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January 28, 2021

A Guide to Dental Practice Financing

dentist office

This is it: You found the practice of your dreams. But how are you going to pay for it? If you are like most dentists, you are going to take out a loan to fulfill your dream of owning your own dental practice. Not only is this a large commitment, but it is also going to be one of the biggest decisions you will make since deciding to become a dentist. The experts at Professional Transition Strategies (PTS) are here to give you the guidance needed to help you walk down the dental practice financing path.

When are you ready to buy a dental practice?

You may think you are ready to buy a dental practice as soon as you graduate from dental school, but the banks may have a different idea. Most lenders tend to encourage new dentists to associate for a few years before purchasing or building their own practice. This allows the dentist to gain experience in an office, while at the same time increasing their hand speed and building experience in the production and managerial aspects of the business.

Maybe you think associating is not for you. You are an entrepreneur, and you are ready to go! If you choose not to associate, you are not necessarily disqualified from receiving a dental practice loan. The lender will also take other aspects of the dentist’s experience into consideration: internships, working in family practices in the past and current financial status. While some banks will still lend money to a new dentist, the amount tends to be smaller than for someone with real-world experience.

Dave Thomas, founder of the Wendy’s fast-food chain, has these words of advice: “What do you need to start a business? Three simple things: know your product better than anyone, know your customer, and have a burning desire to succeed.” (1)

The average loan amount for a new dentist is $300,000, so be prepared to make a case about why you need to own immediately rather than associate first. Note: For preferred status, it is recommended to have cash on hand for up to $50,000.

Default rate for dental practice loans is low

How will you get dental practice financing with your high debt in dental school loans?

It may be surprising to know that lenders are not necessarily worried about student debt. The reason is because it is widely acknowledged that dental school graduates have a significant amount of student loans. What the banks will look at is if the doctor can afford the payments on the student loan debt and the practice debt.

Compared to a small-business owner whose average salary is approximately $70,000 a year, as of 2016, the average dentist’s salary is $173,000, the average orthodontist’s salary is $228,000, and the average oral and maxillofacial surgeon’s salary is $233,000. Due to the higher-than-average annual salary and the 0.3% failure rate of dental practices, the dental industry has the lowest default rate and some of the highest cash flow.

While the default rate is low, the bank is still going to be cautious. Lenders will not loan any amount the doctor wishes. They review if the doctor can handle the amount of production. For instance, they likely won’t loan $850,000 to purchase a dental practice if the doctor has minimal production experience.

Low interest rate isn’t the only factor of dental practice financing

The bank you should go with is not always the bank with the lowest interest rate. That’s why it’s important to take everything into consideration. The interest rate is only one part of the overall dental financing package. Here are the top seven details to consider when choosing your bank and your dental practice loan package:

Remember: When you take out your loan, it is common to include the purchase or build-out of the practice, as well as working capital in the amount sought.

Interest rate

Do they offer competitive rates on credit lines, loans and deposits?

Terms

Most lenders will offer 10- or 15-year fixed payment plans. Some will even do 20-year options.

Fees

What are the charges for transactions, account maintenance, etc.?

Security

Is your money safe?

Convenience

Does the bank have an online presence? If so, how simple is the user interface? Are there mobile capabilities?

Knowledge base

How familiar is the bank with dental lending?

References

Talk to friends and brokers about their experience with the considered bank.

Different types of loans available

Dental-specific bankers: Bankers with dental-specific divisions are nearly guaranteed to have the best rates and terms. They also tend to have the fastest underwriting process. When it comes to guarantees, dental-specific bankers typically ask for very little collateral and normally offer 100% financing. Another benefit is that you don’t have to worry about the Small Business Administration (SBA). This rate program is only available to dental and medical professionals because the bank knows the loan will be paid.

  • Standard loan amounts: $5,000 to $5 million.
  • Terms: Five to 25 years.
  • Interest rate: Tends to start at 5.25%.
  • Approval time: Can be as short as a couple of weeks or take as long as several months.

Local conventional: There are many benefits to working with a local banker. One is that a local banker knows the local market and can potentially become a patient of yours (and a referral source!). In addition, they can sometimes give faster decisions on funding and will have fewer hoops for you to jump through because they rarely have excessive layers of management to approve the loan. Last but certainly not least, local bankers also are known for having a better relationship with their borrowers than the regional/national banks.

Regional/national conventional: Regional and national banks tend to have a large presence in many states. These larger companies can typically offer lower interest rates because they have so many loans. Because of the high number of transactions, the process is typically more streamlined than with smaller banks. Another advantage of borrowing from a larger bank is the ease of relocating, should you so wish. This is because you already have the established relationship with the bank and there are multiple branches stretching through the region or country. Finally, this option can also potentially give you a better long-term strategic partner.

