We’ve seen some doctors thrive and be deeply fulfilled in their startup practice (like this one http://goo.gl/c8DkOv )
…others will only be happy if they’re in the “fixer” mode of practice acquisition.
My firm (www.HowToOpenADentalOffice.com) has, ironically, advised many doctors to go the acquisition path INSTEAD of the startup path. Why would I do that when we help doctors across the country open practices from scratch?
Because startups are not right for everyone.
Buy or Start a Dental Practice: The 2 Tests
There are many of reasons to consider.
2 of the most potent are discovered through 2 simple tests.
THE FIRST TEST
We call it the “Litmus Test”
When I work with doctors asking about advice about Startup-vs-Acquisition, my first test is this:
Would you be more fulfilled creating something from nothing OR…
would you be more fulfilled fixing existing issues?
If you’re one of the “creators”, you’ll have a higher chance of loving practice ownership THROUGH STARTUP.
If you’re one of the “fixer uppers”, you’ll have a much happier path through ACQUISITION.
We call that the first litmus test.
THE SECOND TEST
Business or Job?
When looking at to buy or start a dental practice, many conclude that buying is right for them.
The biggest question you need to process through is that of buying a business or buying a job.
This is what I’m referring to:
When you find a practice to purchase, you’ll get a report called a valuation (I’ve seen hundreds and helped doctors sift through all the nonsense in the valuation in about 5 minutes).
Some of the practices for sale are EXCELLENT and offer huge upside.
Others are doomed.
I get contacted by doctors every month who say they bought a practice that the broker told them was a great buy, only to find they can’t do enough dentistry to pay themselves a salary.
Its not a joke.
I just had a call like that yesterday…the doctor just about broke into tears on the phone, telling me how he hasn’t taken a paycheck in months, just had his second baby and needs immediate help (let alone the fact that he has to take a part time job).
==> It doesn’t have to be that way.
Before Looking at the Practice Valuation
The biggest question you need to ask yourself BEFORE you even look at the valuation is:
Do I want to buy a BUSINESS or a JOB?
If you buy a large practice, you can actually purchase a business (something that makes YOU an income).
If you buy a practice that is too small, you’ll end up buying yourself a JOB (something that you WORK to earn an income).
The bigger practices, or at least the good ones, will have:
- well trained staff
- systems in place
- modern equipment
- profitable tech
- multiple producers (Hyg or Doc)
Those things will make YOU and income through an efficient, profitable business…which happens to be a dental practice. Remember, this is the purchase of a dental practice that is a business.
If you want to purchase a practice, please remember the simple concept of buying a business, not just a practice.
If that sounds appealing and you want to ACQUIRE a practice, make sure you buy a BUSINESS (that just happens to be a dental practice).
In a smaller practice…
(my personally recommended threshold is about $1 million)
…you’ll commonly find:
- outdated equipment
- fewer than 1200 patients in recare
- 1 or no other providers
- old or sad tech
- undertrained staff
- generally older patient population
These kinds of practices require an immense amount of work.
For example, in a smaller, outdated practice, you’ll often find:
- ALL the marketing will need to be done so you can build up the patient base.
- All the staff training will need to be done (or redone, perhaps).
- All new technology needs to be purchased
- Most of the equipment needs to be replaced
After all that, is it what you really wanted in the first place?
Would you “own the practice”? Yes.
You would, in this example, officially be able to call yourself a PRACTICE OWNER.
But does that matter if you can’t afford to pay yourself?
Does it make sense if you need to replace most of the equipment and staff while marketing for a new base of patients?
Do you really want to end up like the doctor who was about to cry on the phone with me?
Be very careful about buying the small practices.
“Sometimes, the cheaper practice can set you back a decade financially.”
BUY A DENTAL PRACTICE:
If you won’t purchase a practice over $1 million, it’s nearly impossible to find a practice that will be a real BUSINESS – something that works on your behalf. Something that is more than just a JOB.
START a DENTAL PRACTICE:
This is no lollipop road, so don’t believe anyone who tells you so (even if its me, the founder of http://www.HowToOpenADentalOffice.com).
HOWEVER…the tremendous upside of a startup is that we can create a framework for your practice to succeed very quickly.
If the practice is:
- built in the right town (see my book),
- has the right vision,
- secures the best financing
- negotiates construction properly (10-40% savings)
- negotiates equipment properly (10-25% savings)
- puts the right marketing plan together
- hires the best team
…THEN you can create an amazing experience.
For some doctors, they tell us their startup has given them:
1) Clinical Freedom
2) Income level they’re really worth
3) a Platform to make a bigger difference
Unfortunately, the sad reality is that many startups jump in to a location simply because they live nearby.
Or they found a pretty building.
Or it looks like a good part of town.
DON’T BE FOOLED.
Dentistry has changed forever because of Corporate Dentistry, PPOs, rising taxation and demographic shifts.
Startups can be AMAZING for doctors when they’re done right.
But the proper steps must be taken to create a practice that represents you clinically, gives you the pride of ownership and the income you deserve.
As you consider the big question of “BUY or START a Dental Practice”, know my team is here to help and we’ll gladly assist in any way we can.
Make sure you do all your homework and you can create a life changing experience that allows you to take control of your future in dentistry.
Bestselling Author, Practice Location
Host, Ideal Practices Podcast
Chief Advocate for Practice Ownership
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