The purchase of a dental practice can be considered one of the greatest achievements in the career of dentists. One of the main choices here is between an existing dental practice acquisition and establishing a new dental clinic from scratch. Each of these possibilities has its benefits, but the costs involved in their implementation differ drastically. This information should be useful to a dentist when deciding which way to go.
Dental Practice Acquisition: A Brief Overview
Acquiring a dental practice would entail buying a functioning dental clinic that has a baseline of patients, a dental team, and equipment at the very least. A good number of dentists who decide on dental practice acquisition view it as a way to not only secure production from day one but also ensure running their business without many disruptions. Key aspects for dentists who plan to buy a dental practice include understanding how well the patients stay, how much income the clinic makes annually, where the office is located, and the condition of the equipment. One of the advantages of dental practice acquisition over setting up a completely new office is the possibility for owners to have a smoother and faster launch of their ownership.
Starting a New Dental Office
Beginning an independent dental practice provides dentists the opportunity to develop branding, office layout, hire employees, and purchase equipment without any prior restrictions. The challenges of starting a new practice can require extra funding for set-up costs and provide a greater risk than dental practice acquisition, a larger patient base. Since there is no established patient base, the owner will need to heavily invest in marketing and community outreach to promote the practice; therefore, revenue may take longer to build than if you had purchased an existing practice.
Comparison of Startup Expenses
One of the most significant differences between these two methods is the startup expenses. Starting an office would entail costs such as:
- Construction/renovation of office space
- Dental chair and equipment installation
- Systems and software technology
- Permits and licenses
- Employment of staff
- Advertising/marketing
It will cost money to start up the practice until it starts making consistent income. Buying a dental practice can save you from paying some of these expenses since the office already has the necessary equipment, workforce, and systems installed. However, you might require doing renovations and upgrading the office’s technology systems. This makes buying a dental practice less expensive compared to opening a new office. Due to this reason, many banks have dental loan services specifically meant for dental practice acquisition.
Financing Requirements
Another big difference between buying a dental office and starting your own is how you pay for the business. Lenders tend to be more comfortable with dental practice acquisitions since the businesses have been generating income and have patient records. The continuation of cash flow is a less risky factor to lenders, so it might give you a better shot of getting your loan approved. Lots of banks have special terms for dental practice acquisition loans that are tailored to healthcare professionals. Getting financing for a new office could be more difficult, as there won’t be any records of the business operations. Dentists might need to prove excellent credit, have substantial savings, or present a well-thought-out business plan in order to obtain funding.
Patient Acquisition and Cash Flow
The benefits of acquiring a dental practice include gaining immediate access to an existing patient roster, as well as established recurring appointments and treatments that provide predictable cash flow immediately upon acquisition. Having that financing from the start allows the dentist to focus on improving their care and services and growing their practice. On the other hand, a new dental office must establish its credibility before bringing in consistent patients. Marketing costs for a new practice can often be greater for the first couple of years as they attempt to gain enough patients and revenue to support themselves. If you are looking for a way to create a predictable income as a dentist, a dental practice acquisition would likely result in less financial risk than starting a new dental office.
Equipment and Operations
A well-established office has equipment in working condition, personnel trained in using such equipment, and operational systems already set up. But dentists who are planning to purchase a dental office should check on the condition of the equipment and see if any upgrading is required. Establishing a new office means that dentists can incorporate the latest technology into their practices right from the beginning.
Conclusion
The decision to opt for either acquiring a dental practice or setting up a new dental office can only be based on one’s objectives and ability to invest, as well as how much risk one is willing to take. Dental practice acquisition allows you to get an already established customer base and consistent income. However, if you choose the second option, then know that it will allow you the most freedom and full control, but you have to spend more money in the beginning, and you will also need to devote many hours before becoming profitable.