SBA (either local, regional or national): The SBA was started to allow banks the leverage and ability to finance businesses (and practices) they would normally turn down. Through these programs, the SBA partners with intermediary lenders to guarantee up to 85% of loans funded to small business (and practice) owners. With federal insurance comes federal guidelines, therefore, do expect a lot of red tape. For instance, compared to the ease of working with a regional/national bank or a dental-specific lender, the process to receive SBA financing is not nearly as simple. Fees are associated with starting this type of loan and the underwriting process can take significantly longer. In short, the SBA loan application tends to be a lot more rigorous and highly selective. With that said, the SBA is a great route to take with real estate purchases. Of note, from 2006 to 2015, the SBA default rate for dentists was 5.2% (including their real estate), while the SBA default rate in general is 17.4%. It is important to know that SBA programs are typically used for the riskiest dental loans.

  • Standard loan amounts: $10,000 to $1 million.
  • Terms: Six months to 20 years.
  • Interest rate: Ranges between 6% and 12%.
  • Approval time: Banks normally quote 60-day approval periods, but in our experience, it can easily take three or four months to approve.

Equipment loan: From lights and chairs, to electric handpieces and Panos, dental practice equipment represents a substantial portion of startup costs. For this reason, equipment loans tend to be common among many dentists.

You can choose to use your banker or supplier for this type of loan. You will most likely find exceptional rates with equipment loans because lenders want you to purchase the equipment instead of leasing, such a car loan. There is never a personal guarantee on an equipment loan because the only collateral is the actual purchased equipment.

  • Standard loan amounts: The standard loan amount differs based on the cost of the equipment and the lender.
  • Terms: Six months to five years (five years being the most standard).
  • Interest rate: Tends to start at 6%.
  • Approval time: One of the fastest approval times – can be as short as one business day.

Some of the information a bank will request

  • Multiple years of tax returns.
  • Copy of dental license.
  • CV.
  • Production reports.
  • Bank-provided application package.
  • Personal financial statements (retirement accounts, if applicable).
  • Demographic information about the practice.
  • Practice’s financial information.
  • Balance sheet.
  • Projections.
  • Marketing plans.
  • Practice staff explanation.

What’s next?

Contact the team at Professional Transition Strategies for any assistance you need regarding a dental practice loan. Our many bank and private equity contacts make the process of practice refinancing a smooth process. The necessity of maintaining adequate cash flow is an ongoing challenge for every independent practice. Let us help simplify your finances and ultimately give you greater control.

Our business refinance program consolidates your business term debt into one simple payment, often lowering your payment and improving your cash flow. The program is especially valuable for doctors who want to allocate more funds to other practice endeavors, including retirement plan funding.

  • Consolidate business term loans, leases and lines of credit into one convenient monthly payment.
  • Reduce monthly payments.
  • Free up resources to invest in your practice and your future.

Resource

January 28, 2021

How Quarterly Reviews and Employment Contracts Can Contribute to Dental Practice Success

smile written on rock

We know that many doctors want input on the health of their dental practice, but in most cases they are not willing to pay the tens of thousands of dollars most consulting firms charge. Much like a medical or dental checkup, the experts at Professional Transition Strategies have found many practices would benefit greatly from a quarterly confidential practice performance survey. These surveys indicate strengths and weaknesses of the practice, and compares the practice to local peers and colleagues.

Because PTS works closely with hundreds of local medical and dental practices, we see what the top performing offices are doing to be successful. We offer suggestions and a plan to improve the performance of the practice. We perform this service without a contract or large financial outlay. Here’s how quarterly reviews and employee contracts can contribute to the success of your dental practice.

What is a quarterly performance review?

The key indicators our reviews and audits focus on include:

  • Production, adjustments, collections and accounts receivable (A/R).
  • Overhead and margin.
  • Production/hour and margin/hour.
  • Visits, new patients, production/visit and margin/visit.
  • Hygiene performance and efficiency.
  • Income.
  • Confidential local fee survey.
  • Confidential local salary survey.

From this data and analysis, we can find opportunities for improvement in:

  • Practice and production growth.
  • Case acceptance.
  • Hygiene department.
  • Profit.

Why are performance reviews so important?

Ultimately, dental practice performance reviews and audits are important because they help the doctor understand their practice better and help them become a stronger leader. Strong financial performance leads to improved annual income and a higher selling price when it comes time to consider transitioning the practice.

A recent survey done by Deloitte, a multinational professional services network, highlights that business audits help improve business performance. (1)

What are employment contracts

Upon graduation, new dentists looking for employment in the private sector will encounter a situation with which they are not very well familiar or informed about: They will be asked to sign a contract.

