Guide to Buying Your First Dental Practice
Oh the glorious times of the early 21st century! I’m sure we all have reminisced the wide spread opportunity of practices to choose from being sold for affordable prices. The greater times of generous bank loans with minimum security restrictions being provided to any acclaimed and qualified dentist, even at the lowest of rates!
Many accomplices still aim to further develop their career path or strengthen their already existing position in their field of dentistry by becoming a practice owner, as owning a private practice ultimately strengthens management over your financial prospect.
However, most wanting to make this establishment of self-employment face several issues such as a reduction in income, reduced protection under employment laws, a change in contract terms or worst case scenario, losing their position all together if the practice requires to be sold.
Unfortunately at present day, law enforcements have led to security restrictions that have sky rocketed so high, financial loans provided by banks have become anything but an urban myth as they are fulfilled so uncommonly.
Additionally, there has been an evident rise of practice goodwill values and substantial competition between businesses and even fellow colleagues to obtain marketed practices, averaging approximately 30 potential purchasers awaiting each practice.
Moreover, in order to elongate the procedure further, you are now required to demonstrate you are in fact a suitable business candidate by providing a thorough business plan along with a scheduled interview with the CQC.
Therefore it is essential to stand out from the thriving crowd. Here are a few tips in order to successfully obtain your very own private practice.
How much can I expect to be loaned?
As of present, there are 14 High Street Banks who are most likely to support the dental profession on goodwill purchase. There are also further small-scale lenders available. However, rather than just contacting one bank direct who can provide information on their own loan contract only, (often found to be inflexible) we advise to approach independent advisers who have access to a variety of banks and can offer strategical advice. Each banking establishment are different from one another. Some being more flexible and generous than others, therefore it is essential to be in contact with advisers who can provide you with the most suitable loan investment for you.
There is a widespread of practices available, ranging from £200,000 to £1,000,000. Therefore you must create a financial plan prior to searching for a loan. This is because financial pre-assessment certificates are seen to be a more reliable source to sale agents. So, what is in your budget? How do you plan to make a successful investment? After you have made this establishment we can offer more advice on the expected support provided by banks for you. This will include running a background check including your financial situation and clinical/employment background.
The initial viewing process.
It is absolutely crucial for you to be differentiated from other potential buyers as there is rapidly increasing competition. Wholesalers will be assessing every aspect of each individual, therefore you must be able to cover each checkpoint, and no matter how trivial it may seem for example, being punctual. Build a memorable presence, a strong rapport with the vendor as this has been shown to be a contributing factor to being chosen. You will also be asked questions whilst on the visit; subsequently it would be wise to revise
your prior experience and knowledge around the CQC registration and process of purchasing. The likely questions can be listed by your independent business adviser.
You should put forward sensible proposals towards a potential practice, knowing it is within the budget you are aiming towards and is suitable for you. The matter of value of the practice is usually discussed with the sales agent after the initial viewing process. However, this will differ from individual vendors. The role of your private adviser will enable them to provide a further confirmation to the sales agent of your capabilities and reliabilities of fulfilling offers made.
Your next essential step as a practice owner should be to consider future profits and losses. This will include producing any changes to the practice as well as your own personal costs such as bank loan repayments which are a priority. The sales agent’s previous accounts can provide a useful insight in to what can be improved or removed.
This procedure will highlight the pros and cons of investing into the practice, whether it is the correct decision to be made in terms of your potential gains or losses. It will also place into perspective the maximum investment you are capable of offering to the vendor.
Working with an independent business adviser will aid you in organising your business plan and future predictions in order to make the procedure more effective. Their role is to negotiate and secure the best terms with banks for you. They also provide support whilst interacting with accountants, solicitors, sales agents, and the CQC.
Working with a Solicitor who has a thorough understanding of the development of the dentistry field and also an accountant who is familiar with the requirements for practice owners is crucial to ensure the most tax-efficient purchase and business arrangement.
Of course, it is challenging in this day and age to invest in and build an efficient structure to run a successful practice, especially for first-time buyers. However, I am sure these advisory tips well be useful for those aiming to carry out with this process.