Dental Practice For Sale?
Things to Consider before Buying a Dental Practice
If you are in the market, looking for a dental practice for sale, congratulations! Buying a dental practice can be a life changing experience for many dentists. It is undoubtedly one of the most important career moves that dentists can make in their lives. The hardships of starting your own clinic from scratch are just too many. Not to mention you don’t have any data to know what your future will be like when you are starting from the ground up. However, a dental practice on sale means you can look into all the necessary information about the practice in order to secure your investment. If the data shows that the practice you are interested in will not be a good buy, don’t go for it.
No matter how easy it is to build a career by buying a practice as compared to starting your own, there are always some important things that need consideration before you make the purchase. Here are those important things that will serve as great pointers for you to close a deal that you won’t regret.
Strike While the Iron is Hot
The first and foremost important thing for you as a dentist is to wait for the right time before you buy a practice. If you have just completed school, it might not be the best time to go for it. Keep in mind that your medical studies have only made you a good dentist. To run a practice, you need to be a dentist as well as a businessman/businesswoman. How do you get your hands on that experience? One of the best ways to go about it is to be an associate for a couple of years. This will give you a good idea as to what “business” related factors of a practice are and how they need to be tackled. Keep in mind that your dentistry skills will come into play when you are running the practice.
When it comes to the transaction, this is all business, calculation and numbers. You will have to learn a few things to know how to find and execute the right deal. Areas where you think your knowledge is not sufficient, it is better to hire professionals for them. In the meantime, you should also work to arrange the finances for making as smooth a deal as possible.
Existing Practice Is Better Than a New One
You don’t always need to look for an existing practice to ensure success. You can also buy a practice and start things from the beginning. However, an existing practice with a solid track record is a preferred choice for experienced dentists. The deciding factor here is to value your long-term benefits against the upfront cost that will come out of your pocket. A new practice will have a smaller price tag than one that has been around for years. However, when it comes to getting back that return on your investment, the existing practice will always be a better choice. With a customer-base and established reputation, you can pay back your loans easily and while you are earning profits too.
You Don’t Have to Be Alone
Buying and running your own dental practice is a business, and you don’t have to act like a one-man army in it. Businesses can be run with partnerships, but you need to act as professional as possible to make successful partners. Going into a deal with a partner will also shift some burden off your shoulders, to the shoulders of your partners. You will not find yourself in as much financial debt as you would have if you had gone for the deal alone either. However, partnerships have their own challenges and so everything needs to be documented before you finalize the partnership.
If some friend of yours is going to be your partners, and you think your friendship is enough to become great partners, you could not be more wrong. Time, financial conditions, changing priorities, personal issues, professional jealousy etc. are only a handful of reasons that contribute to friendly partnerships ending in enmities. Walk a professional path and fully document your partnership while reaping the benefits of having another dentist and investor with you.
Dental Practice Brokers Exist
Yes, these people can be greatly helpful in your practice purchase and we just happen to work with a number of them!
These are the brokers who specifically work in the dental industry and have great options available for you that will get you the most for your money. If you don’t wish to buy a practice straight away, you can ask brokers to help you work as an associate first. While you can visit dental schools for information about practices on sale too, nothing will be more benefitting for you than getting in touch with a broker who can show you multiple options that are exactly according to your needs and budget. Rather than searching for them in your area, you can find the best brokers for dental practices on sale online.
Be very patient when it comes to choosing your dental practice brokers because a good or bad broker can make or ruin your deal for you. Look out for those online reviews about brokers to know which one is the most recommended by customers and online reviewers.
Go Deep in Practice’s Valuation
When you are looking for dental practices on sale, you will be looking at the prices of those practices. These prices reflect how the sellers have valuated their business. However, when there are multiple methods for company valuation, it is best that you inquire about how the valuation was done. A seller can do the valuation using three different methods: market comparison valuation, asset-based valuation and income-based valuation. Asset based valuation is never the best way to look at the value of a practice unless it is a new one. The best valuation is income based because it gives you more insight into the future and helps you plan your expenses based on future earnings.
Take Help from the Experts
Buying a dental practice is no easy job. You are making a huge investment and the success or failure of this investment can have an impact on your entire life. This is why it is highly recommended that you ask a professional attorney and an accountant to close the deal and for overall expertise. They can help you make the most well informed decisions and mitigate any legal issues that could blemish your smooth transaction. Your accountant can give you a clear picture of how much you will be paying as tax, what your real expenses will be and how much you will earn after fulfilling all your liabilities. Your lawyer will ensure you are at no legal disadvantage while closing the deal with your seller.
Inspect the Practice
Don’t make a decision unless you have paid a detailed visit to the practice. You want to make sure the equipment at the facility is not outdated or about to expire. If your seller has valuated the company using the asset-based valuation method, ensure the current price of the assets based on their conditions. Once again, your lawyer or attorney will help you at this stage so you don’t end up buying a practice that will cost you big time in maintenance costs. Now, while inspecting the facility it’s not just the equipment that you will check but also the entire facility as a whole.
You want to make sure that the structure is not damaged and things like cleanliness, pest control, electrical wiring etc. are also in place. It will be just like inspecting a house before you buy it because you don’t want to pay the maintenance costs out of your pocket and still buy the property at a hefty price.
