Owning a dental practice can be very rewarding as long as you remember that you’re entering an endurance race – not a sprint. So, if you’re looking for a “get rich quick” scenario, opening a dental practice is probably not for you. If you want a fulfilling career that, albeit challenging, can be incredibly fulfilling, read on.
Getting to know the four stages of a typical dental career will help you measure your own success and will help motivate you to make the best choices for your practice, especially during the first few years. And don’t forget to download The Business Side of Dentistry: Tips and Tools for Dentists for more insight into the dental profession.
The Dental Practice Career Cycle
- Slow And Steady Wins The Race
Owning a dental practice is just like owning any other small business. You must be mindful of all your new entrepreneurial responsibilities. Managing employees, establishing internal controls, negotiating with vendors and even generating a marketing plan are essential to running a productive and successful business. Unlike your friends who opted to pursue MBAs, your background in these disciplines is limited. It’s also likely that you will find yourself at an economic disadvantage because, unlike your business school cohorts, you have astronomical debt.
The American Student Dental Association states that, according to the American Dental Education Association, the average dental student graduates with upwards of $241,000 of student loan debt. This total has not only increased more than 66 percent in the last decade, it greatly exceeds the average student loan debt nationwide. Therefore, as nice as it would be to spend your paycheck on luxury items, avoid the temptation. Your long-term success will be measured by how well and how quickly you can pay down your debt. Get started as soon as possible. It will be worth it.
- Build A Solid Foundation With A Sound Financial Plan
Your school debt is almost paid, your practice is busy and, for all intents and purposes, successful, and you are now at a point in your career where you are beginning to build equity in your practice. This is truly a great moment for you as a professional and as a dental practitioner. But be forewarned. At this point in your career, you are likely making some serious money – which means you are probably itching to spend a little (or a lot) of it. This is the fork in the road that will determine much of your future happiness.
You can either choose to spend it on vacations, homes, cars and the like, or you can start developing saving habits that will set you up for later in life. Frankly, this is an optimal time to develop a financial plan and start putting a set amount of money into a retirement instrument every month. Whether it’s a stock portfolio or a 401(k), developing a steady financial plan is critical. That’s not to say that you can’t buy some really nice things along the way – just make sure you have a nice nest egg waiting for you when you are ready to start your retirement.
- Put The Pedal To The Metal
There comes a time, usually in your early to mid-50s, when the kids are through school, your business and student loans are paid off, you are paying for equipment upgrades from your cash flow and your financial plan is beginning to bear fruit. This is the point on your career timeline where you set your sights on what you want out of retirement and revise your plan to make sure it happens.
There are things to consider at this point in your life and there are tools to help you make informed decisions. At this stage, many dentists find themselves yearning for more control over their free time and less pressure at work. They aren’t yet ready to retire, but would love to slow down and smell some of the roses they’ve planted. Working with a business valuation or succession planning professional can help you streamline your future goals while ensuring that there will be no major surprises along the way.
- You’ve Worked Hard, It’s Now Time To Play Hard
It’s been a long, exciting road – but you wouldn’t have had it any other way. As we round the corner to stage four of your career as a dental practice owner, you can finally sit back and relax. If you took the time to plan ahead, your mind, body, spirit and bank account are ready. Now the only thing left to do is to pass the torch to a good, young dentist and take your leave. You’ve earned it.
Have questions? Email the Bright Dental CPAs at Rea & Associates for answers. And don’t forget to download your free copy of The Business Side of Dentistry: Tips and Tools for Dentists and get to know more about what you will encounter as a new dental practice owner.
By Ryan Dumermuth, CPA, CFP (Mentor office)