Deciding to start your own practice is a huge if not daunting one! Fortune favors the brave.
As with any successful endeavor a key component to success is planning, understanding what needs to be done and when so that all the pieces fall into place setting your new practice up for success. Below is an outline of things to address and consider as you start your journey to ownership.
Define your New Practice
The first step to a successful start-up is defining the type of practice you want to build. Write down your ideal characteristics of your new practice: number of operatories, practice model, type of patients, etc. Draw from your years of associate experience and what you liked. Think about the types of patients you enjoy, income levels, kids or adult practice, employment sectors, education levels and the like. Defining the type of patients you most enjoy working with goes a long way in making your career an enjoyable one.
In starting your new business, focus just on what you need to get the doors open and the practice up and running. You don’t need to equip all the rooms. You may be able to get by for the first few months without a PAN.
As your business grows you can add other equipment, like a new PAN or a mill. Target your large equipment spend about $70,000 or less w/o a pan, but including your hand held and sensors.
Look Towards The Future
One thing to keep in mind throughout everything we discussed above is “what’s the end game?”. Is your intent to build up the practice and sell in a few years? Is it to practice till you retire and sell to another dentist? Is it to have associates working with you in the practice? Always think about the long term and how your current decisions might impact those future decisions.
Research Dental Demographics
Once, you’ve defined the type of practice, it’s time to do dental demographic research. First, consider your quality of life and work home balance. For example, if you are looking to start a new practice in your current area ask how long you would be willing to commute. Is it 20 minutes, an hour? If you are not someone that enjoys a long commute, this will narrow your search area.
Are you willing to move to a potentially great area? You could find an area with great numbers where people are spending $400 per capita annually on dental services. Down the road two or three miles may be an area with a dental spending of $1,200 per year. It’s good to do comparative research of multiple areas. Having side-by-side comparison s of areas allows you to make the best decision for your type of dental practice.
Knowing and understanding a given area is critical in being able to accelerate your growth once you get the doors open. You need to know who your competition is, what they offer, and where they are located. It is also crucial to know not only the general demographics of an area, but how to market and appeal to that population.
We’ve created an amazing tool to help with this phase, check out our On-Demand 24/7 Dental Demographic Study Application.
Obtain Practice Financing
We recommend that you get the loan approved before signing a lease. That means you go through the entire process of underwriting. You will already know what you can spend on occupancy costs without impacting your loan. Don’t be afraid to shop around! Competitively shopping your practice loan can yield thousands in savings over the course of the loan.
Conduct Dental Space Search
Be sure to define your search criteria for your new start dental office. Include items you defined for your practice above: number of operatories, practice design model (this can highly impact the size of the space overall), type of practice and type of space are you interested in. For example, Denali Group highly recommends retail locations for GPs, Pedos and Orthos. Being on Mom’s path makes growing the practice all that much easier. Foot traffic that increases visibility is also important. Typically, the lease terms at retail centers can be very beneficial to a new start up.
Engage a knowledgeable commercial real estate broker that understands the unique needs of a dental practice. DO NOT use the listing broker. They have only the landlord’s interest in mind. Get your own broker. Remember, they all get paid on commission by the landlord, so having someone in your corner is very smart.
Make sure you verify with the zoning department that your type of occupancy is allowed. Confirm there is enough parking available. Make sure the building can accommodate the power needs of the practice. Otherwise, you could be buying a new transformer. Make sure the HVAC and Roof Top Units are in good working order or negotiate the Landlord to warrant them for a two – three years. Confirm ADA accessibility.
We recommend a lease negotiator to handle the Letter of Intent (LOI) Make sure they know you have no funding contingency as your loan is already in place. They should also be made aware of your search criteria. There’s no shame in engaging service providers that specialize in both the economical and operational aspects of the lease. It can go a long way in helping you to avoid pitfalls and is money well spent. Always have YOUR lease attorney do a final review of your lease before you sign it.
Design Space and Create Construction Plans
Many people don’t realize it, but design is where you save money in construction, not when the hammers start swinging. Detailed construction plans will help avoid surprise construction cost increases as well as get you the finishes you need and want within your price point.
As a side note, a lot of brokers and Landlords will expect you to start working on your construction plans while you are still negotiating the lease terms. The idea here is to get you financially invested in the space prior to having it secured by a fully executed lease. You will have to pay for the plans, and those plans cannot then be used elsewhere as they are space specific. Whatever you’ve spent on those plans will be lost if the lease is not fully executed. We strongly recommend pushing for 6 months for design, permitting, bidding and construction (free of rent or pass-through expenses).
Make sure your dental equipment provider is involved in the final plans prior to submitting for permit, bidding with builders to ensure that your space is going to be able to accommodate your equipment and still be within ADA guidelines.
Try to pick materials and installation methods that allow you to update or refresh the practice every three to five years. For example, use floating flooring instead of glue down. It is easy to remove and reinstall over a weekend. Use white cabinetry throughout, so you change out countertops and back splashes and ensure that virtually anything you choose matches.
Consider how others will practice in your space. You may want to bring on an associate down the road. Designing your treatment areas in a way that they are highly flexible is a very good way to maximize the earning potential of the practice.
There two main aspects to consider when designing your space. The first of course, is the clinical. What do you need as the dentist to do your best work? The second is what your patients experience will be. Think about how they experience your services. For example, we don’t recommend toe entry rooms if they can be avoided. A lady in a dress sitting in a dental chair with their feet towards the door might feel uncomfortable. Remember, patients sharing a wonderful experience in your office is a great way to accelerate the practice growth.
In today’s world, everything is electronic. Information Technology has a huge impact a practice’s ability to operate. Having a local server might make sense for your practice if your area doesn’t’ have reliable internet. It is also a good idea to have a back-up hot spot on your network. With so many forms, files, and payments being electronic, you want to ensure connectivity.
Again, get what you need, not necessarily everything you want. Get computers for the rooms that are equipped, one for check-in, and one for check-out when first starting out. We highly recommend a computer for sterile along with a small multi-function printer for after care instructions, prescriptions, and the like. This saves time from walking up to the front of the office and keeps the front desk available to answer calls and help patients.
Taking on the adventure of starting your own dental practice has some risks. Every dental startup will have challenges that come up but planning can greatly reduce those challenges. Being your own boss and able to make final decisions is priceless. Remember as you begin your journey follow these steps:
- Define your new practice
- Research Dental Demographics
- Obtain practice financing
- Conduct dental space search
- Design and create construction plans
- Purchase information technology
- And most of all