“A goal without a plan is just a wish.” – Antione de Saint-Exupery
The best way to make a dream come true is to create a plan. A good plan gives steps and guidance to the owner as well as reassurance to banks and financers. A solid plan shows that an owner has considered key aspects of starting or purchasing a dental practice. Many lenders will require a basic business plan. It is ideal to create the business plan at the start and modify it as needed.
What should be included:
Type of entity and name of entity – Discuss the best entity type to establish with legal and tax advisors as there are legal and tax advantages to different types of entities. Determine the name of the entity keeping in mind that a DBA (Doing Business As) name can be established later. Verify the chosen name is not being used or copywritten. Have an attorney or a CPA set up the entity with the state and order the federal tax identification number (Employer Identification Number) with the IRS. Entities are easy to establish in some states, so some dentists choose to do this themselves.
Ownership – This summarizes the ownership of the entity. Devote a paragraph to each owner. Discuss the percentage of ownership, education, and experience. Make sure to highlight special licensing, experience, and management experience.
Professionals hired – Give a brief paragraph of any professionals hired or engaged. These could include lawyer, CPA, consultants- new start, practice management, PPO negotiations, commercial real estate broker, equipment vendor, architect, GC, marketing company (logo, website, mailers, SEO). It is fine to list professionals or areas of expertise that will be hired as well.
Market Research – Complete a comprehensive on demand Dental Demographic Study for the areas of interest to determine viability. The study can be sent to the financial institution as a separate document. Many lenders will require a demographic study. Start a study now by clicking here! For the dental business plan, summarize areas of interest with key demographics from the study: dentist-to-population ratio, dental spending, dental visits, target population number, growth information, viability, and other data points for a specialist. A solid competition inventory of the areas is also very helpful.
Operations – Define job duties for each role at opening. This helps with the hiring process and ensures that the main duties are covered for the practice. Highlight any software that will be used to help maintain controls, ensure a quality patient experience with follow up included, and aid staff to streamline job duties. Determine days associating versus days at practice. Keep in mind that the bank will look for a dentist to be able to cover living expenses with the associate position income while producing enough at the new practice to cover the practice expenses. Determine days at new practice based on a saturation study of the competition as much as possible.
Cash flows– This is a separate document that will show cash flow for the first three years. This document will show the number of days the dentist is working at the practice and the production to determine if it is enough to cover expenses.
Marketing plan – Decide on a DBA that is appropriate for the area and work on the logo. Begin to set up the website with the content and images focusing on ease of use and design to initiate action. Once the practice is open, engage in an SEO campaign and pay-per-click ads. Look to do direct mail, window advertising, and banners in addition to as much signage as possible. Set up call tracking to determine the biggest return on investment.
Internally, train front desk to get appointments converted from incoming calls and ensure a great patient experience. Ask for referrals and online reviews which will positively affect the practice. Verify practice is listed on PPO websites. Plan to visit local businesses and employers to get the word out as well as the local chamber of commerce to create buzz.
Wrap – Much can be added to the above as needed. The best business plans should include the items above with enough explanation to convey the information as a solid guide but no more than three written pages plus cash flow projections and a demographic study. Keep it simple and easy for banks as well as easy to adjust as needed. Remember this is a plan and projections for the future. It may need to be altered throughout the project. To expedite a journey with a new start dental practice and even a purchase or relocation, take a few minutes to create a solid plan.