NAPB Dental Practice Broker Is Direct Mail Still Worth It for Your Dental Practice - Flickr, Credit Bogdan Suditu

Is Direct Mail Still Worth It for Your Dental Practice?

If you are looking to establish or maintain a reputable and profitable practice you will sometimes find it hard to balance being both a dentist and a businessman.

Regardless of where you put most of your attention, you need to understand the importance of effective marketing.

Much has been said in the last few years about the increasing importance of digital marketing and the changes in both technology and clients, as Gen Y becomes the largest demographic of consumers in the world.

Many businesses however still focus heavily on print related marketing – they hand out physical business cards every chance they get and are committed to using direct mail as part of their marketing strategy.

So one pressing question is; is direct mail still effective?

And the answer is a resounding YES!

This is for a couple of reasons. First, for local businesses such as dental clinics, a large part of the marketing is based on building a personal connection and a printed letter or handwritten message will always feel more familiar than an email or text.

Second, the Internet can be incredibly competitive, and as more and more businesses are focusing their efforts on Internet marketing, the potential for you to have some success with direct mail increases.

So how can you make sure you direct mail is effective?

We’ll cover this in more detail in a future post, but for now here are a few points to keep in mind.

Integrate your online and offline efforts. Your mail should include a call to action and a link to your website, as well as a contact email and Facebook details for your practice.

Provide offers. If you offer coupons or discounts for whitenings and check ups then prospective clients are far more likely to open the mail. Something as similar as a 25% discount for an initial consultation could give you huge value in the long run if it brings you a long term client.

Make it easy to read. People are used to reading differently in the Internet age – their attention spans are a lot shorter. So don’t include a mountain of text in your letters, just make sure it is simple, spaced out, and anything important is bolded.

Track the mail. Don’t just send everyone the same mail; existing customers and prospective customers should receive different messages. Customize the letters as much as possible depending on whom the client is that you are sending it to.

With a little focus, direct mail can bring your practice a lot of value. Experiment with different offers and formats today and see how effective they are at generating leads in your area.


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NAPB Dental Practice Brokers 6 Phone Tips for Closing Prospective Patients - Flickr CC, Credit Alan Clarke

6 Phone Tips for Closing Prospective Patients

Keeping regular dental patients coming in the door is a matter of having a proven and reliable sales funnel in place.

Whether your clients are coming from direct mail, personal referrals, or by way of the Internet – at some point you’ll need to speak to them either on the phone or in person. If you’re looking to sell or hand over your practice you will need to establish a solid sales funnel to prove to a buyer that your business model is sustainable.

When receiving a call from a client, make sure you and your staff are pushing for appointments and not simply going through the motions or passively answering questions.

Here are some tips to keep in mind when speaking to prospective clients on the phone.

Set an intention. Make sure you have a goal from the call, whether it’s for the client to set a date to call back that week or to get them to agree to an appointment.

Be knowledgeable. Answer any questions your patient has with complete confidence. People come to a dentist to get their teeth cleaned but they also want to be as comfortable as possible, and they need to have confidence in you in order to feel reassured about their care.

Spend enough time building rapport. You don’t need a master’s degree in communications to be able to understand the basics of building rapport. For the most part, it is a matter of developing empathy and general interest in your patients. One thing you can do is to start the conversation with a question. Simply ask them how their family or work is going – if they are a returning patient, try and get into the habit of picking up the conversation where it left off last time.

Make sure you answer all questions. Always finish the call by asking if they have any more concerns. Not everyone will speak up on the phone. They may think the question they have is silly even if it’s completely valid. It’s up to you to get it out of them.

Give them instructions about what they need to do next. Let them know when you’ll be in touch or when they need to be in touch, and exactly what they need to do if they have a procedure coming up. Also, always make sure to follow up with an email or a text so they don’t push your conversation to the back of their mind.

Have you trained your staff in best communications practices? Are there any tips we’ve missed out? Let us know in the comments!


