Are you a recent dental school graduate? Do you have plans to take over an existing dental practice – one with an established client base, ideal location and new equipment? While this may seem like a great way to streamline your career, don’t be fooled – transitioning ownership of an existing practice requires much more work than hanging your degree on the wall.
For instance, the patients currently being served by the practice may be loyal – just not necessarily to you. Furthermore, the owner you are planning on buying out has likely spent years engaging with the community, establishing his reputation and creating partnerships with other businesses and organizations. Your purchase price probably doesn’t include the price of those contacts and relationships. So, while you may not have to build your dental practice from scratch, you still have a long way to go before you can consider yourself to be an “established” dentist.
The good news is that you don’t have to go through this journey alone.
How To Master The Transition Phase
- 5-Star Introductions
You never get a second chance at a first impression, which is why your introduction strategy should be seamless. Consult with the retiring dentist about the best way to make this introduction to the existing clientele and community leaders. Will the initial introduction come from the retiring dentist or from you? Is it necessary to follow up with the client to provide additional information? Sometimes a simple letter is the best way to make to make a first impression, just remember that this piece of correspondence is incredibly powerful. Therefore, consider hiring a professional to write it for you. Just don’t forget to include your hand-written signature.
- Employees Are Ambassadors
This transition will not only affect you, the retiring dentist and clients of the practice, it will also deeply impact current employees, many of whom are uncertain of their new role in the practice. It is important for you to be open and upfront with the men and women who will make the transition with you. Consider creating a communications plan and try to answer as many questions presented to you by the employees as possible. You should expect clients to question your employees about the transfer and their feelings about the move and you – their new boss. If you create an environment of safety and transparency, employees are likely to feel better about the transition and will be more apt to positively represent the practice.
- Business Ownership Is Not a 9-5 Job
As a business owner, your responsibilities reach far beyond implementation of the technical skills you learned in school. Now, in addition to patient files, you have to balance the books, onboard new employees and become a networking pro. You will soon find out that the most opportune moments are the times you are outside of the office where you can mingle with the community. One of the best ways to target your efforts is to get involved in your local Chamber of Commerce or other business-friendly organizations or clubs. This is a great way to make valuable connections while building your client base. But remember to be choosy about which groups you join. Every membership requires a commitment of time and there are only 24 hours in a day.
- Stick To An Advertising Budget
Advertising is a powerful tool when it comes to making people aware of the significant changes occurring within your newly purchased practice. But it can also be incredibly expensive. Not only should you prepare a solid advertising and marketing plan, you must be vigilant when it comes to sticking with that original plan. Ad buys ad up and if you aren’t taking care to strategically target the audience you reach, you could just be throwing money away – a luxury you just can’t afford. Before the first ad rep knocks on your door asking for your business, do your homework and stick to your budget. Oftentimes, media outlets are willing to negotiate.
- Rainy Day Fund
Hopefully you conducted a thorough inspection of the equipment prior to your closing date, but even so, it’s good to be over-prepared. Whether your equipment was purchased one year ago or ten years ago, make it a point to set aside some cash to protect against hardship and losses that could result if something were to break. The last thing you want is to diminish productivity, quality and employee satisfaction. This kind of hardship can leave a lasting blemish on your practice’s reputation. Make an effort to put a plan in place to save for any upgrades that may be needed in the foreseeable future.
- You Own The Business, But Who Owns The Patient Records?
In addition to your typical buy-sell agreement, you contract should specifically spell out who owns, and who is responsible for, the practice’s receivables, debts and patient records. According to the American Dental Association, this matter may be handled in one of three ways:
- Retiring dentists keeps original records, buyer gets copies.
- Buyer keeps originals, retiring dentist keeps copies.
- Buyer keeps originals and grants access to retiring dentist in the event of need.
If you are considering the pros and cons of transitioning into the small business owner role, be sure to know what, exactly, that role entails. The e-book, The Business Side Of Dentistry: Tips and Tools For New Dentists, provides new dentists with insight into building a business team, deciding on insurance plans and even the business cycle of a typical dental practice. Email the Bright Dental CPAs at Rea & Associates to find out what else you should know before purchasing an established dental practice.
By Alan Hill, CPA (Mentor office)