There is a lot of legwork when it comes to starting up a dental practice. Earning a doctorate to practice dentistry is only half the battle. The other side is understanding the many business decisions and financial transactions that come with starting up a practice. The following information will give you a rough idea on what steps to take and what to expect.
First when beginning any business venture, you need to have a basic understanding of what the costs involved are. Location costs, equipment, and the various supplies needed can add up fast. Other variables that can greatly affect the overall cost is the region where you are planning to setup the business and the size of the office space. With an average price tag of $500,000 for new practices, you will need to have a strong financial standing before venturing out on your own. If you are set in that department, the next step is assembling a business plan.
Sound Business Plan
If you do not have a good plan going in, lenders are more than likely not going to be willing to fork over half a million dollars to someone who looks like they don’t know what they are doing. You need to map out in detail all aspects of your business, such as cost analyses, profit and expense projections, hiring and employee plans, etc. What is your growth strategy to continue to build on top of what you have? How will you attract new patients to your practice? How will you keep them on? These are all questions you will need to have detailed answers for when presenting to a potential lender. In addition to the basics that you should know when applying for a loan, you now need to acquire that loan.
There are various options when it comes to where you can get financing. The most common and obvious place is your local bank. The requirements to get approval may be more strict and rigid, such as requiring a credit score of at least 725, and the rates may be slightly higher. However, you may be able to negotiate the terms of the loan in a way that favors you. A federally backed SBA loan is another option for financing. This will take longer to get approved but credit requirements are not as high. If you can obtain approval though, there are perks such as 6-7% rates with no prepayment penalties. Lastly, if you cannot get a loan through conventional means there are third party lenders who can offer you financing. Drawbacks to this route are higher costs, penalties, and rates.
In the end, obtaining financing for a dental practice is very similar to getting a loan for any other reason. You need a strong financial foundation. But unlike other common loans, you really need to delve into all the details and have a strong business plan to show you are ready to undertake the massive responsibility.