In 2015 I worked with two clients who were eerily similar. However, one understood the impact of the most important career decision a dentist makes, and the other did not.
You see, one bought a practice collecting $1.2 Million per year, and the other bought a smaller practice collecting only $675 thousand per year. It was fascinating to see what kind of impact that decision had made a few years down the road. And what impact it was likely to make in their life overall.
Other than the practice they bought, they were so similar it was scary sometimes!
Both clients went to the University of Michigan’s Dental School and graduated within a year of each other and happened to be the same age. Both were married, and very personable. I liked talking with both and could tell that they would both have an easy rapport with patients and staff.
Interestingly, both were producing about $80k/month in their respective jobs so they both had comparable hand speed and clinical skills.
Eerie? Yeah, a little. More than once I accidentally called one client the other’s name and vice versa.
However, I was surprised when I checked in with these clients a few months back and asked about their practices and overall financial picture. It was fascinating to me how different the client’s financial picture looked three years later.
One was knocking it out of the park financially, and the other was struggling. One was about 2 months from their last student loan payment, was ahead on his practice loan, had fully funded Roth IRAs for the last two years and had emergency cash in the bank.
The other was talking to a bank about a line of credit because he was constantly feeling stressed from running out of cash in the business checking account. He hadn’t started saving for retirement yet and was still doing “pay as you earn” on his student loans.
Having the perspective I did, I could trace the main financial difference between these two clients to the most important career decision a dentist makes: whether or not to buy a practice, and which practice to buy.
Both dentists are great people. Both are taking great care of their patients. But one bought a very successful practice, and the other didn’t.
There were lots of reasons for the differences in their decisions.
One was more flexible in where he wanted to live, and the other wasn’t as much. One had a better personal network, and the other had fewer leads to consider. Patience played a factor, as did their respective risk tolerances.
I’m not suggesting that one dentist is better than the other. I’m not suggesting that both dentists won’t have a great life and be financially comfortable – both will, without question. I’m also not suggesting that total collections are the only factor affecting these dentists down the road.
I am unapologetically suggesting that which practice they bought will make a material difference in the ease in which they achieve their financial (and some non-financial) goals in their life.
The dentist who bought the better practice will have less stress, fewer money worries, more control over their schedule and which patients they see. The dentist who bought the worse practice will be in debt longer, have more stress and probably work more hours for more years than the other dentist.
Buying the right practice is the most important decision you, as a dentist, will make in your career. You need to get it right and understand the process to find, analyze and purchase the right practice for you.
Know someone considering buying a practice? Share this article with them! Or, have them reach out directly to me via email, email@example.com to help them through the process.