Many new doctors entering the field of dentistry believe a contract may not be necessary or that it only serves to protect the employer. Nothing could be further from the truth. A contract can and should protect the employee, as well as the employer. A signed agreement should be in place prior to any commencement of employment. In fact, at PTS, we insist every physician and doctor should have a signed contract/agreement in place before starting a position. Without one, they may have no legal recourse if something goes awry.

The Law Depot explains an employment contract is what employers and employees use to spell out the rights, responsibilities and obligations of the parties during the work period. It may include information about compensation (pay/wage), vacation time, the job description and duties, probationary periods, duties of confidentiality, termination procedures, and information about both the employee and employer. (1)

What’s next?

PTS representatives have the expertise to prepare and execute contracts that will empower both sides and allow a win/win situation to occur. Contact us for more information.

Resources

January 28, 2021

Why Relocating a Dental Practice Needs a Strategy

dental tools

Whether you are relocating your dental practice across the street or country, it is important to have a relocation strategy in place before the big day. There are many reasons why one may decide to move their practice. Maybe the landlord sold the building, forcing you to move. Or you are looking to expand your practice and the current location doesn’t allow for growth. You could be looking for lower rent rates, moving to a larger area to gain more new patients, upgrading your space or looking for a better work-life balance. No matter the reason for the relocation of your dental practice, we help you get started by laying out a strategy. 

Before signing a contract

Make sure your relocation strategy considers all aspects of the new location. Following are a few major points to think about before signing on the dotted line.

  • Demographics of the area: What is the average income level of residents within a five-mile radius of your potential new location? What is the age of the residents near you? Is the area growing with new homes and businesses, or is it declining or staying stagnant? How is the traffic volume? For easy marketing, you ideally want to be in a high-traffic area with great visibility that allows good signage for the practice.
  • Competition: As with any business, it is important to analyze the competition around you before making the move. Be sure to figure out if there are competing dental practices near the location you are considering. If you are relocating to an area with competition nearby, consider what your unique value proposition is and what will help you stand out among the crowd. Also, keep in mind the dentist-to-patient ratio. How many other dentists are in the area? Is the dentist to patient ratio high or low?
  • Location: Because you already have an established practice with patients and staff, it is important to minimize as much patient and staff attrition as possible. To do this, try to stay as close to your current location as you can. If your current area is not ideal, you may want to move to a better area where your practice has more potential to grow.
  • Building: When relocating your business, you will need review all aspects of the new building. Consider the accessibility of the practice for your patients. Is parking adequate for patients and staff? How is the signage situation? Is there opportunity for expansion if you choose to grow?
  • New patients: Use this opportunity to grow your patient base in your new neighborhood. To do this, become immersed in the area and market to the community. Make sure to get your name and your brand out in front of all potential clients.

Preparing for the move

As with any big change, it is important to prepare properly to achieve a good outcome. This is the same with all business relocations. To best prepare yourself for the move, be sure to analyze the terms of your current lease. It is important to have little to no dark time between your move. Every day your office is closed, the larger the loss of revenue. By reviewing your lease, you can ensure you are able to stay in your current location until your new office is up and running.

The logistics of the move

It is important to get everything in order before the big day. A few key aspects to remember are:

  • Figure out a date of the move.
  • Notify your landlord that you are terminating your lease or wish to not extend.
  • Create an inventory of your office contents.
  • Create a diagram of the office and where you want all equipment and furniture to go.
  • Choose a moving company that has experience moving large and fragile equipment, such as X-ray machines.
  • Get moving insurance since renters’ insurance does not always cover damage to furniture or equipment during a move, and moving companies always legally responsible for property damage. Typically, they only cover minimal responsibility for damaged goods and are not required to reimburse the entire cost. For these reasons, it is smart to get moving insurance through third-party insurance companies.
  • Delegate responsibilities among your staff.
  • Use this opportunity to declutter your office and get rid of anything you no longer use or need. In addition, use this time to update your patient records — remove inactive patients, call patients due for an appointment and schedule them and advise them on the new location.
  • Plan to be at the office the entire day of the move to oversee the entire process, including placement and handling of equipment and furniture.

Notify your patients

Be sure to notify your patients of the upcoming move. Following are a few ways to keep your patients aware that your practice is moving:

  • Display a “We Are Moving” sign in your waiting room.
  • Notify patients by updating your website’s homepage to include a “We Are Moving” banner.
  • Send out a mass letter to all patients detailing your move. Be sure to include the new address, date of opening and the highlights of your new location. It is important to sound upbeat in the letter.
  • Familiarize patients with the new location by including a map on the website. It is also wise to display a map in the waiting room showing the faster route from your current location to your new location at least six months before you move.
  • Have your staff emphasize the move to all patients. They should mention it to every patient that comes into the office from today until the day you move.
  • Get your patients excited about the new location by throwing an “office warming” party and allow all patients to check out the new office before they sit in the chair.

