Starting vs Buying a Dental Practice
ADS brokers help you find the right path and avoid costly mistakes.
Should You Purchase an Existing Practice or Start Your Own?
Recent dental graduates have to make big career decisions that will impact the rest of their lives. If you are at this point and are hoping to one day own your own practice, you have likely considered whether to start your own practice or buy an existing dental practice. There are benefits to both strategies, but each must be approached with caution and forethought for the best chance of success.
Buying an Existing Practice
One of the greatest benefits to buying a practice is that you can rely on some of the existing experience from the previous owner. Systems are typically already in place, including staff with clear responsibilities and billing and payroll systems. Another benefit is that an pre-existing practice will have a profit and loss sheet to review. When a practice is already profitable, it is easier to plan for expansion. It is also easier to qualify for a loan because you can show profit in the past. Finally, if you buy an existing practice, there is likely already a client base that is connected to the practice. This makes it easier to make a profit during your first year than if you had started a practice from scratch.
However, an established practice will come with history and procedures that may not fit you exactly. Also, due to the purchase cost, you will likely make less money over time than if you had started a successful practice yourself.
Creating a New Practice
Although you take a bigger risk, there are benefits to starting a practice. For one, every major decision will be yours to make. While that can be overwhelming, it also gives you the opportunity to shape the practice into exactly what you want. Yours will be the guiding philosophy and vision; you will not be working on someone else’s dream. Additionally, a new practice is an opportunity to take advantage of any business skills you possess. If you are able to start a practice and later sell it, you’ll likely make a bigger profit than had you purchased a pre-existing office.
As mentioned, starting a practice can be a major risk. It is important to note that many start-up practices fail due to undercapitalization or because new doctors struggle to build cash flow while battling location or economic hardships. Additionally, without consistent patient flow, it becomes difficult to build management skills and make sound business decisions.
Whether you decide to buy or start a practice, business ownership takes experience; missteps and miscalculations can be devastating. Our dental broker team at ADS can help you to decide which option is right for you, and we can also help you as you navigate the choice that you have made. Click here to get in contact with your local dental broker today.