THE MUST-KNOWS FOR STARTING
YOUR OWN PRACTICE

Soon after graduating from dental school, Dr. White purchased a dental practice. He bought it from an old friend of the family. Besides the family connection, the low purchase price was attractive to Dr. White, who was afraid of taking on too much debt. He ended up doing the kind of treatment that the former dentist did and that the patients expected: single-tooth dentistry. Dr. White, however, soon became unhappy. He felt a growing sense of frustration from seeing large numbers of patients and predominantly doing procedures that lacked interest for him. Six years after buying the practice, Dr. White felt unenthused and lacked the energy to get up every day for work. He started arriving late to the office and becoming irritable. Then he began a program of clinical study at a major institute. This was a watershed experience. Feeling a new surge of excitement for dentistry, he embarked on an extensive series of clinical courses and became passionate about doing comprehensive-care dentistry. Dr. White took a hard look at his practice and realize that it was unsuitable for the kind of dentistry he wanted to perform. The residents in his area were not known for their interest in healthy lifestyles, so he would now have an uphill battle transforming his practice into the one he wanted it to be. He had put eight years of “sweat equity” into a practice, only to discover that it did not meet his real needs, interests, or goals.

Dr. Brown also bought a practice soon after graduating from dental school. She purchased in a large city, where she and her husband enjoyed theater, restaurants, fine stores, and all that a major metropolis can offer. A few years later, her first child was born, and doctor and her husband investigated school options. They were dismayed to discover that the public schools in the area were undesirable and the private schools had long waiting lists and steep price tags. They decided to move to a suburban town with an excellent school system. Dr. Brown now commutes an hour each way to her office. She must decide whether to sell her thriving city practice and spend the considerable time, money, and effort it would take to start over in her new location, or to continue a commute that saps her energy and robs her of time with her family.

What did Drs. White and Brown do wrong? They made short-range decisions, without seriously considering their professional and personal long-term goals. Dr. White based his purchase decision on a friendship with the dentist and a fear of incurring more debt. Dr. Brown based her decision on where she wanted to live for the next few years without thinking past that. As a result, they grew unhappy with their practices and faced sizable investments of time, effort, and money to change things.

Often new dentists start out in a practice that will not meet their long-term needs. They base their decision to purchase a practice on a fear of contracting more debt, a failure to define their long-term objectives, a lack of sufficient information, or other unsound criteria. You can avoid this happening to you! With a little soul-searching and forethought, you can vastly improve your chances of making the right practice decision from the outset, saving you from what could be a major mistake.

First, let's put you in the right frame of mind. Successful entrepreneurs push the envelope. They are not foolhardy, but neither are they overly cautious. So, it's important to have a healthy attitude about debt, which is part of having a long-term perspective on your new practice. The goal is not to waste years in the wrong practice, but to hit the ground running in a professional environment that makes the most sense for your long-term personal and professional fulfillment.

Here are some questions to answer before you take the very big step of purchasing a practice or starting one from scratch.

Where do you want to live?

The first and foremost question to consider is location. It would be incorrect to think that where you live is not that important. It is critical! You will spend a great deal of money establishing yourself in a location, so you need to choose wisely. This is a personal decision that needs to be based on what will make you happy in the long run. For one dentist, a rural family practice in the suburbs would be ideal; for another, a city practice specializing in esthetics would be the right choice. It all depends on your values and goals. The point is to define them as carefully as you can, and for as long-term a period as you can. Where would you like to live 10 or even 20 years from now? If you can define that, you will have a much better chance of making the right decision on location.

A common error is to start out in one area with an intention to make money so that you can move your practice. After spending years putting down roots in an area, you do not want to throw that time and money away to start afresh if you can help it.

Because there is a vigorous demand for dental services, there are excellent opportunities available for new dentists with a good grasp of business to succeed in just about any location they choose. However, there are some key opportunities.

One of the big mistakes dentists make is to think that practicing in a metropolitan area is more lucrative than in a suburban or rural area. Virtually everything is more expensive in the city, including rents, salaries, utilities, and a host of other expenses. Even though your fees may be a bit higher, it does not follow that you can make more money in the city. The average rural practice has a 10 percent lower overhead than its counterpart in the city, with rents reduced as much as 50 percent. And there are excellent opportunities in rural communities throughout the country. When people work in a dental practice in rural America, it often becomes a career to them, rather than just a transient job, so the quality of staff can be higher. Being the doctor in a small town carries with it a good deal of prestige. Patients who know and respect you as a member of their community—and who want to be respected, as well, in their town—have incentives to pay their bills in a timely manner. And currently there is a strong demand for good dentists in small towns. Consider this option, if possible. It may be the best opportunity available in dentistry today.

What kind of practice do you want to have?

You must be passionate about the services, systems, staff, and patients that comprise your practice. If a practice fails to excite you, it will not bring you lasting happiness. You need to create a compelling vision of the outcome you really want. If you do not create a blueprint that suits your needs, you will end up suiting other people's needs—your patients', your staffs', other dentists', or your family. Dr. White bought a practice built on single-tooth dentistry, although this kind of dentistry did not excite him. As a result, he began experiencing signs of burn-out within the first 10 years of his career. Without pursuing the goals he really wanted, he was unable to sustain the huge commitment that dentistry requires.

