By Christine Villarreal; Xite Healthcare Real Estate
If you’re facing the prospect of transitioning from practice associate to owner, dental school to a starting a practice—or somewhere in between, it’s natural to feel apprehensive about the unknown.
It’s true it can be very challenging moving into entrepreneurship mode. Even some of the most skilled and knowledgeable practitioners ultimately fail due to poor planning. But as long as you do your homework and educate yourself on the start-up process, your probability for success is very high. Unless you’d be happy working for someone else your entire career, there’s no reason fear should hold you back from your dream of practice ownership.
So let’s address a few common phobias surrounding starting or adding a practice, and why you shouldn’t let them hold you back.
Will I Be Able to Get Financing?
If you feel like you won’t be approved for a loan because your student loans and other debt are a dark cloud over your head, you’re not alone. Most dentists in your shoes believe they can’t get approved for additional loans. However, this is a misconception.
Since the probability for a dentist to default on a practice loan is 1% or less, banks consider practice loans to dentists a low risk, and help borrowers set up for success. For a first-time practice, banks are willing to loan a dentist $350,000-$500,000 or more, depending on the situation.
Can I Survive Out There?
It seems like there’s a dentist around every corner. Can you survive in a competitive environment? The answer is yes, you can succeed!
One of the critical factors to a practice’s success is its location. It’s extremely important to invest a substantial amount of time researching and speaking with dental-specific real estate professionals, as well as dental-specific contractors, designers, and equipment specialists. These professionals specialize in developing practices from the ground up, and serve as advisors throughout the process.
Real-estate professionals specializing in the dental industry and that have comprehensive knowledge of the Texas dentistry market can help you implement a data-driven plan. Using statistics, they can assess patient demographics of an area that are conducive to your practice’s success. (TDA Perks Program partner Xite Realty provides a free initial demographic analysis to TDA members.)
Keep in mind that a dentist planning to open a practice should ideally begin the process of locating a property a year or more in advance. This timeframe allows for the completion of necessary planning and paperwork and construction and customization of a new facility. This is why a proactive and aggressive approach is so important to securing the location you want.
I’ve Never Run a Business Before.
“Did I get enough business knowledge in school, or as an associate, to run my own office?” This is a valid question, and many dentists feel it might be easier to work for someone and collect a paycheck than be the one writing paychecks to employees as well as themselves.
A good way to approach this issue is by having a strong financial team around you that includes a CPA, attorney, financial advisor and management consultant.
Some key questions you should ask yourself, and consult with your team about, are:
- What are my practice goals?
- Where do I see myself and the practice in five, ten years?
- Will I eventually add an associate?
- Did I negotiate enough space to accommodate my practice goals?
Let’s say you planned space for only 3-4 operatories. Later, after your practice grows, it may not have space to expand, and lose potential income. That’s why it’s key to have the guidance of knowledgeable people behind you from the beginning.
I’m Afraid I’ll Be Overwhelmed.
“It may be too much for me to handle.” It’s true you might feel overwhelmed at the beginning of your transition. But once you understand the process of running your practice, it will become second nature. You’ll feel a sense of accomplishment and experience a completely different workload as a dentist and owner. Furthermore, with the right team leaders and team, being overwhelmed won’t be an issue; and the rewards will outweigh the risks.
How Will I Survive With This New Debt?
Will you still be able to afford life’s expenses? The answer is yes. You may have to change your lifestyle for the first year or two as you build your practice. But with proper planning, the bank will provide enough working capital to cover living expenses. Build out, equipment, marketing, working capital and survival expenses will be factored into a loan, if so desired. So fear not, this is a normal part of starting a practice. Once you’re established, this fear will be a thing of the past.
The key takeaway? Despite the common fears dentists face about practice ownership, with careful planning and the help of a strong team of advisors, the probability of their succeeding is very high. Now that you know you have the means to succeed, there’s nothing to stop you. Owning your business and practicing dentistry your way will be very rewarding in the end.