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What Dentists Should Look for in a Financial Advisor

As an owner of a dental practice your financial needs are unique. It’s a good idea for any professional in any business to have a financial advisor help them maximize their earnings to keep the money they have earned safe. There are a few things that separate your financial needs from other professionals, so it’s important to work with a financial advisor that knows how dental practice operates, how to value a dental practice, and how to address your unique set of circumstances.

Here are some of the most important things to look for when searching for a financial advisor:

  1. Make sure your financial advisor has worked with other dentists. The more, the better. You want an advisor who has already experienced the financial patterns of a dental practice and knows what dentists need, from the time they begin practicing until they get ready to make a dental practice transition. There are many areas that a general financial advisor has no understanding of when it comes to dental expenses and income.
  2. Find out how your financial advisor gets paid. Do they earn their income through commissions on selling products for a larger company or do they earn based on fees paid by you? The commission earners will be biased toward a specific product and may not give you a full picture of what you can do with your money.
  3. What type of education and licenses does your financial advisor hold? Many companies provide “weekend workshops” allowing almost anyone with any background to become “certified” as a financial advisor. There are only two designations you want to look for – Certified Financial Planner (CFP) and Certified Financial Advisor (CFA).
  4. Look for a fiduciary planner. Someone that is licensed as a fiduciary has made a legal commitment to putting their client’s needs above their own. This is not something that just any financial advisor will necessarily have.
  5. Talk to other dentists that you know and respect. Who do they recommend? This may be your best source for locating the ideal financial planner for your dental practice and for your transition of that practice.

Picking the best financial advisor for your specific financial needs is one of the most important steps to peace and security for your future. If you’re considering selling your dental practice it’s a good idea to use the best financial advisor available to you. Likewise, if you’re just starting your dental practice and want to make sure your financial needs are met for the duration of your dental career, use this checklist to determine if the planner you are considering is the best for your situation.


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Tips for Growing Your Dental Practice During a Tough Economy

The last decade has seen industries across the board from retail to hospitality to healthcare all facing tough economic times. Many families have been forced to reduce spending, and unfortunately dental services often become one of those cuts.

When it comes down to it, even in a difficult economy there is still revenue circulating and there will still be people needing to visit the dentist. Though there may not be the same opportunity that exists in a healthy economy, a simple change in marketing may make all the difference.

Find a mentor

This is particularly relevant if you are a younger dentist, but age really isn’t a factor here. What you want to find is someone that has been through financial slumps in their own private practice who can offer you advice on how to best deal with it. Finding a mentor may include becoming part of a club or hiring a business coach.

Any way in which you can gain advice from others who may have practical recommendations for your dental practice or have more general mindset tips from a wider business perspective – all of it can help.

Get into the minds of your patients

When patients start to come through the door at a slower rate, many practices go into panic mode. As the owner of a private practice you need to understand that there is still ample opportunity for you to find new business.

Take a step back and try and get into the minds of your patients. Who are they? Do they have insurance? What demographic are they in? What motivations drive their purchasing decisions (including healthcare) during a recession? What might make them want to invest in going to the dentist?

For example, if you are going to be working in an area where the majority of patients have insurance, you’re going to want to focus on becoming a preferred provider.

Participate in your community

When times get tough people can get into the habit of worrying and as soon as this happens they’ll forget about some of the peripheral aspects of their life – which may include those things your business provides. One way to counteract this while continuing to build valuable relationships is to participate in local community events. Make an effort to help others, make friendships and network with other local businesses. Look for your local Rotary Club as a place to start.

Step up your customer service

When a market is competitive it’s the little things that make the difference. Spending time focusing on how you can improve your customer service may be the reason a prospective customer chooses to go with your practice as opposed to someone else’s in the area.

Though it may be more difficult to sell your practice during a tough economy, if you want to continue to generate revenue through a valuable dental practice, it’s going to be necessary that you put in extra effort. With that said it is not impossible to grow your practice during these times, it just requires focus.

How have you managed to stay profitable during the recession? Is there any advice you would add? Let us know in the comments!


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5 Ways to Increase Productivity For Dentists

Like any service based business, the productivity of your day-to-day operation has a huge impact on your bottom line and the valuation of your practice.

