Posted on Apr 22, 2013
Image Credit: © Dreamstime.com
Posted on Apr 22, 2013
Upon graduation, you may feel like you’re finished with your education. Also, you may be in a hurry to purchase a dental practice and get your career underway. Before rushing right into a dental practice purchase, here’s a “syllabus” outlining the recommended steps.
Chapter One: First and foremost, as I alluded to in the previous paragraph—slow down. Every year, there are up to two hundred dentists anxious to become buyers. Do not rush into a purchase. Most likely, it will be one of the biggest purchases of your lifetime so I recommend that you wait at least two to three years post-graduation before you seriously consider purchasing a dental practice. That doesn’t mean you can’t take steps in the meantime. Waiting simply gives you time to be involved in a practice. You can learn as much from a poorly run practice as you can from a highly successful practice (but without the personal financial risk). It also provides time for you to do the research necessary and then make an informed decision once you are ready to buy a dental practice.
Chapter Two: Decide where you want to live. This isn’t as simple as desert or mountains? Make sure you like the area, but also go the extra mile and investigate the vitality of a dental practice in these areas. What is the competition like in the area? There are studies conducted on dental practice demographics. An NAPB dental practice broker can provide you with details about specific locations and the viability of taking over a practice there.
Chapter Three: While we’re on the subject, once you’ve decided on a location, introduce yourself to and develop a relationship with a local dental practice broker. The more informed you are as a buyer, the higher the chances of making a good decision when it comes time to purchase, and a dental practice broker is equipped with years of knowledge and experience.
Chapter Four: Round out your advisory committee. Find an attorney, make sure you’re finances are squared away, and begin the process today. You may ask, “Is this necessary two to three years before I’m even planning to buy?” Absolutely. Too often, I see a doctor purchase a practice right out of school and then suffer for the next three years, learning everything about owning and running a practice that they could have learned with much less pain and frustration, (not to mention personal financial strain).
Chapter Five: Educate yourself about dental practice valuation. There is a bit of a science to valuing a dental practice. Consult with your dental practice broker to learn about particulars to look out for when buying a dental practice. What may appear to be a good buy may have other (less visible) negatives to consider before a purchase. It’s helpful to have a practice broker advising you along the way.
Chapter Six: Get your finances in order and introduce yourself to a bank associate at a bank that specializes in dental practice sales and purchases. Make sure you’ve got some capital socked away, a stellar credit score, and current employment. Finally, when you’re ready to apply for a loan—I don’t recommend small business loans; they can appear attractive, but can quickly become overpriced (especially with early payment penalties). You don’t want to be penalized later for doing well.
Chapter Seven: Become knowledgeable about practice metrics. What percentage of profit does a healthy practice allocate for staff? What about management? Lab fees? You should have a good idea of what makes sense so when you are looking into a purchase, you know when the numbers are spot-on. At the end of the day, it’s your practice. Make sure you’ve done due diligence.
Having help from an NAPB dental practice broker ensures you’ll be an educated buyer when you’re ready to purchase your dental practice. Call to set up a free consultation today.