FROM ASSOCIATE TO OWNER: YOUR PATH TO DENTAL PRACTICE OWNERSHIP

Practice Ownership: Is it a Dream?

Have you ever caught yourself daydreaming about owning your own dental practice??

You’re not alone.?

It’s a common aspiration among dental associates, yet for many, it often feels like a distant dream.?

Financial worries often top the list of obstacles. You might wonder how on earth you can afford to buy a practice while you’re still paying off your student loans.

The prospect of taking on more debt can be nerve-wracking, especially when you’re just starting to find your financial footing.

Then there’s the fear of the unknown: Running a business is a far cry from focusing solely on patient care. Suddenly, you’re not just a dentist—you’re an employer, manager, and entrepreneur.?

What about competition? The dental market can seem saturated, particularly in certain areas. You might worry about finding a practice in a good location or attracting enough patients to make your investment worthwhile.

Let’s not forget the work-life balance conundrum. As an associate, you might enjoy the luxury of leaving work at work. But as an owner, the buck stops with you, and that responsibility can be daunting.

These concerns are real, and they’re shared by many aspiring practice owners. But here’s the crucial bit: they’re not insurmountable obstacles. They’re challenges to be met head-on with the right preparation and support.

In this article, we’ll walk you through the key steps to prepare for this exciting journey.?

We’ll demystify the process, share insider tips, and give you the confidence to take the first step towards practice ownership. Whether you’ve just finished dental school or you’ve been an associate for years, this guide is for you.

Preparing for Ownership

Before you dive headfirst into practice ownership, it’s crucial to lay a solid foundation. Think of it as building your professional toolkit – the more prepared you are, the smoother your transition will be.

Gain Experience as an Associate

First things first: there’s no substitute for good old-fashioned experience.?

As an associate, you’re in the perfect position to learn the ropes without the added pressure of ownership.

But how long should you wait? While there’s no hard and fast rule, most experts recommend at least 2-3 years of associate experience before taking the plunge.?

This time allows you to hone the broad clinical and interpersonal skills required of a successful practice owner:

Clinical Proficiency

Sharpen your dental skills across a range of procedures. The more clinically confident you are, the more headspace you’ll have for the business side of things.

Patient Management

Learn to build rapport with patients. Happy patients are loyal patients, and they’re the lifeblood of any successful practice.

Team Dynamics

Pay attention to how the practice operates. How does the team work together? What makes things run smoothly (or not so smoothly)?

Financial Awareness

?Keep an eye on the business side. How does the practice handle fees, NHS contracts, or private plans?

Understanding the UK Dental Market

Now, let’s talk about the lay of the land. The UK dental market is a complex beast, and understanding its nuances will give you a significant advantage.

NHS Vs Private Practice

This is perhaps the biggest decision you’ll face. NHS practices offer the security of government contracts but come with their own set of challenges.?

Private practices offer more freedom but require a different approach to patient acquisition and retention. Many practices opt for a mixed model – could this be the sweet spot for you?

Regional Variations

The value of practices can vary wildly depending on location. Urban practices might command higher prices but face stiffer competition.?

Rural practices might be more affordable but present recruitment challenges. Do your homework on different regions – where do you see yourself fitting in?

Market Trends

Keep your finger on the pulse of the industry. Are corporate dental groups expanding in your area? Is there a shift towards more cosmetic treatments? Understanding these trends can help you spot opportunities and avoid potential pitfalls.

Remember, knowledge is power. The more you understand about the market you’re entering, the better equipped you’ll be to make informed decisions.?

So, read industry publications, attend dental conferences, and network with other professionals. Your future self will thank you for it!

Assembling Your Team of Professional Advisors

You wouldn’t perform a complex dental procedure without the right tools. Purchasing a practice is no different—you need the right team in your corner to navigate the complexities of practice ownership.?

Let’s break down the key players you’ll want on your side.

The Dental Accountant

First up, you’ll need an accountant who knows the dental industry inside out. They’ll help you make sense of practice financials, advise on tax implications, and provide invaluable insights into the financial health of potential practices.

A good dental accountant will:

• Interpret practice accounts and highlight any red flags
• Advise on the most tax-efficient way to structure your purchase
• Help you understand the true profitability of a practice

The Solicitor

Next, you’ll want a solicitor with experience in dental practice transactions. They’ll guide you through the legal maze of practice purchase.