For your patients, a notable amount of stress often accompanies dental visits. For them, a short experience is a good experience.

If you spend a second watching your patients in the waiting room you’ll see how anxious most of them are – constantly checking the time, trying to distract themselves from the procedure ahead.

A dentist that can keep them from spending too much time in the waiting room, and make sure procedures are speedy and effective, will soon develop a great reputation.

  1. Time your procedures. A lot of dentists don’t actually bother with this. They roughly estimate how long it will take for the assistant to prep the room, for them to perform the procedure and for administration to finish all processing. This leads to overlaps which leave patients waiting in line.
  1. Be willing to invest in equipment. It is important to invest in new equipment, not just for safety reasons, but because it will improve the efficiency of your practice. You can have your assistant manage the equipment and stay on top of industry trends, so you know when it makes sense to make a purchase.
  1. Train and trust your dental assistants. If you adequately train your staff to do as much as possible you’ll be better able allocate your time and you’ll have a more competent and reliable team. Make sure you are familiar with state laws that dictate exactly what your staff is allowed to do based on their qualifications.
  1. Master your scheduling. Having a neat appointment book that is easy to navigate, or even digital can prevent a lot of hassle. It’s even worth having patients ‘check-in’ once they get to your practice to determine who are typically no-shows or late comers. This way you can tell them that repeatedly coming late results in a fine – and this will often incentivize them to come on time.
  1. Brush up on your management skills. Effective management means that tasks are delegated properly, everyone knows their role in your practice, and all employees are motivated.

Productivity can ultimately save you a lot of time and stress in your practice.

Consider these five practices and you’ll begin to see noticeable improvements in your bottom line.


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Tax Related Advice to Consider When Selling Your Dental Practice

A successful dental practical transition requires that you are knowledgeable in many different areas.

For example, you need to know how to sell the practice, how to market the practice, and most importantly, how any tax laws may apply to the dental transition.

Because the sale of a dental practice is typically a significant sum of money, proper knowledge of taxation procedures could end up saving sellers thousands of dollars. However, these savings are dependent on a number of factors, which are also dependent on constantly changing state and federal tax laws. In fact, just 10 years can make a big difference in the market and legislation.

Even if you’ve already sold a practice, no two sales are the same, so an adequate understanding of t tax law is important. For this reason, you will want to make sure you get the best tax advisor for your practice.

However, even before you do this, you can familiarize yourself with tax tips to make sure that you know the basics and are asking the right questions of your advisors. Below we’ve composed some basic advice that you may want to review before approaching and while in talks with, a tax advisor.

Learn about asset allocations. When selling your practice there are multiple tax categories by which your assets will be allocated. The brackets will be different, with some falling under favorable capital gains, and others under standard income. Make sure you understand what this means for your practice, and learn how to get the most appropriate tax return on your assets.

Look at different retirement plans. Depending on whether or not you plan on sticking with the practice for a length of time following the sale, you may be able to use your retirement plan to shelter part of it. Know your intentions after the transaction, and make them clear with your advisor.

Avoid double tax. In the case that you are a corporation (C-corp.) then make sure the sale is structured in a way that as the doctor-shareholder, who has goodwill with the patients, you can attribute all the goodwill to yourself in your individual capacity. If you will be practicing for longer than 10 years, ask your tax adviser about the benefits of transferring to an S-Corp.

Remember that selling your dental practice can be a complicated process, so make sure you always seek advice from a competent tax professional.

Making an informed decision when choosing a consultant will give you a decent return on your investment, as the amount of savings you can generate from their recommendations will largely outweigh the cost of hiring them.


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Three Items Sellers Will Need to Show Potential Buyers

When your goal is to sell a dental practice, the smart seller’s credo is simple: Disclose! Disclose! Disclose!

Providing thorough information is of utmost importance when it comes to educating potential buyers about your dental practice for sale. You can never present too many details to a buyer. Informed and ready-to-market sellers know that information is king.

