Building Your First Practice? Do This, Not That.
Congratulations! You’re building a new practice. It’s an exciting time. You have the opportunity to create the space that you want, according to your specifications. You have a loan from the bank that you are confident will be plenty to build your dream office. Sure, some expenses are coming in north of what you had originally anticipated. By the time you found the almost-perfect location and the right builder, it was going to stretch the budget, but you think it will be okay. Granted, the cost of equipment and high-end finishes are teetering on the brink of over the top, but you don’t want to miss the salesperson’s special offers and great deals that they promised to cut “just for you.”
And, well, you’ve waited a long time, at least seven or eight years when you count the four years you spent dreaming about this in dental school. You want to do it right. And why shouldn’t you? Sure you might have to dip into the amount that was reserved for working capital a bit, and the construction delays are going to be a challenge to manage. Then there was that compromise you had to make on the location. But, hey, having that video gaming parlor next door might provide access to a patient niche that you hadn’t considered. And you are confident that you will be making money in no time.
There you have it - the typical practice start-up fantasy. We see it time and again, almost without exception dentists underestimate the cost, the time involved, and the headaches that commonly accompany the process. They’ve never built a practice before, but they’ve talked to fellow dentists who have, and thus they believe they know all there is to know about it.
The stakes are huge, yet too often dentists go into it with an over-simplified view of what is involved and an unrealistic perception of the budget. They see the building and the equipment as the sum total of what they will need to spend. They become impatient with the process and settle for less than ideal space or locations that will not lend themselves to the type of practice they want. But they convince themselves that everything will be fine. They will make it work; after all they are dentists.
If only all it took were the initials DDS behind a name to make every start-up a guaranteed success. Instead, like dental school, it’s a whole lot of work and money. When it’s done right, there are no regrets. When it’s not, the “woulda, coulda, shouldas” will haunt a doctor for decades.
Building a new practice requires a detailed budget, a clear business plan, and a team of well-qualified experts – specifically, your accountant, your attorney, your insurance agent, and your practice consultant – to protect your interests. Each plays a critical role in the process, from the very moment you are considering making this type of investment in your career.
For example, your attorney should review key documents throughout the process, such as the build-out agreement with the office designer/contractor, the lease agreement, the articles of incorporation, and the many licenses, permits, registrations, and certificates from multiple governing bodies that are required before you can open for business. Your accountant will help you assess your financial situation and assist with your accounting systems. They can also advise you on various financing alternatives and help you assess the pros and cons of each. Your insurance agent will make sure that you have necessary building and property coverage, liability coverage, and other insurance appropriate for your practice.
Your consultant will make sure that you are poised to be profitable when the doors open. They are your go-to person for developing a detailed business plan, which is commonly a requirement in securing financing for a start-up. They should also be able to provide demographic assessments of the prospective practice locations and help you select a financial institution that best understands the unique challenges that your start-up practice faces. Additionally, they are an essential source for contacts and vendors in the dental marketplace – not just random salespeople whose primary motivation is making the sale, not building the relationship.
Most importantly, your management consultant makes sure that you have the systems in place to ensure that patients are choosing your practice, accepting your treatment, and paying your fees from the first day you open the doors to your beautiful new office.
Starting a new scratch dental practice? McKenzie Management can prepare you to face business challenges with confidence and provide you with experienced and professional support in your dental practice start-up. Details can be found HERE.
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