Buying a dental practice can be an excellent investment since you can benefit from having existing patients, loyal employees, and a good reputation. Unlike opening a business from scratch that requires more responsibility in staffing, marketing, and increasing your client base, purchasing an already established one can kickstart your own practice without exerting too much time and effort.
Just like any other major undertaking, taking this opportunity involves risks. It can also be more stressful and complicated than expected. To increase your chances of success, here are some steps to take before buying a dental practice:
Know the financial standing of the dental practice
Buying a dental practice should help you achieve your financial goals. Unfortunately, keeping your practice viable can be challenging. Ensure that you gain significant returns on your investment by evaluating and understanding the cash flow and financial situation of the practice you are planning to purchase. Here are some financial details to take note of:
- A breakdown of employee expenses (including salaries, benefits, payroll taxes, retirement, and more)
- Balance sheets
- Income tax returns (going back at least three years)
- Percentage of revenues used for overhead
- Revenues that are broken down by procedure
- Profit and loss statements
- Fee schedule
- Production and collection reports for each staff
- Reimbursement structure, number of employees, and other financial factors
Don’t forget to ask why the dentist is selling the practice. If you discover that the outgoing dentist is losing money and their patient base is shrinking, choose another practice to buy.
Be organised with finances
If it is your first time buying a dental practice, remember that everything costs more than you initially perceived. You must record everything to ensure financial stability. Use books, a filing system, and spreadsheets. You can also hire a practice manager who understands the complexities of a dental business. This will help you see a clearer picture of your financial standing and prevent you from overextending yourself financially.
Hire professional consultants
Buying a dental practice is a big financial transaction. To help you with the due diligence, create a team that consists of a transition consultant, an accountant, and a dental lawyer. They will assist you in appraising the practice and facilitating the sale.
Your consultant will analyse the practice for you, figure out how much to offer, secure funds, and close the sale, while your accountant will advise you on tax considerations. Make sure they specialise in healthcare services so they can provide you with sound advice when it comes to buying a dental practice.
Your dental lawyer or legal team, on the other hand, will help you with the volume of regulations affecting dental practices. By working with your team, you will have a better chance of a hassle-free buying process.
Becoming a dental practice owner can be a remarkable achievement and experience. It allows you to deliver quality dental care to patients and gives you the chance to achieve your financial goals. Before buying a practice, remember and follow the steps in this guide. Hire legal professionals like us who can help you with the technicalities of the acquisition process.
Goodman Grant Solicitors is a leading law firm in the UK providing legal services to dental professionals. Our lawyers offer support and sound legal advice to clients practising dentistry, including hygienists, practice managers, corporate dental bodies, and more. Contact us today to see how we can assist you!