The journey to dental practice ownership is a momentous career step for any dentist.
It’s a decision that blends clinical expertise with entrepreneurial ambition to shape your professional path and legacy.
Every dentist who embarks on this journey will have to answer the same crucial question at some point: whether to purchase an existing dental practice or start a new one from the ground up, commonly known as a squat or denovo practice.
In this article, we’ll look at the fundamental distinctions, benefits and challenges associated with each choice and explore considerations to guide you in making an informed decision.
The Dental Practice Landscape
The landscape of dental practice ownership has evolved significantly in recent years.
Market trends show a growing inclination towards mergers and acquisitions (M&As) in the dental sector, reflecting a broader pattern in healthcare services.
This trend is fueled by various factors, including the rising costs of dental equipment, technological advancements, and the desire for more efficient management systems.
Simultaneously, there’s a noticeable surge in dentists establishing squat practices, driven by the desire for complete autonomy, the allure of the latest technology, and the ambition to create a unique practice culture and brand.
As a dentist aspiring to be a practice owner, it’s essential to understand these trends and their implications for your career trajectory, financial stability, and personal satisfaction.
Understanding Squat Dental Practices
A squat dental practice refers to starting a dental clinic from the ground up. This path allows dentists to create their practice precisely as they envision it, from selecting the location to choosing the equipment and designing the patient experience.
The Pros of Starting a New (Squat) Dental Practice
Freedom to Design and Create
Starting from scratch means you have the creative freedom to design your practice exactly as you envision. From the clinic’s layout to equipment and technology selection, everything can be tailored to your preferences and modern standards, offering a unique opportunity to reflect your personal and professional brand.
Modern Equipment and Technology from the Start
A squat practice lets you equip your clinic with the latest dental technology from day one. This modern approach enhances patient care, improves efficiency and attracts a clientele that values cutting-edge treatment options.
Building Your Brand and Reputation
Starting anew means you have a clean slate to build your brand and reputation. This control over your practice’s identity and public perception can be incredibly rewarding, allowing you to cultivate a practice culture and patient experience that aligns with your values.
Tailoring the Practice to Specific Market Needs
A squat practice allows you to conduct thorough market research and tailor your services to fill gaps in the local market. This strategic approach can position your practice to meet community needs, potentially leading to a strong market presence.
The Cons of Starting a New (Squat) Dental Practice
The Challenge of Building a Patient Base
Building a patient base from scratch is one of the most significant challenges of a squat practice. It requires effective marketing strategies and potentially a longer timeframe before you see a steady flow of patients, impacting initial profitability.
Higher Initial Stress and Workload
Starting a practice involves planning, licensing, hiring staff, and setting up systems—a stressful and time-intensive process requiring strong management and problem-solving skills.
Longer Time to Profitability
Unlike an established practice, a squat practice may take longer to become profitable. Without the cushion of an existing patient base, the initial investment period in marketing, staffing, and operational setup can extend the time before you see a return on your investment.
Uncertainties in Market Reception and Competition
Starting a new practice also involves uncertainties regarding market reception and competition. There’s always a risk that the practice may not attract enough patients, especially in areas with high competition or lower demand for dental services.
Pros and Cons of Buying an Existing Dental Practice
Purchasing an existing dental practice comes with a different set of considerations. Due to the established infrastructure and patient base, this option can provide a quicker start in the dental business.
The Pros of Buying an Existing Dental Practice
Established Patient Base
One of the most significant advantages of purchasing an existing dental practice is inheriting an established patient base. This immediate access to a group of loyal clients can ensure a steady flow of business from day one, offering financial stability and reducing the time needed to build a loyal clientele.
Immediate Cash Flow
Closely linked to an established patient base is the benefit of immediate cash flow. Unlike a squat practice, where initial profits can take time to materialise, an existing practice often comes with a predictable revenue stream, allowing you to focus on enhancing services rather than building them from scratch.
Existing Staff and Systems
Buying an existing practice means stepping into a system that’s already operational. This includes trained staff familiar with the patients, daily operations, and existing administrative and clinical processes. It can significantly reduce the learning curve and operational hiccups often encountered in new setups.
Known Community Presence and Reputation
An existing practice typically has a history and a reputation within its community. This pre-existing presence can be a powerful marketing tool, as long-standing patient relationships and community ties can contribute positively to your practice’s perceived reliability and trustworthiness.
The Cons of Buying an Existing Dental Practice
Potential for Outdated Equipment or Practices
One downside is the potential to inherit outdated equipment or methodologies. Upgrading or modernisation can require additional investment, both in terms of time and finances.
Inheriting Staff or Patient Management Issues
While inheriting staff can be a pro, it can also mean inheriting any existing management issues or staff dynamics. Similarly, patient management styles and expectations set by the previous owner may not align with your vision, requiring careful navigation.
Higher Upfront Costs
Generally, buying an existing practice involves a higher initial investment than starting a squat practice. Depending on your financial situation and access to funding, this can be a significant factor in your decision.
Existing Reputation: A Double-Edged Sword
The reputation of the existing practice can be both an asset and a liability. While a good reputation can be leveraged, a poor one can be challenging to overcome, requiring substantial effort and time to rebuild patient trust and loyalty.
The financial implications of starting a squat versus buying an existing dental practice vary significantly. Understanding these is crucial for making sound decisions that align with your financial goals and capabilities.
The initial investment into a squat dental practice can be substantial, as it covers everything from premises and construction costs to purchasing state-of-the-art equipment and marketing for new patients.
While buying an existing practice can also be costly, the price often includes a fully equipped clinic and an established patient base, potentially offering a quicker return on investment.
Long-term Financial Projections:
A squat practice may have higher growth potential in the long run, as you can shape and expand the practice according to market needs and personal ambition.
In contrast, an existing practice often provides more immediate financial stability, with predictable income based on the existing patient base and reputation.
Return on Investment and Break-even Points:
The break-even point on a squat practice might take longer due to initial investments and the time required to build a patient base.
The return on investment in an existing business can be much quicker. However, assessing the practice’s financial health is crucial to ensure profitability.
Both options require careful financial planning and consideration of your long-term business goals. Whether you aim for the potential high growth of a new practice or the stability of an existing one, aligning your choice with your financial expectations and capabilities is key.
Crunch Time: Factors to Consider
Deciding between starting a squat dental practice and buying an existing one involves several critical considerations. This decision should be based on financial factors and your personal goals, lifestyle, and market conditions.
Location and Market Research
The location of your practice is crucial. For a new practice, you must ensure enough demand and not excessive competition. For an existing practice, assess the local reputation and patient demographics.
Personal Goals and Lifestyle
Consider your long-term professional goals and how they align with each option. Starting a new practice might offer more freedom and satisfaction in the long run, but buying an existing practice could provide immediate stability and work-life balance.
A squat practice involves more risk and uncertainty, requiring a higher tolerance for potential setbacks. While generally less risky, an existing practice still requires due diligence to uncover any hidden issues.
Long-term Business Plans
Your vision for the practice’s future should guide your decision. Do you aspire to expand and innovate, or are you more comfortable managing and growing an established entity?
Questions? Talk To Us
The decisions you make now will secure your brand’s legacy and the long-term success of your venture.
Talk to Pluto Partners and take the next step towards long-term practice success with a strategy that serves your personal, professional and financial goals.