By: Drew Hinrichs, CPA, CEO of Engage Advisors
While many dental graduates know that eventually they want to buy their own practice, they usually don’t have a process for finding one that fits with their professional goals or personal preferences. Without a good process, you risk a bad match.
Over the years I’ve helped hundreds of dentists successfully navigate the transition into practice ownership and I’ve learned a few things along the way. Below is an overview of a three-step process I recommend for every future dental practice owner. Follow these steps for a successful outcome:
Step 1 – Start with a Vision
Take the time to think about what you want your future life to look like. Most of us have dreams for our future, but they often get lost in the endless stream of daily thoughts and activities. This initial step is meant to put those dreams front and center. They should serve as a touchstone for potentially tough choices, and in general, help you stay on course for securing a dental practice that meets your objectives. As you contemplate your future practice, there are three factors you should consider.
- Where Do You Want to Live?
In thinking about the preferred geography of your future practice, get specific. Don’t just think about the city, think about neighborhoods. Whether your vision means moving to another state, across town, or staying put, remember that it’s not just about where you’ll work. The best way to build a practice is to be part of the community where the practice is based, so we’re also talking about where you’ll live.
- What Type of Practice Do You Want?
Do you like the fee-for-service model, or do you prefer to be PPO-driven? Do you want a general practice or one with a specialty focus, such as sleep apnea treatment, implants, or pediatric dentistry? Focus on what appeals to you and trust the process. Depending on your criteria, it may take a little longer to find the right practice, but in the end, it’ll be worth it.
- What Size Practice Sounds Right?
Generally speaking, a smaller practice has collections under $600,000, an average-sized practice has collections that run from about $600,000 to $1M, and a large practice has collections over $1M. How much production are you comfortable with? Production relates to things like the number of employees you supervise and the number of patients per day, so think about how you like to work, what suits your style, and how busy you want to be.
This first step creates filters that will save you time by streamlining your search. It allows you to quickly rule out practices that don’t meet your criteria and focus on prospects that better align with your objectives.
Step 2 – Start Networking
Now that you know what you’re looking for, you need to track down practices that fit the bill, and the best way to do that is by talking to people. Get involved in professional associations, visit with the dental supply reps, find time to chat with other dentists and hygienists. The more people who know what you’re looking for, the better chance you have of finding a practice that’s a good match.
Step 3 - Build Your Team
Even before you find a practice, you can start putting together the team you’ll need to execute a deal, which includes a dental CPA, a banker, a broker, and an attorney. If you have a banker or CPA you like, they should be able to help you find the other experts you’ll need. You may be tempted to try and swing the deal without a complete team, but I would advise against it. You will need all the experience these professionals bring to the table because when you’re buying a business, the devil is in the details. Having a knowledgeable team of advocates who can help you avoid common pitfalls is the best way to ensure a successful transition to ownership.
If you’re thinking about buying a dental practice, schedule a call with our team at Engage Advisors. We’re happy to answer your questions and provide details about our unique journey to ownership process. Let us manage the details that will make your dental practice ownership a success.