You're fresh out of school (or perhaps not so fresh) and ready to start your own dental practice. The first big question you need to answer is, "Should you buy an existing dental practice or start from scratch?" There are several advantages to both options, so ultimately, the decision of whether you should buy an existing practice or start from scratch is up to you! Considering the benefits to both sides of the coin will make it easier to make a decision about which style best fits your needs.
Buying an existing dental practice has several clear benefits--not the least of which is the fact that by buying a dental practice that has been in the community for some time, you're likely to inherit a wide patient base who are more likely to stay with you then to leave for a new dentist. Purchasing an existing practice will also:
Allow you to start working with an experienced staff. When you buy an existing practice, you'll typically get the staff along with it: the receptionists, hygienists, and others who help keep the practice running efficiently. Not only do they already know what they're doing, which means that the only adjustment to the job will be getting used to you, they also work well with each other and know how to handle situations that might arise.
Let you take a look at the profit and loss sheet before you buy the dental clinic. While your numbers may vary a little from last year's profit and loss statement, you'll be able to get a good look at how the dental clinic has done in the past and develop a good idea of what your profits will look like immediately after you buy the practice. This profit and loss sheet is also a great way to increase your odds of qualifying for a loan.
Improve your odds of turning a profit in the first year. If you're still paying off student loans, the sooner you're able to turn a profit, the better! Having an existing client base, rather than having to start from scratch, can substantially increase your profits in that critical first year.
Provide you with existing billing and payroll systems. This can eliminate a lot of hassle as you're adjusting to having your own practice for the first time.
Decrease the amount of time you'll have to spend getting new patients through the door. While you'll still need to expend time and effort on marketing, you can spend more time getting to know your new patients and developing a relationship with them instead of always having to think about how to get the next patient through the door.
Despite the advantages of buying an existing dental practice, there are some clear disadvantages that should be considered before purchasing an existing dental practice. If you want to buy an existing practice, make sure you think about these potential downfalls before moving forward.
Purchasing an existing practice means you purchase the former dentist's reputation. If they have a sterling reputation in the community, that can be a great advantage. On the other hand, if they have a less-than-desirable reputation, you may find yourself with a lot of people to convince that you're offering better service.
You might struggle to fit in with the existing dynamics of the staff. Any time you come into an existing group, there are established relationships that you'll have to work around and within. When you buy the practice, you get a staff that's used to working together, and you might be the awkward one in that dynamic. Depending on the personalities of the staff and their expectations of you as the dentist, it may take time for all of you to mesh into a working whole.
You might not get what you expected when you make the purchase. The dentist who's selling will prefer to present their practice in a way that will draw you in. When you enter the practice, you may find that it's not what you expected--and that can lead to its own set of struggles that, now that the practice is yours, you're stuck with.
If you don't want to purchase an existing practice--or you're not sure what to expect if you do--starting from scratch may be the way to go. This method does offer several advantages.
You'll get to develop your own business systems. That means the dental clinic will run your way, rather than running on someone else's idea of how it should be.
You'll learn important lessons during those early years of doing business that will help improve your long-term success. Some lessons are best learned by living through them, and starting your own practice is a great way to do exactly that.
You get to make all of the choices. You'll choose your own business name, location, design the layout, and choose the equipment that you want to use. You'll hand-select the staff that you want for your new practice, rather than inheriting staff members that you might not get along with long-term. Everything will be according to your choice, rather than fitting someone else's expectations.
The freedom offered when you start from scratch is great, but like anything else, there are downsides. If you're ready to jump in and start your practice, make sure you consider:
The cost. It can take as much as two years for you to start turning enough of a profit to pay back those dental practice loans and paying yourself, which can lead to high levels of stress during the early years of your practice.
The marketing. When you start from scratch, you'll have to spend a lot of your time growing the dental practice. You won't have an existing client base, so you'll have to grow your business on your own.
The effort. You'll need to make staffing decisions, purchasing decisions, and more. The effort of starting from scratch can be astronomical, leading to a lot of late nights.
The staff. Even if you're running on an extremely tight budget at first, you need a high-quality, experienced receptionist to keep everything running smoothly. This is one area where you can't afford to scrimp!
