Many dental professionals start their careers as ordinary associate dentists who work for someone else. For some dentists, this is where their career ends, but there are also many professionals who work this way for a few years and then start their own practice.
Starting your own practice is always a challenge. From this point, it’s no longer just about dentistry but also about business. Many dentists don’t even consider starting their own practice because of the business aspect. The good news is that there are many professionals, including business consultants and accountants, who can help you. You may never get used to the business aspects but you can always delegate such tasks to professionals so these challenges shouldn’t stop you from growing professionally, opening a dental clinic, or even building a successful dental group.
Where to Start?
First of all, don’t be afraid. Dental practices are among the most successful types of businesses, with a failure rate of about 2.1%. However, how soon you will succeed depends on you, and if you don’t prepare properly, you might fail because starting your business requires you to know exactly what you’re doing and to take care of many details. Talk to other practice owners and think of how they run their businesses. Ask them about the difficulties that they’ve encountered at the beginning.
You may also need to work on your leadership qualities. You should have a clear vision of where your business is heading and set clear goals. A good approach is to start with long-term goals and then divide them into short-term goals. Think of how soon each of your goals can be achieved, as well as what you need to achieve it. Your goals are the basis for your expectations that you can communicate to everyone involved in your business. Without communicating clear expectations, you won’t be able to achieve the desired results.
Last but not least, you should keep in mind that business means growth, and you should also grow with your business, both professionally and personally. You should learn to cope with constant stress and pressure. Owning a dental clinic can be extremely stressful at first, and if you’re a woman, you may need to overcome even more challenges than your male colleagues, so you might benefit from knowing what successful women do in their first 90 days on a new job.
Who You Will Need
When starting a practice, you will have to meet many people. If you’re new to entrepreneurship, you need people who will help you make important decisions and handle various business aspects of your practice. Here are some professionals that you will need.
You can choose from among many options when it comes to finding financing for your dental business. These options include national, regional, and local banks, loan brokers, and SBA lenders. However, not all of them are familiar with the dental care industry. There are many small business lenders who lend in the transaction against the collateral. They often don’t consider soft costs that feature working capital and tenant or build-out improvement. You should look for dental-specific lenders who know what costs a start-up practice involves. Such costs may start at $450,000, and equipment costs only make up about a third of this sum.
General dentists can work on root canals, but if the procedure is difficult, an endodontist will likely do a better job. The situation is the same with accounting so we recommend that you choose a certified public accountant (CPA) who has some experience with dental offices and clinics. There are also many general CPAs who might want to work with you, but the best solution is to choose those who have at least 20 dental clients.
Just like with other professionals, you need contractors who know the dental industry. General contractors might cost you less, but if you want to avoid frustration and overruns, choosing them is a bad idea. Ask your equipment specialist for recommendations, or get in touch with contractors at the state annual session. Your colleagues may also provide valuable feedback on different contractors.
You need a dental equipment specialist who won’t try to sell you all the equipment that fits into your financing. A good dental equipment specialist can be your valuable advisor, and dental practice owners often have strong relationships with equipment specialists that last their whole careers. An equipment specialist who is interested in long-term relationships will make sure that you have all the best equipment from the very beginning without spending a fortune on unnecessary items.
The Financial Aspect
As we’ve already mentioned above, not all banks and lenders are familiar with the costs of a start-up dental practice and funding allocation requirements. Major lenders, however, know what you might need so they can provide the necessary funding. Make sure not to choose a lender based solely on an interest rate. Of course, you should try to keep your payments low so the interest rate is important, but it’s just one of many factors that you should consider. Here are some other things that you should take into account.
Different lenders offer different prepayment options. When you’re just getting started with your practice, loan prepayment terms are not really important. You might, however, consider prepaying your loan when your business is up and running. Lenders will treat your business as an established practice when you have an adequate cash flow and history of practice collections.
Look for the longest term available. Just like when choosing a home mortgage, a loan term of about 10 to 15 years is a nice option. This way, you’ll be able to benefit from lower payments as your revenue stream grows. Moreover, if your success exceeds expectations, you’ll be able to pay down the loan.
You will have many banking needs immediately after you open your dental clinic or office. For example, you will need business credit cards, direct deposit accounts, credit card processing, etc. An experienced dental-specific lender will have all the necessary processes established to pay your equipment company, contractor, and other vendors.
How to Maximize Profits
First of all, you need a stable stream of patients. Therefore, you should have an effective marketing plan. Your online presence is extremely important so you must have a good website and put some effort into different types of digital marketing, including email marketing and paid advertising. The quality of your content is crucial because your website and emails should keep your audience engaged. Of course, writing content for a website takes a lot of time and effort so the best solution is to check online writing services review websites and choose a professional writer from best essay writing service reviews.
Don’t forget that your website content should be optimized for search engines so that it will rank higher, so make sure to check out dentist SEO tips. To drive more traffic to your website, include links to it in your marketing materials. Generally, a great solution is to hire an experienced social media marketer because promoting a dental business on social media is different from promoting real estate objects or other types of business. You should also keep in mind that successful dental businesses rely heavily on internal marketing so you must have appropriate referral policies.
Your expenses will consist of four major categories: staff expenses, lab costs, supply expenses, and facility expenses. Make sure that your staff expenses don’t exceed 25% of the overall expenses. As for the lab costs, we recommend that you keep them at 10%. Supply expenses will make up about 5% of total expenses. If facility expenses are not featured in your marketing plan, they also shouldn’t exceed 5%. This way, your whole expense ledger will fit within the parameters necessary to keep your overall overhead at 50%.
You should also keep in mind the impact of your practice fees on your overhead. The higher the fees, the lower the percentage of overhead related to the fees, and the bigger your profits. Check out where your current fees rank. If they are not in the 80th percentile of fees presented in yearly reports, they are likely too high. If you’re a specialist, aim for the 90th percentile.
Profits increase and the expense percentage declines as you produce more. For example, if you have two dental hygienists, two dental assistants, and two office assistants while producing a million of dollars a year, your staff expenses will be much easier to keep in check based on percentage than when producing $500,000 a year. If you manage to produce $2 million a year, your staff expense percentage will be even lower, and you’ll also have a bigger overall profit, while your staff members will have a higher salary.
Aim for a 100% monthly collection of all production. By collecting more, you’ll be able to reduce your percentage of overhead. For example, if you produce $100,000 a month but only collect $70,000 and your overhead is $50,000, the overhead to production percentage will be 71%, which is too high. At the same time, if you collect $90,000 with the same overhead, the overhead percentage will drop to 55%, and you will get not $20,000 but $40,000 in your pocket. This is simple math and you should keep such things in mind when running a business.
Although starting your own practice and opening a dental clinic can be very challenging for those who know little about business, it’s nevertheless rewarding. We hope that our tips will help you focus on the right aspects of business and avoid some common problems. Choose lenders and hire professionals who are familiar with the dental industry, and familiarize yourself with the basics of accounting. Besides, you should keep in mind the importance of a healthy work-life balance. Both body and mind harmony are necessary if you want to succeed in business.