Dental Practice Broker Articles
Avoid These 5 Major Mistakes When Buying a Dental Practice
Purchasing a dental practice requires careful thought and consideration. Once you’ve acquired the funds to make the purchase, there are some critical questions to ask yourself before you sign on the dotted line.
- Is the practice the right one for you?
- How are you going to manage the practice after purchase?
- Which operational aspects should you be more invested in?
- What financial figures and patient numbers should you work toward?
- What are the most efficient systems you can implement to market and manage your practice?
- What will you do to improve your practice’s profitability?
Answering these questions thoroughly can help you avoid some of the most common mistakes that other practice owners have made when purchasing a dental practice.
- Don’t Ignore Earnings Normalization
When you are in negotiations to buy a dental practice, you will be provided with the current owner’s records to give you an idea of the financial health of the practice. Don’t take the financials at face value. Review all operational expenses with your CPA.
- Misinterpreting The Seller’s Utilization
Remember that all dentists work differently, and there may be a major difference between the seller’s ability or areas of expertise when compared to the purchaser.
All staff hours should be considered for how efficiently they are filled, and the role of the doctor should be to spend the minimal amount of time with each patient required for each treatment or procedure. This helps the practice move efficiently, which means your patients don’t spend as much time in the waiting room.
- Forgetting to Generate Revenue
It may sound obvious, but there are many dentists who do not have a plan to increase their revenue. There are many creative options for increasing revenue, and they should be a focal point of your strategy from day one. Online advertising, direct marketing, and patient retention marketing need to be adopted as early as possible.
- Not Performing Due Diligence on Patient Files
Your average patient file should range between $400 to $525 per annum, but of course, you will have patients with larger and smaller fees. In the event that your patients do not fit into this range, their files should be reviewed. If their fees are lower, consider working on your own sales skills.
- Not Optimizing Your Working Capital
Buying for the right price leaves you with more free capital to get your new practice off the ground. You may have access to a lump sum right now, but if you buy for that price, how much running capital does that leave? Work on your deal closing ability, or partner with an experienced broker that can help you optimize your working capital.
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