Budgeting

As with any move, make sure to budget appropriately. Not only is the cost of a move expensive, but the new location can also skew your current budget. Your new space could potentially have a higher lease rate, especially if you move to a more desirable area, or a larger space.

Marketing

You have a new address and want to make sure your patients know where to find you. It is not as simple as notifying the U.S. Postal Service (USPS) and moving on. You also need to update your digital footprint and your print marketing.

Digital

  • Website: Update your website’s footer and contact page to reflect the new address. Scour the rest of the site to ensure your old address is not mentioned – this includes images of a map with driving directions or landmarks noted. Make sure the meta descriptions do not reference your old address or neighborhood.
  • Email: Be sure to update all email signatures if they include your practice’s address.
  • Social: Promote your new location on all social media sites. Try to turn this into a lead-generation opportunity. Don’t forget to update all contact information on your social pages to include the new address, hours and contact information.
  • Google: Be sure Google knows about your move. This includes both Google Maps and Google My Business. Upload a new photo of the outside of your office and request a new Google My Business mailer to verify your new address. Please note this can take up to five days.
  • Professional associations: Contact all agencies and associations you are a member of, including the Better Business Bureau (BBB), local study clubs and your state dental association to make them aware of your new location.
  • Online directories: Most dental practices are included in more than 30 online directories, in addition to your website. Almost all include your address. For this reason, be sure to update all directory listings, such as Yelp, Manta, Yellowpages.com and Bing.

Print

  • Update all printed marketing material. Because printed materials have a longer lead time, be sure to give all designers, printers and publishers enough time to make the changes. This includes brochures, business cards, print ads and other marketing collateral.
  • If you come across any existing collateral, such as brochures and business cards, be sure to pick them up and replace with new collateral.

Other change-of-address notifications

Notify suppliers of your new address and the date of the move:

  • Payroll processing company.
  • Insurance companies.
  • U.S. Postal Service (USPS).
  • Electronic claims processors.
  • U.S. Drug Enforcement Agency (DEA).
  • Your accountant and attorney.

What’s next?

A lot of work goes into any business relocation. If you need guidance on this big decision or assistance with all the logistics, contact the team at PTS.

January 28, 2021

How to Successfully Start a Dental Practice

dental practice family

There are two parts to starting a dental or medical practice: industry knowledge and business knowledge. You have spent several years studying with professors and doctors that have years of experience in teaching medicine and dentistry. Professional Transition Strategies (PTS) is your knowledge source for the business side of your new practice. We know because we have been there. We share our top tips for successfully starting a dental practice.

The experts at PTS will help you with decisions, such as:

  • Finding the best financing option for your office and equipment.
  • Calculating how much money you will need to get started.
  • Finding a prime office location.
  • Hiring knowledgeable architects and contractors to help you transform your space to maximize profitability.
  • Working with the right equipment and supply specialists to give you the best value and service.
  • Recommending the best technical support for phone and computer systems to meet your needs and your budget.
  • Offering assistance in hiring and training a productive and self-motivating staff.
  • Recommending branding and marketing strategies that will create active patient flow from the beginning.

By building on our years of experience, you will save time and money getting your business on track. Our goal is to help you succeed.

We realize everyone has different short- and long-term goals. We will use our expertise to help you create a strategic plan to build your practice to meet your goals.

Starting a dental practice from scratch

You are forging your own path. You are an entrepreneur. Or simply … you want to own a dental practice and you can’t find an existing dental office that appeals to you. Whatever the reason you have decided on starting a dental practice from scratch, it is important to have an actionable plan in place to get you where you want to go.

Starting a dental practice checklist

Like many others, you ask, “Where do I even begin?” Following is a summary of starting a dental practice checklist, but we recommend you speak to a professional dental practice consultant, such as the team at PTS, to guide you through the process.

Steps to starting a dental practice

  • Meet with a bank to get prequalified.
  • Form a business entity, whether it is a LLC, C-corp or S-corp. It is advised you work with a CPA or attorney on this. This registration is needed to get a Tax ID, which you will need when you are signing a bank loan.
  • Through this preapproval process, you will be able to create a budget.
  • Work with a commercial real estate agent who has experience with dental and medical offices to find a location. Narrow your search to two to three locations, and begin the negotiation process.
  • Before signing a lease, speak with dental contractors. It is recommended to speak to two to three contractors and have them see the space in person first. By understanding the construction costs prior to signing a lease, you will be able to negotiate this expense with the landlord.
  • Design the office with the dental contractors before signing the final contract. This will ensure you receive proper bids.
  • Meet with design firms or dental supply companies that offer design services.
  • Once build-out is in the works, begin thinking about how you are going to outfit the office. Research all pieces of equipment, including patient chairs, x-rays, IT, etc.