Your solicitor will:

• Review and negotiate the sale agreement
• Conduct due diligence on the practice
• Advise on employment law and NHS contracts (if applicable)
• Ensure all regulatory requirements are met

The Financial Advisor

A financial advisor, particularly one versed in the dental sector, is crucial. They’ll help you navigate the world of practice finance and ensure you’re on solid financial footing.

Your financial advisor will:

• Help you understand your borrowing capacity
• Advise on the best loan products for your situation
• Assist with loan applications and negotiations with lenders
• Provide guidance on personal financial planning

Other Business-Specific Advisors

Remember the specialists. Equipment and supply representatives, practice management consultants, and marketing experts can all contribute to your success.

These advisors can:

• Provide insights into equipment values and future upgrade needs
• Offer guidance on practice management systems
• Help develop marketing strategies for patient retention and growth

Dental M&A Specialists

Last, but certainly not least, consider partnering with experienced dental M&A specialists (like the Pluto Partners team). These experts do far more than simply broker deals; they’re your comprehensive guides through the entire practice acquisition process.

A skilled dental M&A specialist will:

• Help you identify practices that align with your vision and financial goals
• Provide in-depth market analysis and valuation insights
• Coordinate and often lead the due diligence process, working closely with your other advisors
• Facilitate negotiations between you and the seller, helping to structure deals that work for both parties
• Act as a project manager for the entire transaction, ensuring all aspects of the deal progress smoothly
• Offer post-transaction support to help ensure a smooth transition

What sets top-tier dental M&A specialists apart is their ability to take on much of the heavy financial and legal lifting we’ve discussed earlier.?

They can:

• Work alongside your solicitor during legal due diligence, often handling much of the initial legwork
• Collaborate with your accountant to analyse financial statements and identify potential issues or opportunities
• Liaise with lenders on your behalf, helping to streamline the financing process
• Coordinate with equipment valuers and other specialists as needed

By centralising many of these tasks, a good M&A specialist can significantly reduce the complexity and stress of the acquisition process for you. They act as your single point of contact, managing the myriad details involved in a practice purchase.

Remember, this team isn’t just for show. Having these experts in place before you start your search shows sellers and lenders that you’re serious and prepared. It gives you a competitive edge in what can be a fierce market.

Organising Your Finances: Laying the Groundwork for Ownership

Money isn’t the most exciting topic for most dentists, but when it comes to practice ownership, it’s absolutely crucial.?

Getting your financial ducks in a row isn’t just about impressing lenders—it’s about setting yourself up for long-term success.

Polish That Credit Score

First things first: your credit score. It’s your financial CV, and lenders will scrutinise it closely. A strong credit score can be your ticket to better loan terms and lower interest rates.?

Here’s what you need to do:

• Check your credit report regularly. You’d be surprised how often errors crop up.
• Pay all bills on time. Set up direct debits if you’re prone to forgetfulness.
• Keep credit card balances low. High utilisation can ding your score.
• Don’t apply for new credit unnecessarily. Too many inquiries can raise eyebrows.

A less-than-perfect score isn’t the end of the world, but the stronger your credit, the better your position when it comes to negotiating loans.

Show You’re a Savvy Saver

Banks love to see that you can manage money wisely. After all, if you can’t handle your personal finances, how will you manage a practice? Here’s how to impress:

• Build up your savings. Aim for at least 10% of the practice purchase price.
• Live below your means. It might mean forgoing that flashy car for now, but your future practice-owner self will thank you.
• Create a budget and stick to it. This shows discipline and financial acumen.

Prove Your Production Prowess

Lenders want to be confident you can generate enough revenue to repay your loan and then some. It’s time to showcase your dental skills in financial terms:

• Gather production reports from your associate positions. The more history, the better.
• If possible, show an upward trend in your production. This demonstrates growth and potential.
• Break down your production by type of service. This can highlight your strengths and versatility.

Don’t be shy about asking your current employer for detailed reports. Remember, this information is crucial for your future success.

Craft a Compelling Personal Financial Statement

Think of this as your financial selfie. It should give a clear snapshot of your current financial health:

• List all assets: savings, investments, property, etc.
• Detail all liabilities: student loans, car payments, mortgages, etc.
• Include recent pay slips to verify your income.
• Be honest and thorough. Lenders appreciate transparency.

Quick Tips for Financial Success

• Hold off on refinancing student loans until after you’ve secured your practice loan.
• Avoid major purchases (like a house or a luxury car) during the pre-approval phase.
• Start living on a ‘practice owner’ budget now. Allocate funds as if you were already paying practice expenses.

