Q: “I want to own my own practice, but is now the right time?”
A: Now is probably the best time to buy a practice for most of you! Most dentists wait too long and after they own, wish they’d done it sooner. The three most common concerns tend to be 1) “I don’t have the money,” 2) “It’s not the right time in my career,” and 3) “The market is too high / too low.”
Let’s look at each of these.
“I don’t have the money”
Generally, banks are willing to lend 100+% of the practice purchase. You need some cash to show that you’re responsible. To secure funding, the bank will usually want you to have on hand 10% of the purchase price, or $50,000, whichever is lesser. If you don’t have the money to purchase, the power to change that is in your hands. If you have some cash, there’s no need to wait.
“It’s not the right time in my career”
If you’re a year out of school with strong with strong production, you’re good to proceed! You mainly need a production history showing you can keep up with 80% of the seller’s production and can handle the money-making procedures already done. If you’re fresh out of school, you’ll likely only need a year to increase your speed. If you’ve been out longer, the “right time” to buy was probably a few years ago, which makes the second-best “right time” … right about now!
“The market is too high / too low”
Markets fluctuate and you can’t predict when this will happen… doesn’t matter. Dental practice prices typically fluctuate no more than 5%. If the market is high, you may pay more, but the money you make as an owner means saving, investing, and putting practices in place to ensure that you’ll be in a safe place, no matter what. If the market is low, you may have lower-than-average collections for a time. But the due diligence process will give you a reasonable degree of assurance that you’re buying a practice that will make it through the tough times.