To Buy a Practice or Start One From Scratch

Owning your own business may seem intimidating for many of you, but for the majority of dentists, this is a reality. For many Americans it is part of living the American Dream, and for most dentists it becomes a primary goal of their career. Some will choose to jump right into practice ownership, while others prefer to continue their education or work as an associate dentist prior to assuming the risk and responsibility of owning their own practice. Just as the situation may differ, so do the new dentists. Some doctors hit the ground running, while others will struggle, languishing under a lack of confidence and immature clinical or people skills. Some will share the same concerns: Am I good enough? Am I fast enough? Will I be able to tackle the business side of the practice? Your own level of confidence in your skills and abilities is probably the best indicator. If you feel that buying a practice is right for you, keep these three things in mind:

1. First, you must be committed. It is time to sink or swim. For most dentists, this “back-against-the-wall” mentality acts as a motivator. For others, it paralyzes them with fear. If you feel fear taking over, you may want to reconsider. You will be stepping into a role of management and leadership. Confidence–not arrogance–is important in your success. Your staff and patients will sense your level of comfort and confidence.
    
2. Second, one of the big advantages of buying an existing practice is that it will likely come with an experienced staff. If you trust them and treat them right, they will not only take care of the business aspects of the practice for you, but they will also show you the ropes.
    
3. Third, keep in mind that your attitude will contribute more to your success than virtually anything else. Knowledge and skills can always be gained and improved through continuing education, but only if you have the proper attitude. Patients will not “care how much you know, until they know how much you care.” Likewise, staff will only do for you the very minimum they need to keep their jobs, unless they feel you respect and appreciate them.

The most attractive feature of purchasing an existing practice is the immediate patient flow and cash flow. In addition, the overall potential for earnings is much higher for practice owners than for associates. Like a start-up there is associated risk, of course, but with risk comes reward.  On the other hand, there are not always practices available for purchase in the exact area you want to live. Likewise, the practice may not be the “ideal” practice you had envisioned or hoped for. Buying a practice may mean choosing from what is available, which may not be precisely what you want. That being said, do not underestimate the ability to take the practice and make it what you want it to be.

Starting a practice from scratch may be your best or only option. In areas experiencing high population growth you may not see the value in paying for the “goodwill” associated with an established patient base when you could easily attract and retain patients on your own. The key to success is found in your approach. Too many practice start-ups fail due to poor planning and overspending.

1. First of all, be sure to do your homework. Research the demographics of the area(s) you are interested in. Begin by looking at the dentist-to-population ratio, considering population growth, and taking into account office space availability, exposure and rental rates. Hire a professional to do this for you, if you are not sure how. In addition, make sure your real estate agent is familiar with your needs as a dentist when negotiating space requirements. You should always have legal council to review purchase or lease agreements.
    
2. Second, be smart about how you build the practice. Choose lenders, architects, contractors and equipment specialists wisely.  Don’t just go with the first person referred your way. Interview each specialist and compare services and fees. You don’t need to spend tons of money on high-end material or equipment to bring patients through the door. You can have a very nice office without overspending.
    
3. Third, you should think just as strategically about your marketing plan as you do about the color of your counter-tops and walls. Bottom line – stay on a budget. The ability to attract and retain new patients will make or break the practice. There is more to marketing than just direct mailers and directory ads. You should formulate an external marketing plan that includes more than just printed forms of advertising. Be creative; use the community, schools, churches and internet. Your internal marking strategy is just as important as your external. It doesn't do you any good to spend $30k a year on mailers just to see patients go out the back door as fast as they come in the front.

Last but not least - starting a practice from scratch is a great opportunity to get practice systems set up correctly the first time. If you don’t know how the front office runs, make sure to get some training yourself. You will be thankful you did.