Organising your finances isn’t just about ticking boxes for lenders. It’s about creating a solid foundation for your future as a practice owner. It might feel like a faff now, but trust us, you’ll be grateful for this preparation when you’re signing those ownership papers.

And here’s a bit of good news to end on: dental practices are generally seen as excellent investments by lenders. With the right preparation and a solid financial picture, you’re well on your way to securing the funding you need.

Transition Planning

The moment has arrived. You’ve found your dream practice, the financials stack up, and you’re ready to take the plunge. But hang on a minute—there’s one more delicate task to handle: informing your current employer.?

This step requires careful consideration and impeccable timing. Let’s walk through how to navigate this potentially tricky conversation.

Review Your Associate Contract

Before you do anything else, dust off that associate contract and give it a thorough read.?

Pay particular attention to:

• Notice period requirements: Most contracts stipulate a notice period, typically ranging from one to three months. Knowing this is crucial for timing your exit properly.
• Non-compete clauses: These might restrict where you can purchase a practice. Make sure your plans don’t breach any agreements.
• Patient communication restrictions: Some contracts have rules about how you can inform patients of your departure. Ignoring these could land you in hot water.

Timing is Everything

Choosing when to have this conversation is crucial. Here’s what to consider:

• Don’t jump the gun: Wait until you’re reasonably certain the practice purchase will go through. You don’t want to jeopardise your current position prematurely.
• Give ample notice: Even if your contract only requires a month’s notice, consider giving more if possible. It’s a professional courtesy that can preserve goodwill.
• Consider the practice’s schedule: Try to time your departure to minimise disruption to patient care.

The Conversation

When the time comes to break the news, approach it with professionalism and gratitude:

• Request a private meeting: This isn’t a conversation for the staff room.
• Be direct but positive: Clearly state your intentions to leave and purchase a practice, but also express gratitude for the opportunities you’ve had.
• Offer to help with the transition: This could include training a replacement or ensuring all your cases are properly handed over.
• Be prepared for different reactions: Your employer might be supportive, disappointed, or even try to persuade you to stay. Remain calm and professional regardless.

Dealing with Patients

Informing patients of your departure can be emotional, but it’s a necessary step:

• Follow any contractual obligations regarding patient communication.
• If allowed, consider writing a letter to your regular patients explaining your departure.
• Be positive about the practice you’re leaving. It’s not only professional, but it’s also good karma for your own future practice.

Maintaining Professional Relationships

Remember, the dental community in the UK is relatively small. How you handle your departure can impact your professional reputation:

• Offer to be available for any follow-up questions about patient cases.
• Don’t badmouth your current practice, even if you’re leaving due to frustrations.
• Consider keeping in touch. Your soon-to-be former employer could become a valuable part of your professional network.

Navigating this transition requires a delicate balance of assertiveness and diplomacy. By handling it professionally, you’ll not only leave on good terms but also set a positive tone for the beginning of your practice ownership journey.

Still Considering Practice Ownership? Avoid these Common Pitfalls!?

Even the most prepared dental associates can stumble on the path to practice ownership. By being aware of these common pitfalls, you can sidestep them with grace. Let’s shine a light on these potential trip hazards, shall we?

Jumping the Gun on Student Loan Refinancing

It’s tempting to refinance those pesky student loans as soon as you can. After all, who doesn’t want lower monthly payments? But hold your horses! Refinancing too soon can actually hinder your practice purchase plans.

Why? Lenders look at your debt-to-income ratio when considering your loan application. Refinancing might lower your payments, but it could also extend your loan term, potentially making you appear more indebted in the long run. Our advice? Wait until after you’ve secured your practice loan.

Splashing Out on Big Purchases

We get it. You’ve been living frugally as an associate, and now that practice ownership is on the horizon, you might be eyeing up that swanky car or dreaming of a new house. But major purchases can throw a spanner in the works of your loan application.

Lenders want to see that you’re financially stable and responsible. A big, recent purchase might make them question your ability to manage the financial demands of practice ownership. So, as difficult as it might be, hold off on those big-ticket items until after you’ve got the keys to your practice.

Underestimating Working Capital Needs

Here’s a scenario we see all too often: a dentist secures funding for the practice purchase but forgets to account for working capital. Suddenly, they’re scrambling to cover staff wages, supplies, and other day-to-day expenses.

Remember, your practice needs to run smoothly from day one. Factor in at least three months of operating expenses when planning your finances. It’s always better to have a bit extra in the kitty than to be caught short.

