Starting a dental practice from the ground up can be a daunting yet exciting ride for many doctors. While it’s not the easiest path to ownership, there are situations where start-ups just make sense, and it may be the best route for you and your goals.
“Whether you want to do a start-up practice or acquire an existing practice, the end goal is always the same: practice ownership,” Partner Charles Loretto said. “Start-ups require a considerable amount of time, effort and money, but there are cases where it is the best option.”
Because a start-up is very different than an acquisition, the process calls for a particular set of tasks to get the business up and running smoothly. One of the most Important things is getting started on the right foot.
Ensure This is the Path for You
The first step may be a long one: discerning if this is the right decision for you. A start-up can be a significant financial risk, especially when it may take a long period of time to generate revenue, so having a clear understanding of your goals as well as your personal and financial situation will lead you towards your decision.
You could be a recent graduate with an entrepreneurial spirit. You may lack options for acquisition in your desired location. Or maybe you’ve been practicing dentistry for a few years, and you want to take a different route because of how things are going. Some circumstances justify the start-up route, making it a viable option for aspiring practice owners.
There are also factors that could help reduce your risk and make a start-up sound more appealing. Some examples of these factors are low personal debt, high spousal income or a great need for the specific type of practice in the area.
If a pediatric doctor is considering a start-up, and their spouse is an orthodontist, this is a desirable situation for a start-up pediatric dental office. Because of the high-income potential from both doctors and the unique referral ability between pediatric dentists and orthodontists, this strong combination of factors would help reduce the financial risk.
It’s also a good idea to talk to other colleagues or peers who have gone through the experience. Having a better understanding of the process upfront may alleviate some fears and doubts. You can listen to real experiences on NDP’s Transition Talk Podcast and Cain Watters & Associates’ Accumulating Wealth Podcast.
Before you move forward with your start-up, take a look at your story and situation, and feel certain you’re ready to tackle the road ahead. If you’re stuck at a fork and unsure of which path to take, a coaching call with a dental transition advisor can offer clarity.
With Experience, Comes Confidence
The process of starting up a dental practice is a full-time job in itself. That’s why by the time you decide you’re all in, ensure you have the clinical experience to fit the bill.
Gain that experience as an associate before you start working on your start-up’s business logistics. You can also continue to work part-time while you build your practice. The objective is to grow your clinical speed and efficiency and most of all, feel confident in your skills.
Start Patient Acquisition Immediately
While acquiring a practice reaps the benefit of already having existing patients and cash flow, a start-up practice begins with an empty patient list. One of your primary objectives will be to get patients in the door to generate that much desired revenue and then convert those new patients into active ones.
For a general practice, 40 new patients per month is the ideal goal. In order to get started, think about your marketing strategy early on.
Even before you find your location and really start moving in the process, have your marketing team or a practice management consultant in place so they can provide input, crafting a practice that’s attractive to new patients.
When you start, you will lack the patient base you need to support a big office. As such, building a massive office with premium finishes for the ribbon cutting shouldn’t be your highest priority.
A better strategy is to leave room for growth, where you can add more operatories, make renovations, expand your hygiene department or get an associate in the future. You don’t need to start off with the best office and equipment to build your patient base.
X Marks the Spot: Finding Your Location
Finding the right location for your start-up dental practice is not just about looking for a “for lease” sign in a medical or dental commercial area.
It’s about being in the area that fits your life and future, understanding the patient demographics and recognizing the competition, like similar dental practices, that surround you. Organizations like Dentagraphics can be a beneficial resource as they provide the latest data surrounding the demographics, competition and overall feasibility of the marketplace.
Looking at multiple location aspects while also being mindful of the big picture can help map out the ideal spot for your practice.
Build Your Dental-Focused Team
This isn’t a road you have to travel alone. As you begin to build your team of specialists and individuals who can assist you with the business logistics, look for people who have robust experience in dentistry. This industry is unique, so you want to make sure you have teammates that live and breathe it.
While there are many types of individuals who can help you along the way, here are a few important ones to consider and their respective advantages.
- Practice Management Consultant: This individual can help the practice grow in areas such as new patient flow, marketing, office systems and billing.
- General Contractor and Architect: A general contractor and architect focuses on the designing, planning and facilitating of the construction project for your practice.
- Demographic Research Consultant: As mentioned earlier, organizations like Dentagraphics can help pinpoint a location for your practice by providing data on demographics and competition.
- Marketing: Dedicated marketing professionals can be beneficial for content-based marketing, SEO, website design and other strategies that can put your practice in a favorable light.
- Lawyer: Lawyers are often brought in to assist with items such as complicated leases, specific clauses and renewal and exit plans.
- Financial Services: To achieve your financial goals, a firm like Cain Watters & Associates, who offers services in financial planning, taxes, investments and accounting, can help keep you on track with your plan.
- Banks/Lending: Banks can set realistic expectations for your loan considerations and help you understand the requirements for loans specific to start-up practices. By talking to and obtaining quotes from dental-specific lenders rather than general banks, you can increase your chances of being approved for loans.
- Dental Distributor: Selecting the right distributor for equipment is certainly a major decision based on the percentage of the loan and the finish out of the space. Benco Dental can assist in this area as they provide a wide variety of dental products and equipment.
- Vendor Marketplace: If you’re struggling to find the best vendors that fit your needs, Elite Dental Alliance can provide a vetted list of products and services at favorable prices.
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There are numerous moving pieces when it comes to start-up dental practices. It can be daunting when you are beginning the process. However, if you take it one step at a time, it is not only possible; it’s profitable.
NDP strives to supply clients with knowledge and tools to help them along the path to ownership. If you’re wondering what this process may look like for you and your goals, contact our team today.