Buy an Existing Practice or Build a New One?
By We speak with hundreds of practice buyers each year. Many are looking for that gem of a practice in their desired area; a practice with new or newer equipment, digital technology, great location, recently remodeled, etc. Oftentimes, that practice either doesn’t exist; or if it does exist, it’s not for sale. So what’s a buyer to do – buy an existing practice or build one?
Omni is a rare breed in the practice broker world. We not only provide practice transition and valuation services for dentists – both buyers and sellers – we are also experts in helping dentists with their real estate needs. We are often asked in seminars, at conferences, or over the phone, “Should I buy an existing practice, or do a startup?” I often suggest that dentists spend some time looking for a practice in their desired location. If they can’t find one, they should consider starting a practice, especially if the doctor is 100% certain of the area in which they want to practice.
I recommend that dentists do a bit of demographic analysis on the locale. See how many dentists are currently practicing in the area. A good ratio is 2,000 daytime population for each doctor. There is a difference between the daytime population and the regular population. The daytime population includes the workforce. For example, if you look at the population of South Lake Union during the day vs. the nighttime population, you would see a big difference. Another demographic to pay attention to is the age of the population. For a general practice, a good mix of young and old is best. If you want a high cosmetic practice, but the average age is 28, you might need to consider another area. Homeownership is another good indicator of practice success. You want to have more homeowners than apartment renters. You can obtain detailed demographics either through a company that will charge a fee and provides data such as the average annual dollar amount spent on dentistry per person within a zip code and other more granular items. Or, Omni has information that we can provide.
If you perform the necessary research and find that opening a new practice in the area you like makes sense based on the numbers, we suggest that you go for it. We have helped many dentists over the years do demographic research, find a space, and negotiate a lease. Steve Kikikis is our go-to person for real estate leasing and sales. You can reach out to Steve anytime for help on whether you should buy an existing practice or build one by sending him an email at steve@omni-pg.com.
Read MoreShould I Pay Down My Student Debt Before Purchasing a Practice?
By Nothing resonates more with recent college graduates than the talk of possibly wiping away student debt. Even though this might be a talking point of our current administration, it does bring up a question that newly graduated veterinarians worry about if they want to own their own veterinary practice. Should I pay down my student debt first? Or should I purchase a practice and then have two debts?
Your own gut reflex will say, “Uh, no way…more debt is crazy when I’m already so far underwater.” However, it is usually advantageous in the long run. If the dream of owning your own business is on your vision board, then it makes financial sense to move ahead with securing a business loan early in your career, even with a large amount of student debt.
Each person’s financial position will be unique. However, here are some items to consider:
Will it be harder to get a bank loan with a lot of student debt? Although not necessarily harder, the amount you can borrow will be determined by the amount of your student debt and your history of making regular and timely payments. Consistent payments and not skipping any repayments on your student loan will show the bank that you are reliable in your financial commitments. Although it’s tempting to splurge on extravagant items, keep your finances in check during this time and keep making regular payments. Banks like to see that you have a stable financial history and are not high-risk.
Which has the higher interest rate, the student loan or business loan? Whichever loan has the higher interest rate, is the loan you will want to pay down first. This might seem obvious but check with your lender for your student loan because they often don’t have harsh penalties if you lower your payment. Go back and recalculate what the minimum student loan payment is and take the difference you had been paying and use that towards your new business loan, hence paying the more expensive loan sooner.
Buying a turn-key practice or one that needs some work. Look for a veterinary practice that is undervalued, has potential, and is located in a good area. Most buyers want a turn-key solution when purchasing a practice. But there are a few diamonds in the ruff. The advantage is you will secure a loan for less money on an underperforming practice and with some work, you can turn it into a polished gem which is a great investment.
Building equity. You will earn equity in your business if you purchase a practice, rather than remaining an associate. As an owner, your earning potential is far greater, often outpacing the associate salary from the day you purchase a veterinary practice. If you purchase a practice where you own the real estate, then you would also increase your bottom line when you are ready to retire and transition.
You haven’t missed the boat of owning your own veterinary practice when you have a large amount of student debt, but you will want to be business savvy on how you should proceed.
Read MoreShould I Pay Down My Student Debt Before Purchasing a Practice?
Nothing resonates more with recent college graduates than the talk of possibly wiping away student debt. Even though this might be a talking point of our current administration, it does bring up a question that newly graduated dentists worry about if they want to own their own dental practice. Should I pay down my student debt first? Or should I purchase a practice and then have two debts?
Your own gut reflex will say, “Uh, no way…more debt is crazy when I’m already so far underwater.” However, it is usually advantageous in the long run. If the dream of owning your own business is on your vision board, then it makes financial sense to move ahead with securing a business loan early in your career, even with a large amount of student debt.
