How to Finance and Plan the Expansion of Your Dental Practice
You’ve evaluated your patient load, your income, and your time. You decide now is the time for a dental practice expansion.
Right now (or within the next few years) can be an ideal time to pursue your expansion goals. According to the U.S. Bureau of Labor Statistics, the dental industry is expected to grow by at least three percent over the decade.
Still, you should take such a big step cautiously. Proper planning and financing are vital to the success of your practice.
Planning for Your Dental Practice Expansion
Common reasons dentists may want to expand their practice include:
- Struggling to meet all their patients’ needs
- Using a small office with little room for all the patients
- Not having the space necessary to utilize the latest dental technology
- The potential for increased profits
If any of these pertain to you and you are ready to proceed with your goals, here are some steps that will help you create a practical plan.
1. Sole Practitioner, Associates, and Group Practices
One of the first areas you’ll want to consider is whether your expansion includes other dental practitioners
Creating a pros and cons list can help. For instance, you may like the idea that more dentists can result in higher practice earnings. However, if you’re someone who likes to be in full control of all decisions, being a sole practitioner might be the least stressful option.
2. Business/Income Goals
Creating a business plan
is a must for every small business owner. A good plan can help you as you are starting your expansion, while also helping you manage it as time passes.
In your plan, you should outline what your business goals
are, the legal structure of your business, financial projects, and your marketing plan.
3. Build Your Team
Your team will include:
- Financial advisor
- Lending partner
- Business partner/associate/group of dentists
- Front office staff
- Dental assistants
- Other back-office staff
As your business grows, so will likely your need for more help. Make sure to use your assistants and their skills. They probably want to put what they’ve learned to work. Doing so can not only help improve their job satisfaction, but it can also help free up some of your time so you can see even more patients per day.
4. Find Property or Remodel
If you are in the market for a new office, you should consider the following before making a purchase or signing a lease.
- Population density
Another option is to remodel your current office. If you don’t own the property, discuss expansion options with your landlord and see if you can come to a mutually beneficial outcome.
5. Start Marketing
One of the best ways to make sure you get a good ROI from your dental practice expansion is to market your business. You can use traditional advertising methods (TV ads, radio, postcards). Or you can try modern approaches, like setting up a website, blog, and posting regularly on social media platforms.
How to Finance Your Practice Expansion Goals
While an expansion has the potential to bring in added income, it will probably also bring added expenses.
Taking time to consider the cost of your dental practice expansion can help you understand what you’re getting into financially. It can also help ensure that the expansion is done in a way that will meet your new financial needs.
Common costs associated with a practice expansion include:
- Additional space (a lease for a bigger office or the cost of an addition to an existing space)
- New equipment
- Furniture, décor
- Carpeting, flooring, window treatments
- A partner/associate
- Additional staff (administrative, reception, bookkeeping, assistants, hygienists)
- Increased insurance
- Additional benefits for your team (paying for continuing education or trips to dental conventions)
- Marketing expenses (including patient notifications of new office address and/or structure of your practice)
Ways to Finance Your Expansion
The first step you should take is to get your paperwork in order. A loan officer will likely want access to:
- Your business plan
- The size of the loan
- Cash flow
- Location of your practice
- Timeline (e.g., your lender should know if you’re interested in buying a practice or office that a seller might be trying to sell quickly)
Next, you should evaluate whether you will be able to secure a loan. Student loan debt, credit rating, and your experience as a dentist all generally play a role. Your credit rating and history will also likely determine your interest rate. If that rate is exorbitant, it might not be the best time for dental practice expansion.
You may want to shop around for the best loan. Talk to other dentists to see who they use and whether they’re happy with them.
Options for small business loans
- Traditional banks
- SBA loans (U.S. Small Business Administration)
- Online lenders
Finally, before signing any loan documents, read through them carefully so you understand the terms. You should know such things as:
- The length of the loan
- The interest rate
- Terms for early repayment
Does Your Dental Professional Liability Insurance Cover Your Expansion Plans?
When you undergo a dental practice expansion, you should reevaluate your dentist malpractice insurance needs. You may also want to go beyond malpractice
for dentists and invest in:
- Business owner’s policy (for commercial property coverage)
- Workers’ compensation
- Cyber liability
- Employment practices liability insurance (EPLI)
Choosing a dentist insurance company instead of a company that simply covers small businesses can help you meet your special insurance considerations.
Is Now the Best Time to Expand Your Dental Practice?
Moving too quickly can result in expenses you might not be prepared to pay. Moving too slowly can lead to missed opportunities.
Carefully evaluate things like patient load, your time, and your dental lease agreement. Can you accomplish what you want with simple schedule changes, or is expansion the best option?
Expanding is an exciting prospect. Carefully consider whether you’re ready for it. If you are, plan well so you can ensure your expansion is a success.
Get a free dental practice insurance quote.