Earlier this year I asked a group of dental residents at some of the best programs in the country a simple question: how will you know when you’re ready to buy a practice?
The answers came back, and one word showed up over and over. Feel. “When I feel ready.” “When it feels right.” “I don’t feel ready yet.” Nine out of ten answers, some version of that word.
I understand it. I’d probably say it too. But a feeling is a strange instrument for measuring a seven-figure decision, because feelings don’t tell you when they’re finished. Nobody wakes up one Tuesday feeling ready. So instead of writing another article about what I think, I asked three people who see this decision from completely different chairs: a broker who has spent his career on the seller’s side of the table, a dentist who bought his practice and now coaches associates through buying theirs, and an associate who is in the middle of his own search right now.
Here’s what they told me.
The view from the seller’s side of the table
Randon Jensen is the President Emeritus of the National Association of Practice Brokers and a partner at CTC Associates. He represents sellers, which means he’s spent decades watching buyers walk in the door. He told me buyers rarely ask him this question directly, but when they do:
“Do not risk damaging the very goodwill you are seeking to buy. Do your best to see things from the seller’s viewpoint and accommodate reasonable requests. Don’t risk creating ill-will just to ‘get a good deal’ or win on a point that may or may not be that important. Sellers will run into former patients after the sale. If you leave them feeling good about the transaction, their endorsement of you will shine through in those post-closing patient interactions.”
Then he told me a story I really liked.
“I once asked a highly successful dentist to tell me the secret of his success. He simply said, ‘I take care of my staff first. Then I genuinely take care of the patient in the chair in front of me, and everything else takes care of itself.’ I generally took this as advice to not let fear control your fate, but rather to focus on the simple things you can control, and brick by brick you will build something wonderful.”
I tell buyers constantly that at least 80% of what you’re purchasing in a practice is relationships. Patients, staff, referral sources, and yes, the seller. Randon sits on the other side of the table from my clients, and he’s telling you the same thing. You’re ready when you understand that the deal isn’t the thing you’re buying.
The view from the coach’s chair
Chris Marshall bought his own practice and now runs Practice Ownership Advisors, coaching associates through the transition from employee to owner. His answer skips the feelings entirely and goes straight at the math:
“You’re going to be doing the same procedures either way, so why share a portion of your income with a DSO or another dentist? Get a year of experience at the busiest practice you can find, save $50-100k so you can qualify for financing, then buy a practice with a full hygiene schedule, and you’ll wonder why anyone would settle for working as an associate for only 35% production.”
What I like about Chris’s answer is that every piece of it is checkable. A year of experience. Savings in the bank. A practice with healthy hygiene. Those aren’t feelings, because banks don’t lend on feelings. The lenders who finance dental practices have a short list of what they need to see, and none of the items on it is confidence.
The view from the chair next to yours
Tony Schicktanz founded The Educated Associate, and he’s living this question in real time. He’s searching for his first practice right now, and his business partner Alex closed on his own first practice two months ago and has been, in Tony’s words, crushing it out of the gate. Here’s how Tony knew it was time:
“In my opinion ownership is a mindset not a final destination. For me, I knew I was ready to begin my search when I started waking up at night with ideas on how to more effectively manage the practice I associate at than the current management team. I don’t think you can ever feel 100% ready but if your mindset is right, I believe it’s time to take the leap.”
I love that milestone: waking up thinking about how he’d better manage the office he’s working in. Tony never says he felt ready. He says he woke up at 3am with ideas that wouldn’t leave him alone. That’s not a feeling, because ideas about the hygiene schedule at 3am are evidence. Your brain has already started running the practice. The only question left is whose name is on the door.
My answer
After more than 1,500 of these transitions, here’s what I know. The banks have already answered the readiness question for you, and their list is short: about a year of experience, some cash saved, a credit score in decent shape, and a clean credit history. If you have those, a bank will fund 100% of the purchase price of a healthy practice and hand you working capital on top. That’s it. That’s the criteria someone else uses to decide if you’re ready.
Everything else is information. Which practice, what price, what you’ll actually make as the owner. And information is the cure for the feeling problem, because the residents who told me they’d buy “when they feel ready” have it backwards. The feeling comes after the information, not before.
So if you’re waking up at 3am with ideas, do what Tony did and start. Talk to the gray-haired dentists in your area. Ask a broker like Randon what sellers actually want. Run Chris’s checklist against your own bank account. You don’t have to buy anything this year, but the dentists who end up happiest as owners started gathering information about a year before they signed anything.
My thanks to Randon, Chris, and Tony for answering the question honestly. And if the question is living in your head at 3am, Season 9 of my podcast is about exactly this, one episode at a time. Episode 1 is here.
