To have your own dental practice is a dream, and one of the biggest business decision you will make in your life. Should you purchase an existing practice or build one from scratch?. That’s an important question to consider.
While both decisions can lead to success, the paths you’d take would become drastically different. Therefore, it is important to consider the various aspects of buying a dental practice versus starting your own. The decision is ultimately yours, but here are some key things that you should consider before making a call.
While there are risks in both, starting a dental practice and buying one, the risk is significantly higher when you’re starting one. Not only are you responsible for the structure, buying the equipment, managing insurance, and other aspects of creating the practice from the ground up, but you also have to learn to manage suppliers, interview and hire employees, bring in the patients, and create processes so that you can hand over some of the responsibilities to your employees.
On the other hand, when you buy a practice, you’ll get experienced staff, existing patients, and a complete set of processes to help manage the practice better.
Chances of Success
While buying a practice is certainly safer in some cases when compared to starting your own, you should not assume that it is risk-free. Many vendors might try to tell you otherwise, hoping to make a quick sale. To understand the risk-reward ratio better, only trust thorough analysis from unbiased parties, and don’t give any attention to the opinions of brokers throughout the sale process.
Due Diligence - Dealing with Unknowns
A detailed due diligence process is mandatory, regardless of whether you startup or purchase an existing practice.
When you’re buying a practice, a thorough due-diligence is critical to the future of the business. Analyzing the books, interviewing the staff, compliance checks, and checking existing patient data are a few of the things that you shouldn’t forget. If the practice you’re considering purchasing uses a cloud-based EHR and patient management software like tab32, then a lot of the due diligence can be taken care of with great accuracy.
You’re not just buying a dental practice; you’re also buying a business. Even if you do an excellent job at due diligence, there can be a lot of unknown factors that you cannot account for. Employees quitting, sudden equipment failure, leasing issues, and patient attribution are just some of the things that you can’t account for with any degree of precision.
Money plays an important role in the decision-making process and cannot be ignored. While it may seem like you’re spending a lot of money on an existing business, you’re also acquiring customers, which means you will be generating cash flow from day one. Although experts do mention that you might lose 7 to 10% of your patients after the acquisition, you can make that up with some marketing effort.
On the other hand, if you start a practice from scratch, you might spend comparatively less on the setup, but you won’t be able to predict your marketing costs with absolute certainty.
When you build your practice from the ground up, you get a superior degree of control over the entire process. Instead of buying someone else’s vision of the perfect practice and molding it to fit yours, you get to make choices that are in absolute alignment with your vision. From designing the perfect office to choosing an excellent location, and even having the latest equipment, all come with creative satisfaction that cannot be matched if you buy a practice.
As you saw, there is a case for building a practice just as there is a case for buying one. Ultimately, the choice is yours. While there is immense pride and creative satisfaction in building something from the ground up, it is much harder to execute than simply purchasing something that is already working.
With some work, acquisition or starting out on your own, both can take your career and accomplishments forward. By understanding the challenges better and considering all the factors we’ve mentioned, you can be well on your way to a successful dental practice.
Check out our ebook Investing in Technology for Your Dental practice, click the link below to download! It offers tips for starting a new practice, and the benefits of investing in the right technology for your success.