Have the right team in place

Along with your checklist, it is important to ensure you have the right team in place. Your team should include:

  • Certified public accountant (CPA).
  • Chartered financial analyst (CFA).
  • Attorney.
  • Banker.
  • Broker.
  • Marketing agency.
  • Equipment and supply reps.
  • Technology advisor.
  • Commercial real estate agent.
  • Contractors, architects and practice consultant (situation depending).

Dental practice financing from scratch

Starting up a dental practice from scratch is not only an investment in your future, it is also a large financial undertaking. The average cost for a startup range between $350,000 and $550,000. This amount includes:

  • Equipment.
  • Leasehold improvements.
  • Working capital.

External factors will also contribute to your startup cost, such as the region you choose. For instance, the difference between building in a low-cost area compared to a high cost-of-living region is 20%. That is not to say it is advised to practice in a rural area. Just be sure to choose your region properly, as your cost to acquire new patients will be lower.

While the region will contribute to your startup cost, the office you choose will also play a part. When choosing your building, it is important to keep square footage at the top of mind. Make sure your office size matches your vision. You will save money by building a smaller space, but that can also prevent your ability for growth. If your financial goals and vision for the practice require you to have five operatories within the next five years, don’t give in to the desire to save money on the frontend that will prevent you from making it on the backend.

Tips to minimize dental debt

It is always advised to minimize your debt from dental practice loans when and where you can. A few ways to reduce your loan amount is on equipment and office improvements.

  • Equipment: Instead of buying every piece of equipment your heart desires, buy only the equipment you actually need to get started. Once your doors are open and your practice is running smoothly and successfully, then consider making the investment in other desirable pieces of equipment (i.e., digital impression system, crown mill, etc.) The list of necessities includes:
  • Leasehold improvements: Another way to minimize your debt is by employing various strategies for any leasehold improvements. These include:
    • Finding a space with a vacated dental practice; therefore, the plumbing for the operatories is already taken care of.
    • Exploring space-share opportunities with other medical professionals or dental specialists.
    • Finding a landlord who will be motivated to make you happy and will pay for all or most of your improvements.
    • Keeping your office design simple at first and upgrade once your cash flows allows.

Establish goals for your dental practice

Whether you are one who wants to “visualize” your goals or simply write it down, it is important to establish them at the beginning. Don’t be vague. Be sure to include details when you come up with your goals. By considering the following at the beginning, you will be ahead of the game when making decisions with your startup dental office.

  • What are your production goals and cash flow projection?
  • Will you be able to service your debt?
  • What services do you want to offer in your practice? Do you want to place implants, as well as restore them? Do you want to offer clear correctors? Or do you want to start with a bread-and-butter practice and refer out specialty work?
  • How many operatories will you need to accomplish your goals?
  • What is your long-term goal?

Inc.com explained why it’s important for a business to set goals: “It is incredibly important to remember that setting business goals will not ensure success for any organization. However, there’s also a lot to be said for not flying by the seat of your pants.” (1)

Location, location, location

You can change many things about your dental practice once your doors are open. Location, however, is not one of them. Therefore, it is imperative to pick the right location from the beginning, even if it means you must be patient.

Many dentists become too focused on lease numbers and overlook critical factors that attribute to the success of a location. Consider the following when choosing the ultimate placement for your practice:

  • Is the location centrally located and easily accessible for your patients? Are you near major intersections or busy streets?
  • Does the office have good visibility? Do you have access to outdoor signage? With outdoor signage, you will have the perk of free advertising from street traffic.
  • Is the building accessible for all your patients? How easy will it be for patients to park or turn into your lot from the street? Is it handicap accessible for patients with disabilities?
  • Are you located in a position to reach your target market? For instance, if you will be a fee-for-service (FFS) practice only or plan to practice high-end cosmetic dentistry, are you located in an affluent area? If you are a pediatric dentist, are you located in a young community with future expansion?
  • Do you have a non-compete with a previous clinic with which you worked? If so, evaluate the proximity of your new desired location, as well as the terms of your agreement to stay within any legal constraints.
  • Are you located near your competition? It is advised to get a visual of all local competition by looking at an online map. If you you don’t mind not being the only game in town, ensure that you have a unique value proposition to separate you from the others.

Unique value proposition gives you a competitive advantage

Develop your own unique value proposition, something that gives you a competitive advantage. Don’t go head-to-head with the competition. Find a way to stand out among the crowd. Find something that cuts through the noise and gives your patients a reason to see you over someone else in the area.

