You need to take many steps when starting your dental practice. From identifying the problems in the community to finding a location that suits your budget, there is a step-by-step process that can help you achieve success. Listed below are some of the most critical steps you need to take. Make sure to read the tips carefully.
Buying an existing dental practice
To purchase an existing dental practice, you need to obtain financing. Banks are more likely to approve the funding through a third-party lender. Self-financing arrangements are not as objective as a third-party appraiser. Since the sale will most likely go toward retirement funds, a bank may be a better choice. Banks will also require essential documents from the seller and buyer.
Before deciding to purchase a dental practice, evaluating its financial health and potential for professional growth is essential. A dentist selling their approach might be losing money or a declining patient base, or they may not be seeing a consistent flow of patients. To determine the financial health of the practice, contact professionals with experience financing dental practices. They can review financial records and compare the practice to national benchmarks. For example, if the practice’s debt is more than 40 percent of gross receipts, it might not be a good investment. A national average is closer to 20 percent.
While purchasing an existing dental practice may save money, the process can be stressful. Therefore, it is essential to consult with people who have previously purchased a dental practice during the purchase process. These individuals can share their expertise and provide helpful advice. Also, it is advisable to consult a financial planner who can draw up a budget for the dental practice, considering all possible line items and expenses.
Creating a business plan
When creating a business plan for starting a dental office, consider the types of customers you’ll be serving. For example, children and adults would likely respond differently to a particular atmosphere or product. For this reason, it’s essential to break down your customers based on their psychographic or demographic profiles. In addition to the general age and gender of your target market, consider the location, income, and other factors that affect the demographics of your practice. While most dental practices serve the same city, you can find demographic data from government websites and local directories.
Regardless of the type of dental practice, a business plan should include financial information and projections. A financial section should analyze how the practice will operate and the expected financial results. The program should also discuss the effects of seasonality, the economy, and the competition. Finally, the operations section should detail how your dental practice will operate daily.
Getting financing when starting a dental practice is vital if you are hoping to open a successful practice. While dentists are considered to have little risk of defaulting on their loan payments, they must meet specific requirements to get approved. A dentist with a credit score in the mid to high-600s will likely get the best terms for a dental practice loan. Lower credit scores may also be approved but at higher interest rates.
A typical dental practice loan includes financing for the purchase of the practice and working capital. For example, a $75,000 loan from Bank of America has $25,000 toward practice management education. However, a dentist aiming to increase their business education could receive a $100,000 loan. They will use the balance of the loan for construction. Bank of America has been helping dentists reach their goals since 1996. Bank of America is a trusted lender for dentists and has a dedicated dental practice lending group.
Choosing a location
There are many factors to consider when choosing a location for your dental practice:
- Consider how you want to position yourself in the community. A dental practice in a commercial center is likely to have more exposure than solo practice.
- You’ll have more control over your signage and address.
- It can attract patients who might not be familiar with the dentist.
Depending on the size of the dental practice, you can also choose a medical or shopping center location.
A dental practice in a high-traffic area is ideal, as it will draw patients from the surrounding area. It should also be visible from the street. A location that’s hard to find might discourage patients from visiting your dental practice. A prominent sign is also a must. Signage can draw potential patients to your routine and bring in more patients. In addition, a good location will be convenient for internal staff and customers.