importance of demographics in aiding your ideal location.
Purchasing a dental practice can be a lengthy process and you will want a team of advisors that will help you through every step of the process. They will also help guide you in making wise financial and legal decisions to help protect you from potential roadblocks and compliance issues.
The letter of intent is one of the first documents you will be need in order to start the process of purchasing a dental practice, as it details your interest in buying the practice and sets out some of the basic business and economic terms.
Additionally, you should take into consideration whether the practice you are interested in purchasing is the right practice for you. As you identify a particular practice you should also look out for red flags.
With any tough decision, there are advantages and disadvantages to every option. The same can be said when determining whether you should buy or lease commercial space for your dental practice. Other factors to keep in mind is whether the seller owns their space and if they do, are they willing to sell their space along with the practice itself. If you can purchase commercial real estate for your practice then go for it, but if you are not able to, leasing space is a great option as well.
In most aspects, it is in your best interest to hire on the team members of the practice you are purchasing for a number of reasons, such as to ensure a smooth transition, familiarity with the processes, and the bond shared with patients. However, it is possible not all team members might be a good fit. To gain a better understanding of evaluating team members, you can view the 7 Tips to Successfully Transitioning Team Members After a Dental Practice Purchase. In addition, we've listed a couple of the tips below:
Upon hiring your team, it is wise to implement your own employee handbook. The handbook should identify any new changes to office guidelines and practices, as it's important to note if anything has changed for the current team members and to have new hires be aware of what's expected of them.
Don't let employment law impede on your future success. The time is now to implement an employee handbook which can protect your practice from employment related disputes. The handbook should also contain clear guidelines as to workplace rules and regulations, disciplinary measures, state and federal laws, among other items. It should also be noted to revise the handbook yearly and to have each team member sign the handbook every year.
Upon purchasing a practice, you will inherit the seller's patient base. However, chances are not all of the patients will carry over and see you. That is why it is up to you to make a good first impression by introducing yourself whether by email, mail or in person. While you can't assume the selling dentist notified his or her patients ahead or after the closing date, it's in your best interest to communicate any logistics during the transition.
Buying a dental practice can be exciting, overwhelming and a bit mystifying. Many dentists choose to buy an established dental practice for the existing patients, but having plenty of patients is no guarantee of success. There are several other considerations to weigh, like how much income you can expect to generate and the potential for growth (or decline).
When you purchase an existing practice, you are also acquiring its support staff, including hygienists, billing staff and others. These professionals not only help ease the transition for current patients but also maintain an understanding of the business systems used to operate the practice. The institutional knowledge they share can be invaluable to your long-term success.
Many dentists find that their bank provides a more neutral route to financing. Your banker will ask for several documents to support your loan application: tax returns for the previous two years, a statement of your net worth and a copy of your dental license and resume, for starters.
From the seller, your lender will want a copy of the dental practice valuation, along with tax returns, profit and loss statements, and depreciation details. The practice business plan, budget and patient count may also be requested.
Starting your own dental practice has many benefits, including the ability to set your own rates and specialize in a specific type of dentistry. Despite these benefits, getting a brand-new practice off the ground takes a lot of work. If you want the benefits of owning a practice without the hassle of starting one from scratch, buying an established practice is another option. We developed this guide to help you understand the costs involved in starting your own practice or buying an established one.
According to the American Dental Association, you can expect to pay about $500,000 to start a new dental practice from scratch. One of the most significant costs is construction. If you can rent a dental office instead of building one, you may be able to reduce your total cost of ownership. Once you have the building ready, you need to fill it with dental chairs, instrument trays and other types of dental tools and equipment. You'll also need furniture for your reception area, treatment rooms and practice waiting room.
If you plan to use specialized software to manage your practice, you may need to purchase the software outright or sign up for a monthly subscription. Before you have your grand opening, you'll also have to stock your practice with letterhead, envelopes, pens and other office supplies. When all is said and done, you may spend as much as $200,000 on office supplies, tools and equipment. Expect to pay more if you plan to hire a marketing firm or a professional web designer right out of the gate. 041b061a72