Buying a dental practice requires a lot of scrutiny and discussion. Even minor details can have a huge impact on your future success. You need to know how successful the practice has been, what assets will transfer to you, and how the previous owner’s situation may impact your future profits.
What Factors Support Your Own Chances of Success?
Even if the former owner of a dental practice has been very successful, buying the same practice does not ensure your own success. No seller, no matter how well-intentioned, can actually sell every element that plays into the loyalty of their clientele. For instance, in many cases, a dental practice makes a lot of profit due to the actual dentist at the helm. A dentist earns loyalty and trust over years of reliable service and word-of-mouth recommendations. People fear dentists more than essentially any other physician. A reputation for a friendly demeanor, gentle hands, and relatively painless work does not come with the brick and mortar assets of a dental practice.
Buying a dental practice requires careful analysis of the factors behind the previous owner’s successes. Is the location conveniently located? Is it on a thoroughfare or close to a major highway? Does it have good parking options for patients? Is it near a bus line? Consider what’s inside the building, too. Will you keep the same staff? A familiar face at check-in may help clients weather the transition between actual physicians. It’s hard to put a clear value on these kinds of assets, which is why it’s so important to pay attention to details before you buy a practice.
Why Is the Practice Being Sold?
Although the last point assumed the previous owner of the practice had been successful, this isn’t always the case. Although dentists may sell a practice due to a move, retirement, or expansion, they may also sell because they can no longer afford to keep their practice running. This information may be difficult to acquire directly, as any sales agent for the seller is law-bound to keep this kind of information confidential. However, if you pay attention to details, you may find critical answers. Sharing income data about the practice is a regular part of most sales. This allows potential buyers to compare it to overhead and their own start-up costs. If previous earnings are low for the region, then you have good reason to suspect the previous owner did not meet the success they planned to.
Even if the previous owner sells because they have a new, better practice lined up, you need to examine how that will impact your own profits. Buying a dental practice, as we mentioned, often means keeping existing staff. If staff move to a new office with their old employer, however, that may lower the overall value of the practice itself.
While there is no way to predict what will happen after you buy a dental practice, asking the right questions in advance can help. They will prepare you for potential roadblocks and allow you to think ahead. Buying a dental practice is complicated, but asking a few questions can help you determine if it’s a safe investment.