Most dentists enter the profession with a common long-term goal: practice ownership. The transition from associate to owner is one of the most significant career moves a dentist can make. Early preparation can put you in a stronger position financially, operationally, and personally, so you’re ready to move forward once the right opportunity presents itself. Consider the following tips to help prepare yourself for practice ownership.
Clinical Skills Alone Aren’t Enough
You spent a lot of time in dental school, which prepared you to diagnose and treat patients. Ownership, on the other hand, requires an additional skill set. Practice owners make decisions daily regarding patient treatments, staffing, financial management, technology investments, strategic planning, and vendor relationships — and dental school doesn’t teach you how to manage all of those responsibilities.
The most successful owners understand both business and dentistry. Learning how practices operate behind the scenes can help you gain a tremendous advantage as an aspiring practice owner. If you are currently an associate, take advantage of the opportunity to ask business-related questions regarding collections, practice profitability, and major business decisions.
Strong Financial Discipline is Crucial
The biggest obstacle to practice ownership is financial readiness. Many dentists graduate with significant loan balances and assume practice ownership is years away. However, it’s important not to let debt prevent long-term planning.
Future practice owners should focus on establishing a realistic personal budget, improving personal credit scores, and reducing unnecessary consumer debt. Lenders often evaluate the individual as much as the cash flow of the practice. Borrower financial discipline is key in showing you can handle the responsibility of ownership.
Forming a Trusted Advisory Team
Successful practice owners surround themselves with qualified advisors who understand the dental industry. These trusted advisors include but are not limited to dental-focused CPAs, transition consultants, attorneys, lenders, and wealth advisors. Too often, dentists assemble their advisory team after they have purchased a practice, which could mean missing out on important planning opportunities.
Understanding Different Paths to Ownership
Not every ownership opportunity is the same. It’s important to understand the different paths to ownership, such as a start-up practice, acquiring an existing practice, or a buy-in opportunity. Associates should compare the advantages and challenges of each option to determine which aligns best with their goals.
Thinking Like an Owner
Thinking like an owner in advance can help you achieve success after your transition. As a dental associate, you can start thinking like an owner by observing how the practice owner evaluates options and makes decisions. During the decision-making process, owners must simultaneously consider the long-term impact, profitability, growth, and patient experience. Begin by asking yourself questions like:
- What would I do differently if it were my practice?
- How would I improve efficiency?
- How would I attract more patients and develop my team?
Early Preparation is Key
The dentists who prepare in advance are best positioned for ownership. They learn the business side of dentistry, strengthen their personal finances, build relationships with trusted advisors and vendors, and develop ownership skills. The actions you take now can shape the success of your future practice.
Learn how a CBIZ advisor can help prepare your dental practice ownership structure.
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