Location Is Everything by David James

It’s essential to get strategic data about potential practice locations

by David James

Table 1: Courtesy of Locate Strategy Rights Reserved

Table 2

• The data for all search areas should be accumulated by adding up census block groups data. This is the most precise and relevant data. Do not use ZIP codes or concentric circle data; their boundaries rarely have any correlation to a true practice market.
• Get two sets of data for the practice location— one with close proximity to the practice and the second to represent the overall practice market. For example, two common search areas for a suburban practice would be a 3-mile radius and a 12-minute drive time (Figs. 1 and 2).
• Obtain current demographic data (2022) and projected 5-year forecast data (2027) to help understand the future demographic trends and assess growth prospects.
• For demographic data interpretation, what’s “good” versus “bad” varies widely based on each location and individual preferences and situations. It is important to work with someone who can apply the data and contextualize it properly. It’s rare that 100% of the aspects of a location are perfect, but it’s important to understand the strengths and weaknesses so the business plan can be adjusted accordingly.
• Competition ratio denominators (number of practitioners) are very difficult to get right but very important. There are no dental practitioner databases available that are good enough for this purpose. They are designed for mailing lists but do not have the precision needed to make life-changing decisions. There must be supplemental practice research conducted to ensure that the competition ratios are not materially misstated.
• Ask the consulting firm if they have the means to do an overall market evaluation (for example, within a 30-minute drive time of the practice) to identify areas where ratios are favorable to consider adding an office, moving, etc.

Fig. 1

Fig. 2

• Is the practice in a growing market or stagnant market?
• Does the market support bringing you on as a new practitioner in that location?
• What is the status of the office building—is it owned/leased, what is the lease duration, does it have adequate room to expand to support long-term growth or will it run out of room?
• Are there areas where expansion and growth could happen?
• If you don’t know where to start looking for an associateship or practice to buy, focus on practices in the areas with the most growth opportunities.

• A location study for the current office location that includes competition ratios and demographics. (See Fig. 3 for excerpt.)
• A market study that identifies the top areas of opportunity in the market (Fig. 4).

Fig. 3

Fig. 4

David James, CPA, has been CEO of Realscore (dba Locate Strategy) since its inception in 2009. James brings decades of extensive CPA and CFO experience to the dental industry, with a mission to provide location strategy education and affordable, world class tools, data and reports to enable dentists and the companies that serve them to succeed together by assisting with making vital location decisions. Website: locatestrategy.com

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