While the Doctor selling a dental practice cannot always fulfill every buyer’s complete wish list, we’ve prepared a checklist that is sure to leave a good impression on even the most demanding buyers.

Real Estate Appraisal or Lease Agreement

The seller’s property is the highest valued fixed asset in the transaction, and it is vital to provide potential buyers with an appraisal of the real estate. Additionally, if the seller leases the practice to the buyer, it is vital that the lease is priced accordingly to fair market value.

When the property is under a lease agreement, the buyer needs to know the terms of the current lease and whether it is possible to assign it, renew it, or renegotiate it for a better fit. An additional key point to keep in mind is that lenders review lease agreements, and many insist that the length of the lease align with the length of the loan made to the potential dental practice buyer.

Production Reports /Income Streams by Provider and Procedure

Show them the money!

The buyer of a dental practice needs to identify all sources of revenue, including how much is produced by the owners, associate dentists, and hygienists, respectively. This report would also include the procedures performed by each source as well as the collection process. Records need to include revenue from the past three years as well as projections for the next three years.

Understanding these procedures and records enable a buyer to determine the quantitative strengths, weaknesses, and potential opportunities for the practice. This report includes details of the associates’ agreements too. An accurate report also helps the potential buyer on multiple levels, ranging from the scope of the business to providing lenders with more accurate information to maximize lending opportunities.

Employee List with Salaries and Benefits

Buyers also need a list of all the current employees of the practice, their job duties, salaries, and benefits. A detailed list is important even if the new buyer plans on making staffing changes, because it offers a solid estimate of the expenses incurred. According to DentalEconomics.com, excluding associate doctor’s wages, employees’ expenses should be approximately 25 percent of the sales generated by a practice.


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Four Vital Points to Review Before Buying a Dental Practice

One of the most important career decisions many dentists will make is how to invest in their practice. Selling a dental practice is an important matter, and buyers seeking practices that fit their buying criteria want answers with measurable value.

Serious potential buyers need concrete facts and details to review before making a purchase. Representation by a third party ensures proper procedures and standards for buyers and sellers. While the process itself is somewhat straightforward, each practice contains a set of variables unique to its business model.

We have put together a checklist of four vital points that most buyers will expect sellers to provide to advance the sales process.

  1. Three to Four Years of Tax Returns

This financial data gives buyers sufficient information to measure the performance of the practice.  Additionally, a handle on stability and sustainability may be obtained via said analysis.  By gathering several years of data, trends can be monitored and stability can be evaluated.

  1. Aged Accounts Receivables

Next to the balance of cash in your bank account, this is the most vital asset on your books. The ageing of receivables also provides insight into the practice’s administrative efficiency.

  1. Dental Practice Valuation

A qualified valuation analyst usually prepares the appraisal of a dental practice, and a business analyst or a professional accountant prepares the report. Analysts set valuation procedures in place to indicate the potential value of the practice.

  1. Cash Flow Model

The cash flow model determines the viability of a practice sale. This projection forecasts sales and the costs of running a dental practice for a five to 10 years period.

The analysis of a practice includes growth rate and all fixed and variable operating costs between five and 10 years after the acquisition. A proper analysis does not include “forward thinking”; instead, it is based strictly on a conservative history of the practice. While high hopes and positive thinking are wonderful traits, a legitimate evaluation only includes empirical data. Additionally, we recommend placing an emphasis on the first five years of the report.

In our next post, we will review specific details to optimize the cash flow model, while providing information to supplement this piece on preparing to sell a dental practice.


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Check the Bottom Line: Profitability Impact on a Dental Practice Appraisal

An NAPB dental practice broker sees many scenarios when it comes to dental practice transitions. In an effort to save yourself a tremendous amount of time and trouble, let’s look at a few case studies to safeguard your primary asset—your dental practice.

By educating yourself and paying attention to profitability, you can be well-positioned when you arrive at your dental practice transition. First and foremost, look at expenses, especially competitive vendor products and services. These expenses often are inflated and they can greatly impact your bottom line.

