Howard Speaks:Business and Babies by Howard Farran, DDS, MBA, MAGD

There’s never a "good time" to have a baby, or to go into business for yourself. But I’ll tell you who does have kids: the young and the dumb. I had four boys in 60 months! It took those five years and four kids sprawled out in my bed before I realized, "I need to pull the plug on this!" and had a vasectomy.

When you’re young, you have a ton of energy—you can be up all night with babies. The older and wiser you get, the more you think about it: "What if I have a child and she’s not healthy?" "What if I end up with a ton of medical bills?"

It’s the same in business, which can be highly illogical. But when you’re young, you can eat all that risk because you have less to lose. There’s nothing sweeter than diving in to it and starting your own practice. It’ll be a crazy period in your life, but you’re not going to drown. Dentistry has only about a 1 percent failure/bankruptcy rate. (Why do you think all the banks want to finance dental transitions? Because they hardly ever fail. And when that 1 percent does go under, it’s usually the man in the mirror who failed—something went wrong because of drug abuse or an arrest.)

So why would you be afraid to open your dental office—because of a 99 percent success rate? Why are you afraid to have a kid—because you think if you buy a house, acquire two dogs, and get used to traveling on the weekends that someday you’re going to ruin all of that with a kid? No, no, no.

Take the plunge

About 25 percent of baby boomers don’t have kids. Instead of getting married at 16, they got married at 26, and by that age people realize that having a kid is expensive. (The percentage of millennials who don’t have children is expected to rise even higher—closer to 33 percent.)

If you’re the sort of person who keeps a close eye on your finances, you’re probably never going to have a kid or give up working in corporate dentistry, which pays six figures and lets you go in at 8 a.m. and leave at 5 p.m., and never on evenings or weekends! You’re going to get really comfortable. When you’re 27 with no kids and two furry friends, and work at Heartland or Pacific, you’re probably going to be there a long time, if not your whole life.

I graduated May 11, 1987, and my office was open four months later. That was the craziest time of my life! On top of that, I had Eric in 1989, Greg in 1991, Ryan

in 1993, and Zack (and a vasectomy) in 1995. By then I was done having kids, and I had my office and the dream of my life.

In my day, your dad threw you in the deep end, because he knew you weren’t going to drown, and that’s how you instantly learned how to swim. It’s the same with having a baby, or opening a practice. You’re never going to be "ready." This is the time to do it. You’ll survive. You’ll have a 1 percent failure rate. And if you get too comfortable, you’re never going to do it.

No more excuses

A lot of people say to me, "Well, you graduated in 1987 and had only $87,000 in student loans. I’m on the hook for a lot more." I challenge the idea that schooling alone puts students $350,000 in debt—I believe it’s the lifestyle those students lived during school. I didn’t have a car until senior year. Meanwhile, today I see freshmen driving around in sports cars that their grandparents never sat in once during their whole lives. I see students taking cruises on spring break, or flying around the country. The reason many students are in that much debt is because they got access to way too much cash and they blew through it. If you gave every tween a credit card and told them they didn’t have to make payments on their purchases for four years, every one of them would max out those cards.

And what’s more, I don’t care about the $350,000 in debt a student might have, because in the grand scale of things it’s not that much compared with what you’re going to be making. Your first divorce, for example, might cost you $1 million. Your "massive" student-loan debt would only be about one-third of what your first divorce might do to you. And what’s the first thing you’re going to do when you get that comfortable job? Buy a $500,000 house, and maybe a $60,000 car. That’s consumption debt, not investment debt.

Big returns in small towns

Every student who walks out of dental school could have a first-year taxable income that equals her student loans if she took over an office in a rural location, where there are more patients per practice. Not wanting to live in a rural area for a few years is silly when it can help pay off your debts that much faster.

As soon as you’re out of school for a year, about 99 percent of the time all the big banks will say yes to helping you buy an existing office. With an existing office, the bank eliminates a lot of risk—there’s already staff, clientele, etc. But if you were going to borrow money to start from scratch, that scares them.

Let’s say you found a town with 2,000 people and one dentist, so you think about opening a new practice there … but when you go the bank, you’ve got no evidence that opening this new practice will get you any guaranteed patients.

In contrast, if one of those dentists has put his practice up for sale, he’s got 1,000 active patients that come with the practice. Plus, you’re not just buying an existing patient base—you’re also eliminating a competitor because that dentist won’t be in town anymore. There’s a huge value to buying out your competition—especially when they want to sell!