The risk. There's always a large financial risk with a start-up, many of which fail due to under-funding. If you're planning to start from scratch, it's important that you have sufficient capital to invest. Many of our clients work elsewhere while they build their own practice.
Whether you choose to start a new practice from scratch or purchase an existing practice, setting out on your own for the first time is an adventure, as you will learn valuable lessons along the way. Making the right decision for you is personal and will depend on your financial situation and your needs. By carefully considering the advantages and disadvantages of each position, you significantly improve your odds of making the choice that's right for you, and your future practice.
At Dental & Medical Counsel, we provide access to a dental lawyer who can work with you during the process and ensure that all factors have been carefully considered. A dental attorney can take a look at your situation, review your options, and make sure you do not overlook anything important. If you would like to learn more about how we can help you, contact us today to speak to a member of our team.
Frequently Asked Questions
Q: What are the main benefits of buying an existing dental practice?
A: Buying an existing practice offers immediate benefits such as an established patient base, experienced staff, existing operational systems, and a clearer financial picture through existing records. This can lead to quicker profitability and easier loan acquisition.
Q: What are the drawbacks of purchasing an existing dental practice?
A: The main challenges include inheriting the previous owner's reputation, which might not always be positive, potential staff dynamics issues as you integrate into an established team, and the possibility of the practice not meeting your expectations based on the seller’s representations.
Q: What are the advantages of starting a dental practice from scratch?
A: Starting fresh allows you to create and implement your own business systems and processes, tailor your practice to your vision, handpick your staff, and potentially learn valuable business management lessons that are integral for long-term success.
Q: What are the challenges of starting a dental practice from scratch?
A: The initial years can be financially and physically demanding with significant investments required in marketing, staffing, and operations without the guarantee of immediate profits. There's also a higher risk factor involved, as all aspects from client acquisition to system implementations need to be handled from the ground up.
Q: How can I decide which option is better for me?
A: Consider your financial situation, tolerance for risk, desire for control, and readiness to handle the challenges of starting a business. Evaluating your long-term professional goals and personal preferences in practice management can also guide your decision.
Q: Should I consult a professional before making a decision?
A: Yes, consulting with a dental attorney or a business advisor who understands the dental industry can provide critical insights. They can help evaluate potential practices, review legal documents, and ensure that all financial and operational aspects are thoroughly considered.
Q: How can a dental lawyer help if I decide to buy an existing practice or start one from scratch?
A: A dental lawyer will assist in contract review, negotiations, compliance checks, and provide legal guidance throughout the purchase or establishment of your practice. They ensure that your investment is protected and that you are fully informed of your legal obligations and rights.
Q: What should I consider about the location when starting or buying a dental practice?
A: For both starting anew or buying an existing practice, the location plays a crucial role in potential success. Consider factors like local competition, demographic suitability, accessibility for patients, and economic stability of the area.
Q: How long does it typically take to become profitable when starting a new dental practice?
A: It can vary widely, but typically, it might take up to two years to start seeing a profit from a new dental practice. This period can be shorter if buying an existing practice with a solid patient base and established operational systems.
At Dental & Medical Counsel, we've been instrumental in realizing the practice goals of countless dentists. Whether you're looking to purchase, launch, or sell a dental practice, our expertise is your guide. Beyond the initial stages, we're committed to ensuring your dental practice remains legally compliant.
We provide comprehensive support, including employment law protections, dental contract reviews, and assistance with dental employment agreements. Additionally, we specialize in incorporating dental practices and securing trademarks. And for long-term planning, our services extend to helping dentists with succession and estate planning. Trust us to be your partner in every step of your dental practice journey.
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About Ali Oromchian, Esq.
Your Dental Lawyer
Ali Oromchian, JD, LL.M., is a leading legal authority in dental law and the founding attorney of Dental & Medical Counsel, PC, with over two decades of experience. His deep connection to dentistry comes from his wife's nearly two-decade-long career as a pediatric dentist.
This personal insight fuels his dedication to empowering dentists to navigate their legal challenges and achieve their practice goals. In doing so, Ali has helped thousands of doctors open their practices while maintaining legal compliance.
Ali is frequently quoted and contributes articles to dental publications, including the California Dental Society, Progressive Dentist, Progressive Orthodontists, Dentistry Today, Dentaltown, and The New Dentist magazines, further showcasing his commitment to the dental community.
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