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My $30K Startup by David J. Arnett, MBA

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Still jet-lagged from coast-to-coast business meetings, I was called into my boss's office. As I walked in, I saw the company human resources representative sitting next to him—not a good sign. Sure enough, I was laid off. Finished with corporate America, I decided I wanted my own business. But what kind of business? This might sound crazy, but I successfully started a dental office (actually two of them), and I wasn't even a dentist!

ost states require that a licensed dentist own at least a majority of a dental practice, but I live in the Wild West—Arizona (you can still visit the O.K. Corral and Tombstone). Although it's not as wild as it used to be, I wasn't crazy enough to start a dental office without the help of a licensed dentist. My good friend who is a dentist became my expert minority business partner, and together we opened a dental office. This is the story of how we did it.

Building
As expected, the biggest expense for any dental office is the actual office building. I was unemployed and had limited funds, so I was in no hurry to go into debt. For our joint venture, we wanted to keep the debt load to an absolute minimum. Fortunately, we found a small dental office—in a strip mall—that was about to be vacated. We learned that the landlord was highly motivated to keep that space occupied. As a result, I was able to negotiate four months rent-free, and talked the landlord into contributing $5,000 toward the office's renovation. I learned, and have repeatedly relearned, that everything is negotiable.

To save money, I personally painted the office and negotiated a good deal on new carpet. Consequently, we had enough money left over to install granite countertops throughout the office. To get my "freebies" I had to agree to a five-year lease, but this just made me all the more committed to make our investment work.

I was all in.

Equipment
Next, we needed to equip our operatories with a delivery system and dental chairs, and purchase X-ray heads, a developer, sterilizer, computers, software, waiting-room chairs, furniture and artwork. For the delivery system and other dental equipment, I found a refurbished dental supply house in California. I had previously contacted the big equipment/supply companies and had received "the talk." Essentially, that talk was: "It's going to cost you $30,000 (or was it $50,000?) per operatory to do a proper build out." The sales guy seemed to pull me right in with his mind-altering Jedi tricks (he was very good), but I remembered that what I really needed was to keep as much money as possible so that I could meet my future payroll. I had to factor in something that a new dentist doesn't have to—paying a dentist. (And you thought paying a hygienist was expensive.)

From the refurbished equipment supplier we were able to procure used A-dec dental chairs, delivery systems, X-ray heads, sterilizers, developers, suction pumps and other items, all at a fraction of the cost of the big suppliers. None of the items was new, but they were all in good condition. They served their purpose and worked well. I also got great prices on computers and software, and my partner's cousin set us up with a used phone system and other office equipment. Now, if I could go back in time and set my office up with the DentiMax Dream Sensor/Practice Management software combo, I would have really had it easy.

Supplies
In addition to new equipment, I needed suppliers. You know—for everything from gloves to composite. And I discovered I could either purchase dental supplies at a premium from a major distributor's local sales guy—and enjoy a free lunch—or I could order them from a discount distributor and save much more money in the long run. I chose an out-of-state discount distributor who offered supplies at a fraction of the cost, with free shipping. I was also able to negotiate great prices for crowns and bridge work from a local dental lab. With a bit of effort, I was able to save a lot of money.

Staffing
With our office space equipped and supplied, I then needed to staff it. I hired a dentist right out of school who came with a dynamite personality and great chairside manner. Patients tend to purchase dental work if they like you and your staff—an earth-shattering concept, I know, but personality is important. We also hired a dental assistant, and that was all. I worked the front desk.

When it comes to a practice's financial success, the two most important people are the dentist and the office manager. If the dentist can't relate to people or is a horrible clinician, or if your office manager can't fill the schedule or collect money, then your practice isn't going to make it. Fortunately, I hired a great dentist, and I must say, I was pretty good at the front …desk. I will assume that you are a good dentist, and so just hire the right office manager.

Patients
I knew I could control my expenses. What I didn't know was whether I could fill those dental chairs with paying patients, which was a huge concern. And so this is what we did to minimize those concerns:

Work weekends. To get some cash flow coming in, my dentist business partner worked Fridays and Saturdays before we went "live" with a full schedule and new dentist. This also gave us an opportunity to work the kinks out of our systems, and brought in a lot of patients who had weekend emergencies.

State Medicaid. At the time, the Arizona Health Care Cost Containment System (Medicaid) paid reasonably well and some of the plans provided lists of patients, including phone numbers. I was able to fill my schedule with patients I called in the evening hours.

PPO plans. I stayed away from HMO plans but enrolled with all of the PPO plans that offered decent fee schedules. Each patient who came from an insurance-plan directory was one less patient I had to pay someone else (coupon mailers, Yellow Pages, etc.) to bring in.

Yellow Pages ad. I took out a half-page ad in a lesser-known directory and, as luck would have it, I got a lot of patients from that ad. Today, I would recommend Internet advertising instead.

Office signage. We draped a large banner that read, "Free Teeth-Whitening with Cleaning and Checkup," in front of our office and got some great patients, many of whom had fabulous insurance plans or were cash-paying patients.

Coupon books. In most months, we advertised in one of the local coupon-mailer books. Our "Free Teeth-Whitening with Checkup" ad worked the best.



By the numbers
So how did we do, financially? Considering we were told repeatedly by multiple sources that my office wasn't going to make it—that there would be nothing left after paying the dentist—we did very well. Here are the numbers for our first 12 months of full-time operation (please note that the expenses include my salary):
  • Total Revenue $526,098
  • Total Expenses $367,236
  • Net Profit $158,862
And for those of you who are visually inclined like me, this is what our first year looked like on a bar chart (below). Our initial investment was $30,000, and our return on our investment for that first 12 months of operation was $128,862, or a return of 430 percent.

I hope that my experience will help inspire you and provide insight and ideas for owning your own office. As a non- dentist, I believe that if I can start and run a profitable office (even having to hire a dentist), any dentist can make great money with his or her own practice. Of course, the really fun story is about how I marketed and sold my dental offices but that is for another article.

David J. Arnett holds a business degree from Brigham Young University, and an MBA from the University of Phoenix. Arnett has owned and operated dental offices and is the cofounder of DentiMax and TotalMD. He can be reached at david@dentimax.com.


Dentaltown Magazine
April 2024
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