You’ve worked hard to get where you are. You’ve put in the long hours, made the sacrifices, and achieved the professional goals you set for yourself. But now you’re faced with a decision that could change everything: should you buy a dental practice?
There’s no easy answer, and there’s a lot at stake. On the one hand, owning your own business can be very gratifying. You’ll have the freedom to set your own hours, build your own clientele, and be your own boss. On the other hand, it’s a lot of work. You’ll be responsible for all the practice’s day-to-day operations, from scheduling appointments to managing finances. And if something goes wrong, you’ll be the one who has to deal with the consequences.
So what’s the right decision for you? Only you can answer that question. But, if you have decided to take the plunge and purchase your own dental practice, here are eight recommendations to help ensure your purchase is successful.
1. YOU’VE DECIDED YOU WANT TO PURCHASE A PRACTICE. NOW WHAT?
If you’re looking to buy a dental practice, one of the first questions you’ll need to answer is how much you’re willing to spend. This decision will be based on several factors, including the type of practice you’re interested in, your financial situation, and the assets that come with the practice or that will be needed. Location is also a key factor to consider, as it can impact the cost of insurance, taxes, utilities, and more. Generally, practices in big cities will be more expensive than those in smaller towns. Ultimately, the best way to determine how much to spend on a dental practice is to consult with a financial advisor and/or an experienced dental practice broker. They can help you assess your options and make a decision that’s right for you.
2. ASSEMBLE A TEAM OF ADVISORS
When considering purchasing a business, it’s important to resist the temptation to go it alone. While you may be tempted to save money by doing everything yourself, this could end up costing you more in the long run. Instead, make sure to work with experienced and competent advisors. At a minimum, you should retain an accountant and a lawyer. An accountant will help you determine that you are getting what you’re paying for and that the seller’s purchase price is justifiable. A lawyer will be required to prepare and negotiate the purchase documents and will also conduct extensive due diligence of the practice to ensure that you’re not taking on unnecessary risks. By working with experienced professionals, you can help ensure that your purchase is successful.
3. DO YOUR DUE DILIGENCE
When you’re buying a business, it’s important to do your due diligence to ensure that you’re getting what you’re paying for. This process will vary depending on the type of business you’re acquiring, but should always include a review of the business’s financial statements, contracts, and legal documents. You should also speak to the business’s employees, customers, and vendors to get a better understanding of the business’s operations. By taking the time to do your due diligence, you can help ensure that you’re making a sound investment.
Some of the factors that you (along with your advisors) should review in evaluating the acquisition of a potential dental practice include:
- The corporate and financial structure of the practice;
- Finances of the practice;
- Tax history and tax returns of practice;
- Analysis of practice patient and treatment information;
- Appraisal of practice location; and
- Appraisal and review of equipment of practice.
You will also want to have a business lawyer review the practice’s contracts and legal documents to ensure everything is in order.
4. DETERMINE WHAT YOU ARE BUYING
When deciding whether to buy the shares of an existing dental professional corporation (DPC) or the assets of a practice, there are a number of important factors to consider. First and foremost, it is important to understand the difference between the two options. When purchasing the shares of a DPC, you are effectively buying the business itself, including all of its assets and liabilities. On the other hand, when purchasing the assets of a practice, you are acquiring only the physical components of the business – such as dental equipment and inventory – and not its debts or other liabilities. Whether you buy the assets or the shares of the DPC may have tax consequences for you and may also impact the purchase price that you will need to pay for the practice.
Ultimately, there is no right or wrong answer when deciding whether to buy shares or assets – it depends on your individual circumstances and goals. However, it is important to consult with a qualified accountant or lawyer before making any decisions to ensure you make the right decision for your particular situation.
5. GET TO KNOW THE STAFF
A well-functioning staff is essential to the success of any dental practice. The staff plays a crucial role in determining the patient’s experience. A staff that is professional, polite, and able to communicate effectively will leave a lasting positive impression on your patients. Conversely, a poorly managed and trained team can negatively affect the practice’s profitability.
If any problems exist with the staff, it is important to act quickly to correct them after you’ve acquired the practice. Leadership by you is key to ensuring that the patients receive the kind of care that will keep them returning. By taking decisive action to address any issues with the staff, you can create a positive environment that will benefit both the patients and the bottom line.
6. INVEST IN MARKETING
To maintain profitability, a successful dental practice must have a steady stream of new patients. There are a number of ways to market a dental practice, including online marketing, print advertising, and word-of-mouth. In order to attract new patients, it is important to identify your target market and craft a marketing message that resonates with them. You should also consider offering special promotions or discounts to new patients to encourage them to give your practice a try. By investing in marketing, you can help ensure that your practice is visible to potential patients and that you are able to attract the business you need to be successful.
7. REVIEW THE LEASE
If you are considering purchasing a dental practice located in leased space, it is important to review the lease terms before going ahead with the acquisition. The length of the lease, the rental rate, and any options to renew or extend the lease should all be considered when evaluating the purchase. It is also important to ensure that the space meets your business needs and that you can make any necessary renovations or modifications. By thoroughly reviewing the lease, you can avoid any unpleasant surprises down the road.
8. HAVE A SOLID TRANSITION PLAN
Once you’ve purchased the practice, you need to ensure that the practice continues to thrive. To do that, you need to work with the seller to put together a rock-solid transition plan. A few steps that you should consider taking include sending an introductory letter prepared by the buyer and the seller to the patients of the practice informing them of the sale, maintaining employment of key staff members with whom the patients are familiar until they become accustomed to new ownership, retaining the seller as an associate of the practice for several months after closing, thereby allowing the seller to introduce patients to the buyer gradually over that time period, and being proactive in creating relationships with patients. Taking these steps will help to ensure a smooth transition and will help to maintain patient loyalty during and after the ownership change.
If you’re like most dentists, the idea of owning your own dental practice is very appealing. It offers the potential for greater income and control over your career. But making the decision to purchase a dental practice is a big one – and it’s important to do your homework first.
Making the decision to purchase a dental practice is a big one. But if you do your homework and follow these key tips, you can set yourself up for success. By taking the time to understand the business, doing your due diligence, and having a solid transition plan in place, you can take over a thriving practice that will provide you with a great return on your investment. At Beganyi Professional Corporation, we have extensive experience in helping dentists successfully purchase and sell their practices. So whether you’re a first-time buyer or a seasoned dental operator, if you require legal assistance with your next dental acquisition or sale, please contact us for a free consultation to discuss how we may be able to assist you.