Are you ready for your next practice?

March 9, 2018 by omniadmin Buyer Articles 0 comments

Are you ready for your next practice?

I often get calls from doctors who want to buy or open a second, third or fourth location. My first question to the caller is how well is your current practice doing? More often than not, they tell me that they’re practice is producing $50,000 per month. I then ask them what percentage of collections is their hygiene production? They tell me it’s about 18 or 20%. Next question: How is your new patient flow? The reply: We get 5 to 10 new patients per month. I don’t ask any more questions, but simply tell them they’re not ready for another practice. They are sometimes disappointed, but will usually agree with me. It cost me a paycheck by talking them out of buying a practice, but I don’t want them to buy one and call me two years later when their practice is failing, their spouse is upset at them and they are stressed and depressed.

If you’re thinking of buying another practice, here are some benchmarks to consider. Note: there may be special exceptions, but this will give you a more stress-free acquisition.

1. Your current practice should be producing between $80,000 and $100,000 per month.
2. Your hygiene program should have production at 25% to 30% of total collections (for general dental practices).
3. You should be getting a new patient flow of 20+ new patients per month.
4. You should have a stable staff with little to no turnover and a good working team.
5. Systems should be in place so your practice can run without you.
6. You have mastered dentistry where you can do most procedures and not refer much work out.
7. Your finances are in good order. You have paid your loans down and you have savings. (See Wikipedia for the definition of savings.)
8. Your spouse or significant other is okay with you opening another location. Realize that two locations = double the work, potential less spouse and family time.
9. You know how to read financial statements. With multiple locations, you now own a business and need to know how to run one.
10. Your bank, financial planner, accountant and other advisors are in agreement that it would be a good idea to start or buy another location.

By following these guidelines, you will save yourself, your family, bankers, attorneys, lawyers and others a lot of grief should you jump into another location too soon. We are always happy to help you assess your situation. Call us anytime, for any reason at no charge- (877) 866-6053.

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