Buying a dental practice is one of the most important decisions a dentist will make throughout his or her career. However, many new dentists and dentists graduating from dental school are unsure about the best time to buy their first practice. Our goal is to make sure you make the right decision at the right time.

While many factors influence this decision, buying a practice as soon as possible offers financial and business benefits. The sooner you take control of a practice, the sooner you have a positive cash flow to rely on, and more time to build the business you want to operate.

Today we’re going to dive into some of the benefits of buying your practice sooner rather than later and what you need to do to prepare for the purchase.

Financial Benefits of Owning a Practice

The financial component is usually the toughest hurdle overcome for new dentists to overcome because they are conflicted by the need to take out a loan to purchase the practice while still paying off student debt.

Get a head start on your cash flow

There is an immense difference between the salary of the practice owner and an associate. So even if you are worried about the additional loan on top of any student debt, the cash flow from the practice will help you pay off your student loans and the business loan faster than if you prolong the purchase.

While you are paying off your loan, you get additional cash flow to pay for student debt, upgrades to the office, and potentially some leftover depending on how much debt you have.

This is contrasted against delaying purchasing a practice where you are potentially missing out on hundreds of thousands of dollars in income. We can help you model this out so that you can literally see the advantages of buying a practice sooner rather than later.

Optimize for the future

When you own the practice, you can optimize and increase efficiency / improve operations to make more money. Older dentists with established practices may not be inclined to push the envelope on acquiring new patients for updating equipment because they are comfortable where they are.

If you buy the practice, you probably have more energy and drive to build the business and optimize it for long-term growth.

By continuing to build the business after purchasing it, your cash flow will grow as your debt diminishes so that when your loans are paid off, you already have a profitable practice.

Make sure you’re financially prepared

While you will be taking on more debt to finance the purchase of this new practice, make sure you are financially prepared for the responsibility and that you can cover your expenses once you purchase the practice. We can work with you to help you get ready financially.

Finding the right practice

It’s important not to buy just any practice for sale. It would be best if you found a dentist whose practice is for sale that you understand and mesh with their patients. Many dentists sell their practice to help finance their retirement, and they do not want to rush the sale.

This allows you to shop around and become familiar with dentists in your area and potentially work as an associate to buy the practice, so you become familiar with the patients and ensure a smooth transition.

Make sure you are ready from a skills standpoint

You should go into the purchase completely confident in your dentist skills. You will become the office’s new dentist, so it makes sense that you are completely equipped from a skills perspective. If you want to take some time to hone your skills, consider becoming an associate of a dentist whose practice you would be interested in acquiring.

Plan ahead and buy as soon as you are ready

Buying your first dental practice can seem intimidating, but the rewards are immense. Look at your finances and make sure you are comfortable with your dental skills.

There are various deal structures available that allow you to split revenue or ownership over a set term where the original dentist will phase out and sell any remaining ownership to you when they retire. Part of our value is in helping dentists analyze deal structures.

Our goal is to help younger dentists get started on a path to financial security and connect you with a team to give you the guidance that you need to find the right practice, fund the purchase price, and execute on making smart financial decisions from the beginning. 

Please reach out if you would like assistance with making the best decision for you and your family.

Other Blogs

You Might Also Like

Why Investing Early Is the Key to Achieving Financial Goals

For long-term investors, knowing the difference between what can and cannot be controlled is the key to both financial success and peace of mind. While all investors would like to believe they can predict or even control the direction of the market, experience teaches us that this is difficult to do. Constructing and managing an appropriate portfolio, while making strategic and tactical allocations based on market opportunities, ideally with the guidance of a trusted advisor, is often the best approach. However, while following markets and maintaining perspective on the economy is important, an even more fundamental key to success is simply to start saving early, stay invested, and remain focused on long-term financial goals. What can investors do to benefit from these principles today?

Read More »
September 18, 2023 No Comments

7 Market and Economic Insights for the Second Half of 2023

Major stock market indices made significant gains in the first half of the year due to improving inflation, slowing Fed rate hikes, the absence of a recession, a more stable banking sector, and a strong rally in tech stocks. The S&P 500 has climbed 16.9% with reinvested dividends this year, while the Nasdaq and Dow have returned 32.3% and 4.9%, respectively. Markets have recovered much of their losses from last year with the S&P 500 now 7% from its all-time high.

Read More »
August 9, 2023 No Comments

General Disclosure

This presentation is not an offer or a solicitation to buy or sell securities. The information contained in this presentation has been compiled from third party sources and is believed to be reliable; however, its accuracy is not guaranteed and should not be relied upon in any way, whatsoever. This presentation may not be construed as investment advice and does not give investment recommendations. Any opinion included in this report constitutes our judgment as of the date of this report and are subject to change without notice.
 
Additional information, including management fees and expenses, is provided on our Form ADV Part 2, available upon request or at the SEC’s Investment Advisor Public Disclosure site. As with any investment strategy, there is potential for profit as well as the possibility of loss.  We do not guarantee any minimum level of investment performance or the success of any portfolio or investment strategy. All investments involve risk (the amount of which may vary significantly) and investment recommendations will not always be profitable. Past performance is not a guarantee of future results.