  • Figure out who your patients are. Are they older or younger? Will they be impressed by fancy equipment and a beautiful designed office, or will they be fine with someone simple and standard?
  • Solve their pain points and not just oral pain. If you don’t plan to accept insurance and plan to run a cash-only practice, consider offering a simple and easy payment plan option. If your patients don’t have time to come to the office for multiple visits in a short amount of time, consider offering a fast-acting anesthesia.

Create a business plan

A business plan is a critical tool when starting your practice because it provides a blueprint for how your dental clinic will become successful. It will also be a requested document for most lenders. They want to ensure you have researched and considered all necessary elements of starting your practice. When creating your business plan, be sure to include the following:

  • Lending plans.
  • Growth strategy.
  • Profit and loss projections.
  • Demographics strategy.
  • Mission statement.
  • Vision statement.
  • Plan for hiring both administrative and clinical staff.
  • Marketing plan (be sure to devote 5% to 7% of collections on marketing for the first three to five years).

Marketing your business

Marketing is essential for your dental practice, especially in the beginning stages. Not only does it bring in new patients, but it can also strengthen the relationships you have with existing patients. Therefore, to see your practice thrive within the first few years, you need a marketing plan in place.

According to the Small Business Administration (SBA), “One of the best ways to stay on schedule and on budget is to make a marketing plan. It describes the actions you’ll take to persuade potential customers to buy your products or services.” (2)

The most common elements to include in your marketing plan are:

  • Online presence:
    • User-friendly website.
    • Offer value with content marketing.
    • Google My Business.
    • Social media presence.
    • AdWords and SEO.
  • Word of mouth (consider giving discounts to patients for referring a friend or family member).
  • Network in the community.
  • Appointment reminders.
  • Remarketing campaigns.
  • Dental patient marketing.

Pros versus cons for startups

You know what is involved when starting your own practice from scratch, but you still can’t decide if it is the right move. Consider the upside and downside of making this commitment.

  • Pros: When you start your practice from scratch, you can make it what you want from the beginning. If design and aesthetics are important, you can choose them from the start. You can choose your location and be exactly where you want to be. This will allow you to tailor your practice based on the type of patients and procedures you want. You can also scale your practice based on your skill set — as you get faster, the more successful you will become. While your debt rate may be high and scary, it is important to remember the success rate is also unbelievably high. Most importantly, you have full control.
  • Cons: As previously mentioned, the initial financial investment average is $350,000 to $500,000. Therefore, if you are already in debt from school, you can be anywhere between $700,000 and $1 million in debt before you see your first patient. Expect a couple of lean years. It can take a while to get to the revenue you would be at if you bought an existing practice.

Resources

January 25, 2021

How and Why to Increase Supply Chain Efficiency at Your Dental Practice

With 2021 already in full swing, now is the time to take literal stock of your dental practice. The impact of the COVID-19 pandemic and consequential shutdowns caused the industry to step back and reevaluate every aspect of your business, including your supply chain efficiency. Here’s how and why you can increase supply chain management and efficiency at your dental practice in the new year.

Online ordering

If you weren’t already doing it, an increase in ordering all your supplies online has been a direct correlation from the pandemic for the better. Ordering supplies online is not only convenient in terms of delivery, but it’s also efficient to be able to view and compare purchase options on various sites in minimal time. The technology and platforms exist to provide supply cost-comparisons.

Networking

In addition to your standard ordering processes, supply chain issues can be avoided by accessing available supplier networks. Supplier networks offer cost savings that wouldn’t otherwise be afforded to individual dental practices, leaving room for more savings and better pricing options.

Teledentistry

In addition to the many trends that have emerged as a result of the pandemic, teledentistry has cut down on the number of in-person visits to your dental office. While it might not be here to stay, in-office visits are still being spaced out to accommodate social-distancing rules, leaving room to reevaluate everyday office supplies.

Buying power

No doubt expenses had to be shifted in 2020, which is why now is a good time to leverage your buying power, especially when it comes to bulk goods like personal protective equipment (PPE) that wasn’t as in demand in the past. Funds that may have been allocated toward commercial real estate can be redistributed in other now-necessary areas.

What’s next?

Contact the experts at Professional Transition Strategies to learn more ways to increase efficiency and your bottom line at your dental practice.

January 19, 2021

5 Ways to Retain Your Dental Practice Team

Like the rest of the world, dental practices and their staff were blindsided by the COVID-19 pandemic. Between mandatory shutdowns and changes in practice operations, dental staff has had to be resilient both professionally and personally. With the promise of a new year and vaccines on the horizon, now is as good of a time as any to put your dental staff first to ensure they retain with the practice. Here’s how.