Case Study #1: Dr. X has a practice running along smoothly. He is getting ready to retire in a few years. He is operating under the assumption that when selling a dental practice, the practice is worth about 65% to 75% of the previous year’s gross revenue. There are a number of factors that influence those percentages and therefore influence the dental practice valuation.

When crunching the numbers, Dr. X noticed that his net income had not kept up with his steadily-increasing gross revenue. Dr. X had some overhead that needed to be trimmed down before listing the practice. Specifically, his hygienist had a brother-in-law who provided dental supplies. Therefore, it had been quite some time since she had looked at pricing from other vendors. When she shopped competitively and shared the other vendor offers with her brother-in-law, he was able to meet their pricing, reducing his prices and saving the practice money.

Case Study #2: Dr. Y is new to practicing dentistry, but she is interested in keeping her practice as profitable as possible. She is building her practice at a steady rate, developing and cultivating patients, and becoming established in her new community. When she looked over her books, she found that her lab costs were higher than the industry average.

Lab expenses usually run about 9% of gross income and her lab expenses were at 12%. She sent all her lab work to a lab operated by a friend from dental school (and had done so since opening), but when she did some comparison shopping, she found that other labs offered the same services at a much lower cost. Dr. Y’s friend wasn’t able to match the other vendor’s pricing so she switched labs and saved 3% of her gross income, about $12,000 every year.

It’s a good idea to keep an eye on expenses whether you are just starting out or contemplating retirement. Some seemingly small changes can have a considerable effect on your dental practice appraisal—a vital part of pricing when you are ready to sell a dental practice.

A local dental practice broker can be an imperative resource to define the appropriate percentage ranges for expenses in order to keep your dental practice profitable. Call for a free consultation today.


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Seven Parts of a Dental Practice Appraisal

We recently stated that a dental practice valuation is the first step to prepare a practice for sale.  Once completed, the next step is to implement a dental practice appraisal. The appraisal complements the valuation with an accurate value of a dental practice.

Maximizing value and substantially increasing the probability of the seller receiving their asking price is the reasoning behind preparing this report which, generally is between seven and ten pages and covers seven key variables of a dental practice.

1 – Summary of the Practice

The summary of the practice provides a history of the business and its owners (dentist or dentists). It is an overview that conveys the length of time a practice has operated, its current and past locations, its areas of specialization, and background information on the owner(s).

2 – Gross Sales and Net Profits

This section of the dental practice appraisal usually includes a four-year history. The information reported is based on a practice’s past three-years of filed tax returns and current year-to-date numbers. The practice’s expenses need to be restated to show the real profit and cash flow.  Both personal expenses and non-cash deductions need to be added back to determine its true potential for profits.  Examples of personal expenses might include car-leasing payments and medical insurance of the owners; depreciation and amortization would be examples of non-cash deductions.

3 – Patient Base/ Operations Overview

This section is the breakdown of a practice and what comprises it. It includes the number of active patients, which are patients treated within the past two years, and new patients. Both figures combined serve as good indicators for gauging stability, sustainability, and growth potential. Demographic information on patients is also included in this section, such as the age range of the patient base. The average number of patients per week is presented along with the number of customers treated by the dentist and the hygienist.

4 – Details of Office

Specific information on the facility is provided in this section. It includes the amount of square feet, the floor plan of the facility, and the condition of the business’ equipment, both office and medical. Additional information includes the purchase price or the leasing terms of the physical location.

5 – Community Demographics

An overview of the area explains the type of community surrounding the dental practice. Usually, it is cited whether the area is urban, suburban, and small or large. It also may include the population and an economic breakdown of the community, that is, working class, middle-class, upper-middle class, or upper class. Strengths and positive aspects of the area also are included here.

6 – Fee Structure

The income generated from each procedure and the percentage of the total income each procedure represents is the vital content of this section. The fee per procedure also should be included.

7 – Office Hours

The man-hours of the entire staff and the office hours are included here. Office hours of the owner, the associates, the hygienist and staff members of the office are included.

All this information in one report enables perspective buyers to audit the dental practice more efficiently. It is a huge step in pushing the sale forward.


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