After spending some time building up your skills as an associate, you may feel you are ready for your next career move of buying or starting up a dental practice. One major question faced by many dentists in this area, is whether to start a new practice from scratch or if it makes more sense to purchase an existing practice. As a dental professional, deciding if you will buy or start up a new dental practice could be a potentially life-changing decision, so it is vital to consider all the factors.
Why Think About Starting a Dental Practice?
Some dentists have a very clear vision of the kind of practice they wish to own and will find it easier to start from scratch than to try to shape someone else’s idea to match their own. As a dental practitioner, starting your own practice will give you the freedom to put business systems in place that suit you, rather than inheriting someone else’s systems that you may not understand or like. In terms of financing, the startup costs may also be less than buying goodwill of an existing practice and you will, if successful, create a valuable asset in terms of the goodwill that you create. All of these are things that you will need to consider as part of your business plan.
What are the Potential Pitfalls of Starting up a Practice?
Most dentists, even associates with several years’ experience will lack vital knowledge about the business side of a practice. This could leave you open to making expensive mistakes while trying to build up the practice and the revenue, a potentially heavy price to pay. Setting up a practice involves a substantial investment in overheads and it can take a lot of time. You will need to identify a suitable property in the correct area and obtain planning permission, while refurbishment of the interior can be very costly.
Starting a practice from scratch is likely to mean your revenue will be considerably less during the first few years as opposed to buying an established business. You will need to estimate the number of new patients, so you can forecast your cash flow. A brand-new practice will not have any existing goodwill, so it is necessary to market it to potential patients.
Why Think About Buying an Existing Practice?
There are several factors that can make buying a well-established dental practice an attractive proposition. We have outlined just some of the things you should consider when looking at a dental clinic for sale, well before you sign any contracts.
It really is about more than just price when considering buying a dental practice. One of the major benefits of buying a dental practice is that an established practice will be able to generate revenue as soon as you acquire it. This will allow you to support the practice outgoings, salaries and your personal expenses. By purchasing something that is a known quantity, you will be able to budget more effectively.
You will inherit an existing patient base which will bring in a predictable income as identified during the due diligence process. There will be less need to immediately spend money on marketing a brand-new practice.
- Having an established cash flow can help accelerate your income and the growth of the practice compared to starting up a practice. All of this can save you a lot of time.
- Existing patients will already be familiar with your staff. Staff retention can be enormously valuable, particularly if they have been with the practice for many years and have built up a good rapport with patients and their families.
- If the dental professional selling has had a successful business, when you buy that practice you will also be buying its goodwill which can help with patient retention. Although some patients may leave, many will give you a chance to prove you can provide the dental care they require.
- Lenders will be comforted by the knowledge that you are acquiring a business with an established income.
What are the Potential Disadvantages of Purchasing an Existing Dental Clinic for Sale?
Buying a dental practice that has been started by another dentist can bring about certain inconveniences. As a prospective buyer, being aware of these factors can help you decide if these will bother you or if they are relatively easy to overcome. It’s important to consider these well before you even think about signing any contracts or agreements.
If you buy a dental practice that is well-established, it will have been built on the previous dental business owner’s philosophy and their way of doing things. Every system that is in place will have been implemented by them and may not be to your liking. This includes staff training, treatment planning and the way patient records are organised. As you will be aware, running a successful practice involves more than dentistry alone.
There is no guarantee you will be able to retain staff or patients. People can and do leave or move on. Some staff and patients may be very loyal to the previous business owner and might prefer to leave.
By investigating both possibilities, you should be able to make the right decision whether to buy or start a dental practice. If you do find a suitable dental clinic for sale, it is important to make sure you employ specialist dental solicitors. They will be able to advise you on how to protect your investment such as ensuring there are anti-competition restrictions against the seller, transfering employee contracts to you, etc. The regulations governing the operation and sale of dental practices are extremely complex. Employing a solicitor who does not understand the dental industry could prove costly and may delay your dental practice acquisition.
This is where Goodman Grant solicitors can help you. Our guide, 18 Critical Steps When Buying a Dental Practice is available for download and will help ensure buying a dental practice is as smooth and as problem-free as possible. Our expert legal advice will guide you through the entire process, protecting your interests and making sure you step into an established practice and “hit the floor running” nce the dental practice purchase agreement is completed.
If you are considering purchasing or setting up a dental practice, then please contact Goodman Grant Solicitors to find out how we can help you realise your dream.