Did you know range of total dental practice start-up costs during the last few years has run $250,000 - $500,000? (and I’ll break that number down for you below).
For some, that sounds like good news since they’ve heard it can cost seven figures.
For the rest of the dental community, it still sounds like a lot of money!
Half a million dollars to start a dental practice is a reasonable budgeting number for much of the country.
In this article, we'll explore that number.
There are 2 common questions dentists ask us frequently:
A) Why is it so high?
B) Where can I cut costs to get that number lower?
Have Prices Risen or Stayed Level?
We've seen fairly stable dental practice start-up costs over the last 10 years. After seeing practices all over the country, the price to open a new office has stayed level, adjusting for inflation, with the exception of two major categories: increased marketing costs and increased costs for handicap accessibility requirements. Construction and real estate costs (leases and purchases) vary in each region of the country.
But, as whole, the cost to open a practice today, is very similar to what it was five or ten years ago.
How the Heck Will I Afford $500,000?
First, let’s spend a minute asking, “how the heck will I afford that??”
As most accountants would say, it’s almost always advisable to take out a loan for a new dental practice (but call the accountant, please). Some dentists have the luxury and option of not needing a loan…but in this discussion let’s mention a reality for those who may want to consider a loan, even if they don’t need to.
There are proven ways to make the finances work in your favor. Here is the biggest secret the banks may not want you to know about: they LOVE dentists. I recently heard of a new practice client of mine getting a dental practice loan for just UNDER 4%. (call us for suggestions that might work for your situation) It seems almost unreal when you consider where interest rates have come from. The truth is, banks run from risk and dentistry has weathered many-a-storm with very low default rates.
So what am I saying?
What does this mean for your new office??
For a few thousand dollars per month, you can have your dream office.
Yes, just a few thousand per month.
After having direct and indirect involvement in more practices than almost anyone, we can confidently say you’ll pay a few thousand per month for 10 years for the practice you’ve always dreamed of.
You may not want a new practice. You may not want the opportunity or the realities of good and bad news that go with being the head chef, janitor, marketer, visioneer and bottlewasher. But for those who do want to explore that path, it is well within reach and your dental practice start-up costs are more affordable than most think.
How do the numbers break down?
Here are the fully simplified estimates for average single-doctor new dental practice start-up costs:
· 2000 square foot space – (ideal office size discussed in our other publications here
· Equipment, supplies, and furniture – $150,000
· Construction (leasehold improvements – which cost approx. $110 per square foot, minus $10 per foot provided by the landlord that we help doctors negotiate)
· Working Capital (payroll, marketing, website, etc) – $25,000
· Total start-up costs are $375,000
The monthly debt service is approximately $4000 - $5000 per month, depending on the loan you select.
That’s a lot of money and a serious topic to think through. The downside is that you’ll be paying that amount per month for a number of years. The other downsides to consider will be the planning process and the effort all that takes. You’ll also want to think through the real duties of being a business owner – many love it, some don’t.
But the biggest consideration is the professional pride, satisfaction and energy you will get from building a dental practice the right way. The ability to deliver your ideal clinical dentistry supported by your facility is an amazing thing to watch – I’ve seen it on the face of countless dentists. A dental practice can be an expression of who you are, a surprisingly valuable investment, a motivator for you and the team, an attractor for the best ancillary staff in town and a powerful reason for patients to refer. It’s a good spot to be in!
The good news is that there is a proven method to plan for these costs and make them work in your favor.
The numbers in this article are real dental practice start-up costs and numbers that you can use in your investigation process.
Click Here to discover more powerful free tools to open your new office:
By Jayme Amos
Jayme and his team have helped hundreds of dental professionals realize their goals. Now you can learn from the best in the dental industry. Come find more practice-defining tips for your new or existing practice at HowToOpenADentalOffice.com
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