The last year was unsettling for many people, even in a relatively stable profession like dentistry. If you weren’t furloughed, you probably know people who were.
The pandemic gave a lot of us time to think about the big picture and recalibrate our goals.
That’s part of the reason I’m seeing so many would-be owners joining ADA Practice Transitions. Some are 10 to 15 years post graduation and say that they have always wanted to own a practice, but for whatever reason, it kept getting pushed to the back burner. The pandemic gave them a new perspective, and they realized they are frustrated by the “lack of control” they have as associates. Now they're ready to take charge of their futures.
These would-be buyers are smart and entrepreneurial. They’re also a little nervous. I don’t blame them one bit. After all, practice ownership is a big commitment.
However, I applaud them for stepping up to the plate.
86% of graduating dentists say they want to own their own practice within ten years of graduation. Over time, many lose sight of that goal, for several reasons:
- They grow comfortable in a good associateship
- “Life happens,” with marriage, children, and life stressors
- Non-compete clauses limit where they can practice
- Financial issues make change more daunting
It’s easy to get stuck in a comfortable associateship. However, if you’ve ever thought you might want to buy, now is the perfect time to explore your options. In many ways, there’s never been a better time to buy. Let’s examine why that is — and how you can get started.
Financially, you're unlikely to find a better time
Interest rates are historically low right now. Meanwhile, many practice values are depressed. This can be due to owners who had to close their doors for months on end, or simply because owners are very motivated to retire. Combined, that means:
- Your dollar goes farther
- It’s easier to get financing
- You can pay back your practice loan faster
Many banks are willing to cover 100% of the purchase price plus some working capital that gives you cash flow for the first few months, as long as the financials support it.
Banks see dental practices as relatively safe investments and will work with you to get a loan — especially if you are willing to work in an underserved market. On that note, check out the National Health Service Corps for loan repayment program opportunities. Several states run similar versions for their underserved communities. You may be eligible for hundreds of thousands of dollars in student loan repayment.
Long-time owners are DONE
I have talked to so many long-time practice owners who are ready to be 100% done with clinical dentistry. In many cases, they had planned to work another 5-7 years, but pandemic-related closures gave them time to think. Some have health conditions that made COVID-19 especially threatening. Others realized how much better their back feels when they’re not leaning over a chair every day. And many realized they want to spend more time pursuing other interests.
As a result, many are now eager to sell, with some willing to take a reduced price just to get out. I’ve seen practices valued at $800,000 list at just $500,000. Some are even willing to practically give the practice away, as long as they can find the right person who will promise to take care of their patients.
However, the longer these eager-to-sell owners wait without a buyer, the more likely they are to drift back into practice, perhaps settling back into their work at a reduced schedule. Now is the time to strike, while they’re eager to sell.
Evaluate your situation
Think about why you want to own a practice. It could be reasons like:
- More control over your destiny
- Better flexibility to set your own schedule
- The pride of doing things your way
Then consider other aspects of your life:
- Personal finances: A financial planner can help you determine if you are financially ready to take on a practice loan, and our The Financial Side of a Practice Transition webinar has advice on prepping for a purchase.
- Spouse’s work: The pandemic may have changed your spouse’s work situation. Did they experience a layoff, or are they now 100% work-from-anywhere?
- Family priorities: What’s most important to your family right now? How might that change over the next few years? Will you need more flexibility?
- Restrictive covenants: Does your current job have a tight restrictive covenant clause? (Read more about restrictive covenants, also known as non-compete clauses.)
- Ties to the area: If your spouse’s job is now more flexible, consider your ties to your current area. Have you always thought about living elsewhere in the country, or is all your family nearby? See our tips on starting the conversation with your spouse or partner, plus 5 Questions to Ask Your Partner Before Relocating.
- Dental interests: Are you satisfied with your current skill set, or do you want to become proficient in a new procedure? Do you prefer to handle everything in-house or refer out? Which procedures do you want to do more or less of? Then think about how you might get there: CE, a residency, mentorship?
- Business acumen: Are you ready to run a business? Assess your business skills, then look for the situation where you can learn what you need to be successful.
If you are confident in your clinical skills but want a mentor to help you ease into ownership by offering some hands-on guidance and business how-to, check out our Mentorship-to-Ownership transition path.
Get in the door now and fix it up later
Many of the well-established practices now for sale may look a bit dated. I urge you to look beyond the surface to evaluate a practice’s “bones” — a well-run practice is far more desirable than a pretty one. After all, while you can update the cosmetic and the equipment over time, it’s far more difficult to “fix” a practice with poor policies and quality.
Before declining to look at a dated practice, look at its production, processes, and quality. How is the practice run? When were the fees last updated? Is it the right size for your goals, or is there room to grow into them? How many other dentists are in the area? Don’t be afraid to take a look at pre- and post-op radiographs! I cover this in more depth in How to Tell If That Nice Practice is Right for You.
Once you’ve purchased a well-run practice that meets your requirements, get in there and get to work. Avoid the impulse to start making major (and expensive) updates immediately, as moving too fast may alienate current patients and staff. Go ahead and add a fresh coat of paint or recover the chairs, but then sit back and get a feel for the practice. Spend a year working there, getting to know its quirks. You may realize that you prefer working in one operatory for its natural light, or that the “flow” doesn’t work for you. Maybe that storage closet would make a great private office or a break room.
People want to help you
Even as a solo business owner, you’re never really alone. Take advantage of the wealth of resources available to you as an ADA member. At ADAPT, we can guide you through the entire process, helping you articulate what you want, find financing, and evaluate practices. Even after the transaction closes, your ADA Advisor will remain available to help troubleshoot or answer questions that may arise.
And as a dentist, you’re part of a broader network. Your state and local societies are full of fellow business owners who are happy to offer advice or CPA recommendations or just commiserate about insurance plans.
Get started with your free ADA Practice Transitions profile
Ready to proceed? Create your free ADA Practice Transitions™ (ADAPT) profile. We’ll walk you through the entire process step-by-step:
- Build a profile that showcases your interests, skills, and goals
- Connect with recommended practice owners who share your goals and timeline
- Navigate the negotiation and contracting process
- Ensure the transition goes off without a hitch
There may never be a better time to buy a practice. If you’ve ever thought about it, take some time to look a bit deeper. I hear so many dentists say, “I wish I had done this sooner!” Don’t look back and regret a lost opportunity.