Personal touch

The best way to help your staff is to get to know them better. What struggles or obstacles have come up for certain staff members? Rather than jump to conclusions or assumptions, have an honest talk with each staff member to see what you could be doing differently during this time to support them. Or better yet, send an anonymous survey to staff members for honest feedback.

Incentives

The best way to track performance is to set goals and work together to track how everyone is doing. Offering incentives or some kind of buy-in helps keep staff motivated and on track with company performance. In turn, you will begin to see productivity increase and turnover decrease.

Fair pay

As a way to cut corners, some dental practices don’t allow a clinical team member to clock their time until the first patient arrives without paying for setup time or if a patient is a no-show. If a dental practice isn’t paying staff for the work they do, they will find a dental practice that will.

Return on investment

Paying for continuing education credits is not just a benefit for the employee. Your patients, team and practice will all be better for it. And as a bonus, you’ll be able to write off any costs as a business expense.

Honesty

Honesty really is the best policy, and establishing a dental practice in which staff feels comfortable sharing their dream or even preferred setting looks like is worth asking. Even if changes can’t be made in the immediate future, it will make staff feel heard and set the tone that their contribution is valued to help grow your staff members and the practice.

What’s next?

Contact the experts at Professional Transition Strategies to learn more about how your dental practice stands up to the rest.

January 11, 2021

Can You Retire from Your Dental Practice During a Pandemic?

Business owners who put off retirement during the last recession are now being faced with the same question: Will COVID-19 interrupt my retirement plans? Even though the economic fallout is still unfolding, banks are still lending and credit hasn’t seized up. In a recent article for The Street, Professional Transition Strategies Founder and President Kyle Francis says, “with careful planning, retirement is possible now.” Here are the key takeaways.

Business recovery

It would be an understatement to say dental practices were hit hard during the pandemic. While the American Dental Association (ADA) reports revenue is down in total, many practices have managed to turn a profit in the five months since they have been allowed to open up again after catching up with the pent-up demand. However, practice expenses are up as patient visits need to be spaced out and the need for extra cleaning costs and personal protective equipment continues to rise. “Planning your next move starts with projecting when your business will recover, so your pandemic retirement plan should include your best estimate of a recovery timeline,” Francis advises.

Planning process

The wait-and-see plan didn’t work out well for businesses trying to recover after the economic crash of 2008. “Business owners slogged through a slow recovery, but too many didn’t take the crucial step of being ready to move fast once the economic situation shifted to more favorable conditions,” according to Francis. “If you’re planning to retire soon, don’t make that mistake; have a plan in place so you’re ready when the first green shoots appear.” The best way to assess revenue, staffing levels, customer traffic, and more is through a valuation of your dental practice.

Future needs

Above all, having a plan in place will help in “knowing where you stand and what is possible can help you stop worrying about things you can’t control and address the factors where you do have influence,” Francis says. Now is the time to ask yourself who you see taking over your dental practice — someone with a similar business approach to you, a current employee, or simply the highest bidder? Additionally, financial advisers are advising dentists to hang up their proverbial hats in anticipation of an increase in capital gains tax while also considering dental practices have the upper hand when it comes to renegotiating a lease, rental rates, or other concessions as commercial real estate takes a hit during these uncertain times.

What’s next?

As Francis says, “Begin with the end in mind” and contact Professional Transition Strategies to start paving the way for your retirement now.

January 4, 2021

Why and How to Show Your Dental Team You Appreciate Them

With 2020 finally in the rearview mirror, now is as good a time as any to show your dental team why and how much you appreciate them. To say this past year has been trying on the dental practice would be an understatement, and it’s never too late to express your gratitude to those who stuck it out and even helped to make things better. With so much of the time spent on patient care, here’s why it’s also important to let your dental team know what they do matters.

Why

A survey conducted online by Harris Interactive for Glassdoor showed employers can retain 53% of their employees longer if their bosses showed more appreciation. A big budget or fancy perks will only keep talented employees on board for so long, but 81% of the more than 2,000 employees surveyed said they’re motivated to work harder when their boss shows appreciation for their work rather than responding to a demanding boss out of fear of losing their job.

How

Even a small gesture like a personalized email genuinely thanking a specific employee can go a long way. Undoubtedly, a lot of new protocols had to be put into place as a result of the COVID-19 pandemic, and recognizing those individuals who helped to get the team up to speed can feel especially meaningful. Pointing out specific actions taken around the office can make an employee feel valued and empowered heading into the new year beyond a general thank you to the whole office at the end of the day.

