5 Crucial Factors Affecting Dental Practice Start-up Costs
Whether you’re buying an existing practice or starting a dental practice from scratch, one of the primary concerns when starting a new dental practice is always cost. It takes a significant amount of money, typically around $500,000 for a new practice to have everything it needs to start operating. This includes equipment, structural fitouts, practice management software and supplies.
For many dentists, this amount of money can make things difficult. It may not be difficult to procure because of the many lenders available, but it may be difficult to pay off. Nowadays, business can be slow because new and loyal clients are harder to come by, and competition has become fiercer than ever. For these reasons, it’s important to consider certain factors that may lessen the financial burden right from the start
Factors Affecting Start-up Costs
There are several things that can affect the amount and ‘weight’ of costs when starting a new dental practice and surprisingly, most of these things are in your control:
One of the biggest factors that affect start-up costs is location. A low-cost area can save you up to 20% of the total cost, but this has its trade-offs. A low-cost area may be inaccessible or inconvenient for your target market, and it may limit your growth goals. In such cases it would not be the better choice. Ideally, you want to find a location that is low or reasonable in cost, accessible, and in line with your growth goals.
Another significant factor is the size of your clinic and operations. Of course the bigger the size of your clinic, the bigger the cost. And the size of your dental clinic setup will depend upon the size of your operations. If you’re starting out with just one chair then a small clinic will do, and this can greatly lessen your start-up costs. If however, you plan on having 5 more chairs in the next 5 years, then it would not be wise to scrimp on clinic space.
Choosing the right contractor can also affect your start-up costs, as choosing wrong can mean hundreds of thousands of dollars more in costs. Make sure you do your research before choosing a contractor that will help turn your practice dreams into reality. Take a
look at their experience, see what previous clients have had to say about them and compare quotes.
When you’re starting a dental practice from scratch, it’s more cost-effective to keep your staff to a minimum and only those you really need. But ‘team’ here refers not only to your staff, it also refers to the people you come to for help in the preliminary stages. This includes your specialist dental accountant, your lawyer and your lender. The right accountant and lawyer can help you minimise costs by negotiating the best prices and advising you on appropriate corporate structures, accounting systems and compliance issues. The right lender is crucial as well. Specialist lenders are usually more understanding of the industry, and offer more reasonable rates and more tax-efficient lending arrangements.
It would also be helpful to include in your team dental supplies and equipment specialists such as Centaur Software, providers of leading practice management software Dental4Windows, dental cam software and other software products. By partnering with these specialists you can gain the most cost-efficient management solutions for your practice.
This is the one thing that affects all other factors. It is a major determinant to the location you choose, the size of your clinic and operations, and the team that you surround yourself with. It is vital therefore, to have a clear vision of what you would want for your practice, and to lay out a plan of how you will go about achieving this vision. The cheapest, smallest dental practice may save you a lot, but will it be fulfilling for you? Will it give you the opportunities for growth you seek? Will it give you steady and satisfying profits? Take note of these things when creating your vision. Your vision for your practice must align with your goals as well as your financial capacity.
Dental practice start-up costs need not be burdensome. By making wise decisions regarding the above five factors, you can keep your costs to a minimum and get your practice off to a financially positive start.
This is especially useful if you’ve just started out. The...