Seriously consider your professional goals. Do you want to be an all-around general dentist, or do you want to specialize in esthetics, quadrant dentistry, pediodontics, extreme makeovers, dentistry for seniors, or another area? The demographics and economics of a community will very much dictate the success of each of these considerations, so analyze and understand them to determine your best chances of success. For example, a neighborhood that is “going downhill” may have practices for sale at bargain prices, but it also may provide shrinking opportunities for a new dentist who wants to develop a crown-bridge-implant practice. On the other hand, a blighted area that is buzzing with new development can be an excellent opportunity.

What kind of person is your ideal patient?

If you could invite only so many people to your party, who would be your ideal guests? Think of your practice in the same way: You want to attract the kind of patients that you will enjoy spending your working life with. Part of building the practice of your dreams is clarifying what your ideal patient “looks like.” This does not mean that you would be unavailable for all levels of care and service. It simply means that you would seek as high a percentage of ideal patients as possible. “Ideal” does not merely mean that the patient will pay your fee. It means the patient will align with your vision. Who would you rather treat: Someone who resists the dentistry you want to offer, or someone who embraces your approach or could come to embrace it in time, with a little enlightenment from you and your staff?

Do you love dealing with children? Do older adults present the kind of dental challenges that excite you? Are young, upwardly mobile professionals a good match for your interests? Are you bilingual and would you enjoy patients who appreciate that service? It is important to define the profile of your ideal patients as early as possible. Are they young, middle aged, retired, male, female, or of a particular ethnic or religious persuasion? What is their economic and employment status? Will they recognize what you are trying to achieve for their dental health? Even if only one in five patients will initially fit your ideal profile, in time you can increase the number by target-marketing for your ideal patient, as well as by educating the patients you have to appreciate the services you want to provide.

Is your ideal patient available in the area where you want to practice? Once you have defined your targeted patients, the next step is to find out where they congregate. For example, you would have a big challenge starting a pedodontic practice in a retirement community, but in an area bustling with young couples in starter houses, you could expect to find many children.

What is the competition like in the area you are considering?

Always consider the competition. Get a map of your chosen area, and put colored pins on the places where each general dentist and specialty dentist is located. Then look for vacant areas where you might have an excellent opportunity to start a practice.

If there are other dentists and specialists in the area you seek, what will separate you from the rest? Your brand identity needs to stand apart. Will you be the only dentist who offers conscious sedation and/or other services to attract and relax the patient who fears the dentist? Will you be the one to offer Cerec in an area where busy professionals value having crowns made in one visit? Think about how to carve your niche.

What should you look for in a facility?

Build with the expectation that you will grow. A facility should support your goals for five, 10, and, if possible, 20 years down the road. Buy a facility that will have sufficient operatories to accommodate you in the future, or a place that you could build onto when more space is needed. The look and feel of the facility is another important consideration. A tattered carpet and outdated décor will attract people who will appreciate that environment. Choose a facility that will match the kind of patients you want to attract, or be prepared to remodel.

Know the current practices on business locations in the area you are considering and determine how they may help or hinder your plans to establish yourself. For example, certain parts of the country are adverse to dentists locating in commercial settings like strip malls, whereas other communities may welcome dentists in these settings. In certain locales, professional buildings or plazas are available, while in other areas, a street exposure and walk-by or drive-by traffic is important. What parking is available to patients, and will it be a plus or minus for your practice?

Cost is also a major consideration. The average build-out of an office is going to cost between $100 and $200 per square foot. This is just for the basics—plumbing, vacuum, electric, and walls. The equipment and furnishings will be another $100,000 for a five-operatory office. A start-up averages between $250,000 and $400,000 to get the front door open and—as one dentist said—to listen to the crickets! It will take over $150,000 of gross income to break even and, usually, between one and two years. By that time the sweet sounds of busy staff and patients should replace the crickets. It will require another $100,000 or so to stay alive in the interim, or a total of between $350,000 and $500,000 before the first profit is realized. It is important to budget enough to have working capital, which is the amount needed to pay expenses while your new practice picks up speed. Develop your business plan for the worst-case scenario and allow yourself sufficient working capital to succeed. Hopefully, you will not have to use it all; however, you need to realize that it takes a while to build momentum and cash flow.

By buying an existing practice, you will be purchasing instant cash-flow and usually instant income. Finding an existing practice to purchase will reduce the risk of failure exponentially. However, it should be a practice that will fulfill your career and life objectives, as discussed above.

Does your choice of a practice fit the vision and values you have set for your career and your life?

To summarize, choosing your practice wisely means establishing yourself in a situation that will lead to the achievement of your most cherished goals. There is an old saying: A vision without a task is but a dream. A task without a vision is drudgery. But a task with a vision is a dream fulfilled. We see a significant number of dentists who are suffering from burn-out. This occurs when they set a vision without taking the necessary steps to fulfill it, or when they perform the tasks of their work without having a clear-cut vision to aim at. It takes both the vision and the tasks to fulfill your aspirations. We know you can do it! Start now by evaluating the above questions carefully, and then go out and find the best opportunity for your successful career in dentistry.

Amy Morgan, CEO of Pride Institute
Hy Smith, MBA, is the director of transitions services at Pride Institute