Neglecting Due Diligence

In the excitement of finding a practice, it’s easy to get caught up in the potential and overlook the details. But skimping on due diligence is a recipe for nasty surprises down the line.

Take the time to thoroughly investigate every aspect of the practice. This includes financial records, equipment condition, staff contracts, and patient demographics. Yes, it’s time-consuming, but it’s far better to uncover issues before you sign on the dotted line.

Failing to Plan for the Transition

You’ve bought the practice. Job done, right? Not quite. Many new owners underestimate the challenges of the transition period.

From day one, you need to be ready to manage staff, maintain patient care standards, and keep the business running smoothly. Develop a solid transition plan well in advance. This should cover everything from introducing yourself to the team to ensuring all systems and processes are in place.

Too Much, Too Soon

You’ve got big plans for your new practice, and that’s brilliant. But remember, change can be unsettling for staff and patients alike. Resist the urge to overhaul everything immediately.

Take time to understand the practice dynamics, build relationships, and identify what’s working well before making significant changes. Evolution, not revolution, is often the key to successful practice transitions.

Neglecting Your Well-Being

Last but certainly not least, don’t forget to take care of yourself. The process of buying and transitioning into a practice can be all-consuming. But burning out before you’ve even properly begun is a real risk.

Make sure to carve out time for self-care, whether that’s hitting the gym, spending time with family, or simply getting a good night’s sleep. Remember, a healthy, happy dentist is the foundation of a successful practice.

Looking Ahead: Post-Purchase Considerations

Congratulations! You’ve done it. The keys to your very own dental practice are in your hand. But as any seasoned practice owner will tell you, the real work is just beginning.?

Let’s take a quick look at what you should be focusing on in those crucial early days of ownership.

Comms are Key

First and foremost, communication is key. Make it a priority to meet with your staff, both as a group and individually. Listen to their concerns, share your vision, and start building those all-important relationships.?

Patients Rule

Don’t forget your patients either – a well-crafted letter or email introducing yourself can go a long way in maintaining patient loyalty during the transition.

Observe. Learn. Act

Next, take a deep dive into your practice’s operations. Review your appointment book, examine your fee schedule, and analyse your product inventory. This is your chance to?

identify inefficiencies and opportunities for growth. However, resist the urge to make sweeping changes immediately. Observe, learn, and then act with purpose.

Finding Balance

Finally, don’t lose sight of why you became a dentist in the first place. Yes, you’re now a business owner, but you’re still a healthcare provider at heart. Strike a balance between your clinical work and your new managerial responsibilities.?

Still With Me?

Embarking on the journey from associate to practice owner is no small feat. It’s a path filled with challenges, decisions, and yes, a fair bit of paperwork. But as we’ve explored throughout this article, it’s also an incredibly rewarding venture that’s well within your reach.

As you contemplate this next big step in your career, keep in mind that countless dentists have successfully made this transition before you.?

With careful planning, the right support, and a healthy dose of determination, you too can join their ranks. Owning a practice isn’t just about being your own boss – it’s about creating a vision for dental care and bringing it to life.

Take Your Next Steps with Pluto Partners

So, are you ready to take that leap? To transform from associate to owner, from employee to entrepreneur??

It’s a journey that demands much but offers even more in return. The opportunity to shape your own practice, build a lasting legacy, and achieve true professional fulfilment awaits.

At Pluto Partners, we’ve guided many dentists through this exciting transition. We understand the unique challenges and opportunities that come with dental practice ownership in the UK.?

If you’re considering taking this next big step in your career, we’re here to help. Our team of dental M&A specialists can provide the expert guidance and support you need to make your practice ownership dreams a reality.

Don’t let another year go by wondering “what if”. Take that first step today. Reach out to us for a free, no-obligation consultation.?

``I would definitely reach out to Max. I feel like he was very supportive, and he knew the ins and outs of the practice. Even though he was there to represent the seller, I feel he was there for me as well.``

Christina Diamanti

Abbey Road Dental Owner

``A huge thank you to Max for all his help! I would not have been able to buy my practice without his professionalism, expertise and enthusiasm. He was always there to give support and advice and checked in with everyone involved at all times to make sure everything was running smoothly!``

Let’s explore how we can help you move from associate to owner, and start writing the next chapter of your dental career. Your future practice – and your future patients – are waiting.?

https://www.plutopartners.co.uk/from-associate-to-owner-your-path-to-uk-dental-practice-ownership/