Hello and welcome to another episode of ask T-Bone.
Today we have a question that was sent in regarding practice startups and ownership. The question reads:
I’m a 2013 graduate. I want to own my own office. I’m struggling with the following
Number 1: Which part of the country should I go to? Big City vs Rural
Number 2: How to find a good office to buy where I will be successful?
Number 3: Or should I do it start up?
This is an unbelievably good question and to be quite honest with you I’m not an expert in this area, I can only give you my advice and my thoughts and the beauty of this is that six of one half dozen of another.
So let’s break this down:
Number one: congratulations on graduating dental school! It is a unbelievable profession, don’t believe the people that are Debbie downers that say that our profession has passed its Glory Days. I certainly do not believe that. And congratulating you on wanting to own your own office.
I firmly believe that in America you should own your own practice and your business, This allow you to control your own destiny. Now, with that being said not everybody is cut out for owning the business. Many of you may be better off just being an associate. If you’re not ready for ownership in the sense of last night worrying, having to deal with team members, dealing with the ups and downs of being a business owner, having to work overtime working on your business vs. being a dentist in your business, then you really should consider whether or not opening a practice is right for you.
The grass is always greener on the other side. There are many days was at practice and business owner myself I just want to work for somebody, want to clock in clock out, do good dentistry in go home without the hassle. there are many people who are in your position where you want to be an associate of working for somebody and you want to be an owner. They all have their good and bad.
So let’s start with the first part of the question:
In which part of the country should I go? Big City vs. the World? You know the old saying is first you need to find a place where you want to live and then work where work where you want to live. And I believe in this very much. You know, you should live somewhere where you enjoy it, because if you don’t enjoy where you live, you’re not going to really enjoy working there and you’re always going to have one foot out the door trying to get out of town because you don’t like it. You know, if you grew up and New York City and you need that fast pace of life, then moving to a small town America probably isn’t the best solution for you. If you grew up in small-town America and you wanted to now suddenly go to New York City you may not be ready for that. Of course there’s always exceptions to the rule. But let’s take a look at it for a business perspective. Grown up in rural North Carolina in the Deep South I will tell you that there are benefits of living in a larger city. Now when you said big city I personally could never see myself living in a big city, big city meaning Los Angeles, New York, Houston, Chicago, place like that. Just not who I am not the business model that I want to try to compete in. But I would like to live in a nice metro area, maybe the city of the size of a million, that’s a Raleigh North Carolina is in the metro area. Now, I will tell you this: Rural America has unbelievable potential and unbelievable opportunity. For example at looking at North Carolina if somebody would to go east of 95 and the Greenville Wilson, those many of those cities in that area, that could do unbelievably well. Rural America has lots of advantages. But you also have to understand that typically in rural America you’re going to need to be a true general dentist that does many faces of Dentistry if you want to truly take care of your customer base. While in a big cities you have access to Specialists and many of these things. The negatives of living and practicing in a big city is competition. Most people want to live in a big city most people want to live close close by to the dental school, because they are begin their life there, they start to get comfortable, so these are areas that are more competitive in nature. So these are things that I would take into consideration when considering Big City vs Rural.
Also, do you have a spouse? Where did your spouse want to live? My spouse he grew up and lived in South Florida Fort Lauderdale Miami. When she moved to Raleigh North Carolina was a shock for her. It took almost two to three years before she became settled and which meant that it was 2 to 3 years before I became settled, and knowing that we were going to stay in Raleigh North Carolina.
How to find a good office to buy where I’ll be successful?
Before I do that, let me go to should I do it start up. In my opinion startups and big cities are very difficult. Doesn’t mean they can’t be done just means they’re more difficult. Now when I said big city it’s about demographics, how many dentists for population, what’s the catch area, how big of an area do you serve… So those are things that I would look at. To be honest with you I did the start-up, back in 2001 I started my practice. Quite honest, I was probably donmm and didn’t know any better, so I do the start-up. But today I probably would not do it start up. I believe that as a solo practitioner, as a traditional dentist buying a practice is probably the more prudent and wise business thing to do. It comes with headaches, you’re dealing with somebody else’s team, you deal with transitioning patients, to deal with many things there. But, you’re buying cash flow and you’re buying a patient base. That leads me into the secon part of the question was:
How to find a good office to buy where I’ll be successful?
I believe this so much opportunity in buying practices today. There are so many dentist who practiced their primer of their career in the 80’s and 90’s, they’ve line when the practice is down a little bit, they have no debt structure, so they don’t need to really produce at the level that you would probably want to produce at, and they’re allowed to practice to be in there for $400,000 – $600,000 gross ballpark. Now, those to my are Gold buing practices boause those are those practices that you can easily walk into and double, through just some Basic Marketing, some using some Modern business philosophies, you can easily double those practices. Also when evaluating a practice, what services are they doing? If you walk into a practice, for example if you were buying my practice and my practice we do almost everything in the office. Minor soft tissue procedures and really complicated impacted wisdom teeth. We can do it all in the office. If you were to walk into our office and you didn’t have that skill set, I’ts probably not a very good office to buy. Also, think about this, if you’re buying a practice, many people say “hey, I want to buy a million dollar practice”. But can you produce some million dollars? can you do you, have the speed, and the ability to produce some million dollars? And what’s the up-side on that type of practice? Can you take a million to million and a half? Can you take a million to 2 million? So, to me I’m not a big believer personal founded business philosophy prospective buying practices that are running at Peak Performance, I want to find a Hidden Gem, a diamond in the rough. I’d love to find the practice of an older dentist who’s been doing a lot of Patchwork Dentistry, lots of large amount of them, not really doing some perio treatment, really referring lot of things out… You know, can you walk in if you have the skills to do root canal and the practice you’re buying doesn’t do root canals with diagnosis then, and sends them out. So when you are valuing a practice to buy, look at what they gross is, look at what the potential is. Another words can you double it? To me, if I’m looking at it, if I would have buy something, can I double it? What would it look like doubled it, so if I buy a million dollars practice as a solo practitioner, doubled 2 million it’s sounds unbelievably hard. But if I were to buy a $400,000 practice, doubling it to $800,000 sounds very reasonable, very doable. What is the procedure mix? Are they doing root canals? Are they doing wisdom teeth? Are they doing sedation? Are they doing soft tissue procedures? Are they doing sleep apnea? Are they doing orthodontics? All these things that you may not have today, but things that you can develop over time, so that you can add those services to your practice. Those are things that I would look up, and then certainly what will play a role in that is where is it? What kind of facility is it? And how much money am I going to have to put into technology? You know, if I were to buy a dentist practice is doing a million 900 million dollars a year but it’s an older practice that’s going to need updating your going to pay a pretty good price for that practice and then to the dump even more money into it to updated and renovated for the next 10 to 15 years, so these are the things that I look at. So, my personal preference is to buy smaller practices that have the ability to grow and go from there. So I wish you luck and congratulations on graduating and I wish you luck in your journey into being a business owner and a dentist for many years.
Thank you very much!
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