Heading out on your own and starting your own dental practice is daunting. So much to worry about it. Where will the money come from? How do I get new patients? How do I pick the right location? Relax, we at H+P are here with everything you need to know about hanging your own shingle.
Explore Your Funding Options
Few people have enough money to start a dental practice without help, so you should spend some time exploring funding options that will help you succeed.
Getting a business loan is the most common way to pay for the real estate, equipment, supplies and personnel you’ll need. You should talk to several lenders to find the most affordable option. Interest rates can differ significantly from lender to lender.
Keep in mind that every interest point matters. If you borrow $500,000 with a 6 percent, 6 year loan, you’ll repay about $9,666 per month ($579,984 overall). Just one percentage point more will raise your monthly payment to about $9,900 ($594,036 overall). By the time you finish repaying the loan, that point will cost you over $14,000.
Take Advantage of Tax Deductions
You can qualify for exceptional tax benefits when you start your own dental practice. Section 179, one of the most useful options for new business owners, makes it possible for you to deduct the cost of equipment in one year instead of spreading out the cost over several years.
Under Section 179, you get to deduct up to $500,000 of what you spend on furniture, equipment, computer software and many other types of tangible personal property. This helps make your initial investment more affordable by lowering your tax burden.
H+P offers a host of services and options for start-up practices. Having a dental financial expert and business advisor in your corner will save you thousands, help you get running optimally quickly, and help you make choices that can minimize your tax liability.
Get More Out of Your Marketing Budget
Chances are, any place you open a new practice these days is going to have some competition nearby. New dental practices need to be intentional with their marketing strategies. Typically, you’ll want to spend around 8% of your collections on marketing. If you can’t afford a large marketing budget, then you should focus on an option that will give you a high return on your investment.
Some of the most successful marketing channels are e-mail, social media, mobile devices and search engines. You may find that you can reach your audience effectively through Facebook ads, Twitter posts and paid ads on Google.
Depending on your target demographic and geographic region, you may also want to invest in traditional marketing that reaches people via print ads and mailing campaigns. Electronic marketing, however, plays a key role in the success of most businesses. It’s also an affordable option with costs you can control easily. Plus, it can really expand your reach very quickly!
Don’t be nervous when venturing out on your own. You’re a specialist with a skill set that is very much in demand!
Buying an established dental practice is one of the most effective ways for new dentists to start their own businesses. Instead of spending years building a client base and advertising a new practice, you can take over for a dentist who is planning to retire or leave the area. It’s not the right option for everyone, but it can work quite well for dentists who want to own their own practices.
Rebranding the Dental Practice
Shortly after buying a dentist’s existing practice, you should do some rebranding to inform the practice’s patients and reach out to new patients who might want to use your services.
Letting patients know that you are taking over the business is probably the most important part of rebranding. Patient attrition is one of the most formidable obstacles you will face in your ownership transition. By informing the patient base, allowing them some time to get used to you (if you can), and becoming familiar with the community, you can greatly lessen the blow of being the “new dentist” in town. If the exiting doc will work with you, try to be introduced to as many patients as you can. Create a brief bio of your background, fun facts, family info, or whatever you feel like sharing. The more your patients get to know you, the more will likely stay. Simply sending letters that introduce you and explain any changes you expect can be beneficial, but don’t rely solely on a mailer to meet your new customers. Yes, customers. The personal relationship is why patients stay. Treat them as valued customers. If your dentist were leaving, how would you feel most comfortable meeting a new doctor? What would you want? Relate to your patients and they will relate to you.
You will also want to update marketing materials to let potential patients know that the practice has changed hands. Some marketing options include:
- Updated websites
- Social media profiles and advertising
- Giveaways such as cups, pens and t-shirts
- Supporting local nonprofits and organizations
Bringing Old Employees Into the New Practice
Although you are not obligated to keep every staff member, doing so is generally a good idea, especially if the staff has worked together for several years. You may, however, want to review their skills to make sure they fit your vision for the practice.
You may also need to update some tax information to make sure you collect the right information. It’s always a good idea to speak with a tax professional before and after purchasing a business. Check out our past blog post on why you want to revisit your W4’s with staff each and every year!
Tax Implications of Buying a Dental Practice
When you purchase an existing practice, you get to add the cost to your balance sheet and deduct it from taxes. Most business owners decide to deduct a portion of the purchase cost during the first year and take the rest of the deductions over the next five to seven years.
If your purchase specifies an amount for goodwill (i.e., intangible assets like the practice’s brand), you can deduct a percentage of it over the next 15 years. You cannot deduct the full amount during the first year, though, so use this opportunity to spread out your tax savings.
Buying an existing practice is a great way to start your business, but it still takes a lot of hard work. Make smart choices and meet with our dental financial experts for help with your transition, start-up, or exit strategy. We know dentistry! We’re here to help!