Why new dentists should always buy a dental practice instead of starting a practice from scratch

Many dental students ponder the great question, “Should I buy a practice or start my own?”.  They may romantically dream of creating a practice from the ground up, potentially inventing a new way of serving patients and becoming rich and famous in the process.  This is what most people think of as entrepreneurship: creating something new from scratch.

Let me make my position clear: Newly minted dentists should never, ever start a practice from scratch!  The reason is risk.  Three types of risk glare in the face of new dentists starting a practice from scratch compared to buying a practice:  cost of failure, cash flow and  competition.

Cost of Failure

Building a new business from scratch carries frighteningly pessimistic outcomes.  In many fields, the failure rate is near 90%.  This statistic is OK when the stakes are low… the startup cost are minimal.  For a new dentist… the stakes are significantly higher.  School loans can easily top $300,000.  The build out of a new office can be twice that.  Nearly a million dollars can be on the line for a new dentist.  Facing that sort of startup costs along with the need to learn the ropes of business ownership at the same time creates a sickeningly risky venture.

Cash Flow

Starting a practice with a large cost of failure is bad enough, but that is compounded by the lack of cash flow to service the debt.  Some lending institutions may offer to lend enough cash to cover the early negative cash flow… but most will not.  This negative cash flow creates such pressure on a new business owner that clear-minded focus on marketing and building a new practice are nearly impossible.  When buying an existing practice, there is a patient base that creates positive cash flow to offset the negative.

Competition

A new dentist starting a practice from scratch is faced with competition from seasoned vets that are enjoying positive cash flow.  These other dental practice owners have learned and worked out the kinks in their businesses.  They may have filled most of the need in a given market.  Starting a new dental practice in an area already well served is financial suicide.

For these reasons, dentistry has created the idea of an associateship.  A new dentist joins a successful senior dentist with an understanding that the new dentist will buy the practice in the near future.  The new dentist learns the business end of dentistry from the senior dentist like a young Jedi padawan at the foot of a Jedi master.  The new dentist has time to build her speed and skills in a practice setting.  The new dentist learns and connects with the patients.

For the new dentist, an associateship is the least risky option, with this caveat emptor: get your associateship terms in writing – in a contract.

New dentist… now you know.  Become an associate to a successful, honest senior dentist.  Be careful who you choose.  Not all successful senior dentists are honest, and some who are have a change of plans.  The dental industry believes that associateships fail to turn into transitions at an insane rate… and they do, if not handled correctly.  If you need help finding honest, successful senior dentists that will back up their associateships with signed contracts leading to a dental practice transition, we can help.  Build your profile at OnlyTheBestPractices and you are on your way.