Do you want to buy an existing dental practice?
Whether you just got out of dental school or you’re looking to expand your practice to a new location, buying a dental practice might be the right path for you.
But before you do, you need to understand what to look for when evaluating dental practices for purchase, as well as the pros and cons. You also need to know the essential steps to take to ensure a smooth sales process.
In this article, we will discuss the pros and cons of buying a dental practice and go over some tips on how to ensure a successful purchase.
There are a couple of good reasons why you should buy a dental practice as well as some potential risks you should know about.
Here are some of the benefits of buying an existing practice:
Below are the downsides:
Before you buy an existing dental practice, ask for advice from industry experts.
Here’s a list of key experts you’ll want to consult before deciding to buy an existing practice:
Most terms range from five to 15 years. Depending on your goals, think about how long you’d like your term to be.
Usually, dentists prefer a longer term because it has minimal impact on cash flow. Plus, it gives you the ability to invest more of your revenue into growing your practice.
Keep your loan plan for a minimum of five years and consider a loan plan with flexible payment options. Depending on the lender, some offer six to 12 months of interest-only payments.
Think long-term. The more you can grow your practice the more you can increase your cash flow and the more you can make additional principal payments.
It’s also important to consider your loan’s interest rate. Rates can be fixed or flexible with a prime rate. It's smart to lock in a fixed rate today for the next seven to 15 years than going for an adjustable rate.
Although your payment now may be lower with an adjustable rate in the future it will eventually rise. So, you might end up paying more.
Acquiring a dental practice is not easy. To ensure a successful acquisition and smooth transition, it’s important to lean on your beliefs and experience to help you decide which practice is right for you.
If you already have a practice in mind, ask yourself the following questions:
The more you know about the practice you want to acquire, the better.
There are different types of acquisitions you can choose from, including the following:
More often than not, there’s a difference between what a seller believes their practice is worth and what you feel it's worth.
It’s best to determine the market value of the practice you want to acquire. Usually, they sell for 70% to 90% of their last year’s revenue.
Specialty practices, on the other hand, sell for less because of unpredictability when it comes to the sources of referral.
However, some sellers put sentimental value to their practice. Put yourself in their shoes and imagine it being their key connection to the community and livelihood for many years.
Think about how they have patients who are the children or even grandchildren of their patients.
Maybe you and the seller can meet in the middle and agree on a reasonable price.
Whether the previous owner stays during post-sale or leaves right away, never rush the transition period.
Take a slow approach to change. Take the time to understand their existing system and processes so you can identify areas to optimize and best practices to keep.
This will also better inform your plan on how to upgrade the practice you’ve acquired.
During this time, the practice’s existing patients may go through some form of anxiety because they lost their trusted dentist.
It’s very important to maintain familiar faces and continue some of the traditions for the sake of familiarity.
It's also important to make it clear to the practice's existing patients that they're under your care now.
However, assure them that although they're under your care now, you will strive to provide the quality care they’ve been provided before – or even better.
Be open to questions and allow patients to reach out to you via email, phone, or a customer feedback form at your clinic.
This will prevent any confusion and keep existing patients from leaving.
After successfully buying a dental practice, the next step you need to take is to create a robust marketing strategy that will help you attract new patients!
It’s best to partner with digital marketing experts who specialize in helping small dental practices achieve business goals and expand.
At Digital Resource, our digital marketing specialists and SEO experts will work with you to create a custom dental marketing strategy that will put your practice ahead of your competitors and attract more new patients to grow your practice.
Contact us today to know how we can make this possible!