Each person’s financial position will be unique. However, here are some items to consider:
Will it be harder to get a bank loan with a lot of student debt? Although not necessarily harder, the amount you can borrow will be determined by the amount of your student debt and your history of making regular and timely payments. Consistent payments and not skipping any repayments on your student loan will show the bank that you are reliable in your financial commitments. Although it’s tempting to splurge on extravagant items, keep your finances in check during this time and keep making regular payments. Banks like to see that you have a stable financial history and are not high-risk.
Which has the higher interest rate, the student loan or business loan? Whichever loan has the higher interest rate, is the loan you will want to pay down first. This might seem obvious but check with your lender for your student loan because they often don’t have harsh penalties if you lower your payment. Go back and recalculate what the minimum student loan payment is and take the difference you had been paying and use that towards your new business loan, hence paying the more expensive loan sooner.
Buying a turn-key practice or one that needs some work. Look for a dental practice that is undervalued, has potential, and is located in a good area. Most buyers want a turn-key solution when purchasing a practice. But there are a few diamonds in the ruff. The advantage is you will secure a loan for less money on an underperforming practice and with some work, you can turn it into a polished gem which is a great investment.
Building equity. You will earn equity in your business if you purchase a practice, rather than remaining an associate. As an owner, your earning potential is far greater, often outpacing the associate salary from the day you purchase a dental practice. If you purchase a practice where you own the real estate then you would also increase your bottom line when you are ready to retire and transition.
You haven’t missed the boat of owning your own dental practice when you have a large amount of student debt, but you will want to be business savvy on how you should proceed.
Read MoreThe Importance of Your CPA During a Transition
The Importance of Your CPA During a Transition. Megan Urban of Omni Practice Group talks about why a dental-specific Certified Public Accountant is critical during your practice transition. Regardless if you are a buyer or seller, you should have a CPA who specializes in dental transitions. If you are a seller, your CPA will help guide you through the complexities of taxes and what you may owe before the sale of your dental practice, so you’re not caught off-guard at closing. They can also advise on the health of your retirement accounts.
As each State has different tax regulations, your CPA can help you navigate these issues with you. If you aren’t currently working with a Certified Public Accountant and would like a recommendation of a dental-specific CPA in your home State, please reach out and we can provide you with details. You can also contact us today for a complimentary snapshot valuation to find out what your practice is valued at. Either email info@omni-pg.com, or call us at 877-866-6053.
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Benefits of Hiring a Broker
Why use a Veterinary Broker to Sell your Practice?
After many years of the hard work, long hours, and substantial investment that go into building a veterinary practice, you’re now thinking about selling the practice. It’s easy to assume that the practice will sell quickly and for a great price when you are ready to sell. Feedback from doctors who have recently sold their practices shows that the process is more complicated and stressful than anticipated. This is why it is essential to hire a veterinary broker to help guide you through the process.
Potential individual buyers and corporates will have experts who can help them navigate the sale. You will also need someone to advocate for you and help you understand the process from start to finish. In most cases, the last time you were involved in a practice sale was when you bought the practice, which means you need someone to help you navigate the process.
Benefits of Hiring a Broker
Here are just a few reasons why hiring a veterinary broker to assist with planning and selling your practice would be a sound investment.
Determining Fair Market Price
At Omni Practice Group, we have certified practice appraisers that put together a valuation to maximize a fair market sales price for the practice and real estate (if applicable).
Develop a Marketing Plan for the Practice while Maintaining Confidentiality
Omni provides confidential marketing and advertising services for your practice that do not identify you or your practice until a buyer is screened and signs a confidential Non-Disclosure Agreement. Omni also provides the financial prospectus for your practice along with confidential personal showings of the practice to potential buyers. Finding the right buyer that you will want to take over your practice can take some time. Good practices can sell quickly, but some can take months or even a year to sell.
Letter of Intent
Omni brokers negotiate on your behalf, a Letter of Intent with your approval for the purchase price of the Practice and the Accounts Receivable. Your broker will also guide you through the due diligence conditions for bank financing, help negotiate a new lease agreement, non-compete agreements, and other conditions that both the seller and the buyer will agree on. If real estate is included, your Omni broker will determine the value of the real estate with a “Broker’s Real Estate Opinion” that is used to market the real estate with the practice.
Finalizing the Sale
Your Omni broker works with you to determine a possible closing date based on whether your practice has real estate to sell or a lease that will be negotiated with the new owner. Omni’s brokers work with attorneys to finalize the Asset Purchase Agreement for both the seller and the buyer.
Omni’s 70-point-plus checklist helps guide both the seller and the buyer through the process of items to be completed prior to the sale closing.
A banker at one of the major banks recently said, “A high percentage of deals that fall apart is due to the seller not using a veterinary broker.” Using a broker typically saves sellers a lot of time, money, and headaches in selling their practices.
Omni Practice Group has been helping veterinarians for over 15 years with the planning and transitioning of their practices. If you’re thinking about selling now or in the next few years, give us a call for a “free consultation” to help you determine a plan that works for you and how we can assist with a smooth and profitable transition.
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