From whom

A genuine thank you doesn’t always have to come from the owner of the dental practice. In fact, it can feel just as good to hear from a colleague that the work you’re doing around the office matters to the rest of the team. Praise can even be directed at the dentist of the practice to let them know you feel appreciated and taken care of. Whether it’s a written note or verbal compliment, a few words can go a long way in terms of the long-term investment in your whole team, especially in a clinical setting the focus is typically on patient care.

What’s next?

Contact the experts at Professional Transition Strategies to learn more about how to keep your dental practice thriving in the new year.

December 27, 2020

3 M&A Predictions for Dental Practices in 2021

It would be an understatement to say dental practices were hit hard during the pandemic. While the American Dental Association (ADA) reports revenue is down in total, many practices have managed to turn a profit in the five months since they have been allowed to open up again. However, practice expenses are up as patient visits need to be spaced out and the need for extra cleaning costs and personal protective equipment (PPE) continues to rise. All signs point toward an increased interest in selling dental practices or joining dental service organizations (DSOs), as Professional Transition Strategies Founder and President Kyle Francis offered in a recent article for Dentistry Today. Here are some key takeaways.

Industry resilience

Private equity groups have turned toward dental practices as an attractive investment opportunity, particularly specialty practices, such as endodontists and oral surgery groups, since they were deemed essential services. As a result, Francis says, “Revenue and practice valuations for many specialty practices actually increased this year.” Likewise, investors know dental care can’t be postponed over the long haul, and the longer care is put off, the more expensive treatment is.

Valuation methodologies

Investors are looking for new ways to determine the value of a dental practice during these unprecedented times. Typically, investors would analyze the past 12 months of earnings with interest, taxes, depreciation, and amortization, but investors are now either writing off 2020 or looking at the past 15 months to make up for the three months when practices had to close their doors. “Some investors are restructuring deals to decrease the amount paid at closing to offset risks,” Francis says. “Others are aiming for longer-term employment contracts with dentists or structuring deals to ensure the selling dentist still has a performance incentive.”

Wildcards

Dental practices need to continue to rebuild their staff and patient bases in the year ahead, which will inevitably turn up in a valuation down the road. What’s more, while dental practices don’t have the option to work from home, if the owner has invested in the real estate, this may impact the value of the commercial property. Along the same lines, capital gains taxes are likely to increase, cutting into profits when it comes time to sell. “But DSOs have capital, and private equity groups see the dental industry as an attractive investment opportunity,” Francis says. “No one can predict the future, but the 2021 M&A landscape looks positive.”

What’s next?

Contact the experts at Professional Transition Strategies to learn the best steps for moving forward with your dental practice.

December 21, 2020

5 Dental Trend Predictions for 2021

In a recent article for DrBicuspid.com, Professional Transition Strategies Founder and President Kyle Francis dusted off his crystal ball to offer the best-educated guesses about what the year ahead will hold. While 2020 was anything but a typical year, he says “there are plenty of reasons for optimism in the dental sector.” Here are five reasons he thinks this turbulent year still holds a light at the end of the tunnel.

Teledentistry and AI

While teledentistry filled in the proverbial gaps when COVID-19 forced dental practices to shut their doors, it is not a long-term solution sustainable for this highly specialized and tactile field. It is not feasible to expect dentists to gauge the depths of caries with an iPad right now, but artificial intelligence (AI) is poised to change the industry significantly. Companies are using algorithms to help dentists interpret X-rays more effectively, and dental tech companies are pioneering 3D-printed implants to replicate teeth.

DSOs

If anything, the strength of dental service organizations (DSOs) was only solidified in 2020 since independent practices have treaded water navigating the storm of business ownership during a pandemic. Analysts on staff to help dentists make data-driven decisions, bulk purchasing power to secure personal protective equipment (PPE), and human resources professionals to handle staffing issues have all become attractive solutions available through DSOs.

Capital gains tax

Massive government spending programs during the pandemic will come at a cost, even after helping to keep the economy afloat. A capital gains tax is most likely the solution, which may drive dentists to seek an affiliation or exit sooner than later. Financial advisers are advising dentists to hang up their proverbial hats in anticipation of an increase in capital gains tax.

Essential workers status

“This year proved that dentistry is, in fact, an essential service,” Francis said. “Delayed preventive care led to restorative care. Delayed restorative care led to endodontic care. Delayed endodontic care led to replacement procedures.” However, while it’s gratifying to recognize that dental services are vital to overall patient health and well-being, essential medical services are subject to health care reforms.

Commercial real estate

The value of commercial real estate is likely to drop in 2021 with partially or fully remote workforces. Since dentists can’t do house calls or work remotely due to diagnostic equipment, leasing professional office space is a necessity, which gives dental practices the upper hand when it comes to renegotiating a lease, rental rates or other concessions.

What’s next?

Contact the experts at Professional Transition Strategies to help determine the fate of your dental practice in years to come.