Know the Existing Competition
It does not matter how good of a deal you are getting and how confident you are about your skills, competition from other practices is an external force that you cannot control. If the competition is there, it’s there, and you will have to deal with it. If you think positively, the competition in the area tells you that there is market for your business in the area. When you think professionally, you have to realize that your patients are dispersed as they have many different places to go to. You will also have to do some inspection on which other practice in the area is most influential and successful. Research and find out why a certain competitor is successful and what sets them apart.
Your competitors might have the upper hand because not only they have good services but also they might be sitting in the best locations. Sometimes, you don’t have your office in the most welcoming location. At other times, your competitors are sitting at the traffic entry points, and so people are never able to reach your office. All of this considered, with a strong digital marketing strategy and a complimentary brick and mortar marketing strategy, you can win the day!
Get Latest Documentation in Hands
Buying a dental practice is like buying any commercial property. You want to make sure that everything about the practice is in good shape. To do this you will have to ask the seller to arrange all the recent documents about any equipment lease, utility bills or legal notices. Some documents you want in your hands include but are not limited to lease agreement, practice valuation, tax return files, cash flow model, associate agreements, etc. Getting these documents in hands gives you a good idea of any possible disputes or their absence. Of course, when you have your accountant and lawyer by your side, they can make the most sense from these documents.
Things that might seem simple and straightforward to you might not be that simple after all. It is best that you let a professional attorney and accountant have a look at these documents so you don’t get any surprises later in the deal.
Inspect Online Presence of the Practice
The modern world that you are living in, no business should exist without an online presence, namely a website, social media pages and some optimization efforts so that it is found for anyone searching for your type of dentistry in the area. Think about it, employers now thoroughly inspect online social networking profiles of individuals before hiring them because their online conduct gives them a clear picture of the candidate’s reality, mindset and professionalism. You might be thinking that you should look at how good the website of the practice is and how much traffic it gets, but that’s not it. There is much more than needs your attention. You will also look at the social media presence and image of the business before you finalize the deal.
Several huge and renowned businesses around the world have lost their credibility and ended up losing it all because of the mistakes they made on social media. Make sure that the potential practice has not been involved in an online controversy on their social networking pages. In addition to that, check out the reviews given by customers on various listing and reviewing websites. If you find various negative customer reviews, this can be an orange flag which should be looked further into.
Know Customer Status in Detail
Seeing that a practice has a big customer database is not enough to know everything. You have to segregate the customers in different categories to know how the practice is benefitting from those clients and making money. You want to know the number of active customers, customers on insurance plans, customers visiting for hygiene related appointments, etc. If everything looks great, you want to inquire why the seller is selling such a profitable business. It’s important to measure the seller’s response pragmatically. They may tell you that the reason for selling is relocation or maybe they are pursuing some other goals. If according to the documents, the flow of customers has gone down in the past few months, this is a telltale sign that something may be askew in the business.
Not to mention, your seller should be clear about every piece of information he/she tells you. If you find them hiding something, it’s best not to take chances and move away from the deal. Keep in mind that insurance customers and those who come for hygienic visits are regular and repeating customers. Customers who come for dental implants, crowns or veneers are more like one-time customers. The more repeating customers a practice has the better it will be for you down the road.
Hire and Fire the Staff
It might sound harsh at first to think of firing someone, but these things have to be done for the benefit of people. First, you must know your staffing requirements in terms of not only what positions you would like filled but also what kind of people you would like to work with. If you find out that some of the people already working at the practice are not the type of people you can work with, you will have to take make your decisions about those people can or cannot uplift the practice under your new leadership. Map out a plan for terminating their services and let go of them as respectfully as possible. Sometimes, staff members can get fussy merely because they don’t want a new person dictating new systems.
If you don’t wish to fire people, then you will have to conduct a meeting and build a connection between you and the staff. The quicker the ice breaks between you and the workforce, the better it will be for the success of your dental practice.
Be Ready with a Marketing Strategy
After you have bought a dental practice, it’s time for you to put your marketing skills to test. The existing practice you have bought might not have the best marketing strategy or no marketing strategy at all. While existing customers are a great asset for any business, creating new customers through marketing is an even more important process. You need to have a sound marketing strategy in your area and online. In fact, it is best that you allocate some part of your budget for your marketing needs as you will need dental SEO professionals, web designers etc. for your dental marketing online.
SEO Process for a Dental Practice
Always Have an Exit Plan
This could sound a bit shocking in the beginning but that’s how shrewd business people operate. You cannot be a successful businessperson unless you have a sound end goal. If all businesses that start on a daily basis around the world became successful, there would be nothing but businesses all around you. The reality is that more businesses fail than succeed. However, a failed attempt at business is not as harming as keeping on with a business that’s only causing you damage. Many people who start businesses know in their hearts and from financial reports that their business is not successful.
These people continue to run the business out of emotions. You might not know now but you will understand later the emotional attachment a person has with their business. However, keeping up a business due to emotions is not wise. You must set a timeline and a deadline. If your business is not successful by the deadline you have set, it’s time to take a good, long look in the mirror and consider packing it up.
Finally and importantly, make sure to keep this list with you in writing form. No matter how good your memory is, people can forget things when finalizing their deals either due to haste, pressure or out of courtesy sometimes i.e. they don’t want to sound too nosy to the sellers. Once you have this checklist with you, it will help make your purchase a more wise and well-informed one.