Many dentists have a specific career plan after qualification, often culminating in them owning their own practice. For the majority, this represents a once in a lifetime opportunity to grow their own business and reap the financial rewards as they work towards enjoying a comfortable retirement. But purchasing your dream dental practice may not be as straightforward as you think, particularly in a fiercely competitive marketplace in which demand continues to outstrip supply.
By failing to prepare, you are preparing to fail. But by conducting the following due diligence and surrounding yourself with trusted advisers, you will be in a better position to realise your ambitions.
Know what you are looking for
Whether you decide to purchase an NHS, private or mixed dental practice, there is no right and wrong answer as each option offers contrasting benefits and challenges. But as an individual it’s important to select a business structure that is best suited to your strengths and preferred way of working. NHS contracts provide a guaranteed income and typically have lower patient turnover so understandably attract many interested buyers. However, NHS contracts can also be restrictive and perspective buyers can expect to pay a premium for them.
Private practices appeal to more entrepreneurial dentists and those with patient membership plans can be very profitable. However, there is an emphasis on practice owners to be proactive in marketing them due to the levels of competition they face to retain existing patients and attract new ones.
Create a robust business plan
Your business plan should represent a blueprint for success and will be analysed with a fine toothcomb by financial lenders who will be looking for tangible evidence that you are worth backing. Prospective buyers should familiarise themselves with the previous financial forecasts of the practice they wish to purchase, in addition to analysing the profit and loss figures, to build a comprehensive picture of the business.
Your business plan should also include contingency measures in case the practice’s income declines and assess what impact this will have on your personal finances in the event of you taking out a long-term loan.
Location, location, location
The location of your dental practice is extremely important and can be critical to your business’s success. Practices that are located close to public amenities, affluent areas, good schools and with convenient transport links will command a higher price but may also help you to attract new patients. It is also imperative to ascertain whether your preferred practice has adequate parking on-site and relevant planning permissions in place should you wish to carry out refurbishments, or extend the practice building to create additional surgeries.
Pick the right team
The process involved in purchasing a dental practice can be quite complex, yet many dentists still opt to appoint generic financial lenders, solicitors and accountants to save costs and experience mixed results. To avoid delays and swiftly overcome any unforeseen obstacles which may materialise, it is recommended that both the buyer and seller appoint specialist legal and financial practitioners who intrinsically understand the dental transaction process.
Collectively they will be able to offer step-by-step support during the four key stages which influence the success of buying a dental practice: pre-contract, due diligence, contract negotiation and exchange and completion. In addition, specialist finance providers can offer flexible payment over time options to support investments in new technology and dental equipment, in addition to short-term working capital solutions to help boost cash flow and preserve vital working capital.
Buying or selling a dental practice comes with risks and rewards…
From determining the right business model and pinpointing the best location, several personal and legal factors must be carefully considered before you take the plunge. Choosing the right financial partner with specialist knowledge of the dental sector can influence whether a dentist is able to enjoy a successful career with financial stability or make a misinformed decision they may ultimately regret.