Start a Practice from Scratch or Purchase a Practice?

Future dental business owners can choose to start a practice from scratch or purchase an existing practice. Either choice can result in success or failure. With either choice, the prospective owner needs to be a proactive planner and seek out expert advice and support. During my 4 decades of helping new owners make healthy decisions, I have observed successful and unsuccessful examples of both



Both Choices Can Be Successful

As a full-service consulting organization, we frequently represent the new owner exploring a start-up practice or a practice purchase. Both have advantages that attract new owners and obstacles that require planning to over- come them. In my experience, dental dealers are an important source of support for any dental practice, but they are normally biased toward practice start-ups and don’t get excited about a practice purchase. On the other hand, practice brokers are generally biased toward practice purchases and not supportive of a practice start-up. Although both of these perspectives have merit, I have found that both options can be very successful for the prospective new owner when he or she plans properly and seeks support from outside advisors.

Preparing to be a Business Owner

After helping more than 1,000 dentists become new business owners during the past 40 years, I have encountered a common theme: “I feel qualified as a dentist to promote excellent care and patient management, but I am poorly trained and prepared for the business of dentistry.” Whether starting a practice from scratch or purchasing an existing practice, the new owner must prepare and become comfortable leading and managing the business. Less than 5% of the US population are business owners managing revenue of more than $500,000 (the average solo practice revenue).

With proper planning and support, the new owner can be successful. On the other hand, the path is filled with possible difficulty and potential for failure.

I hope that the following advice will ensure your path to success and help to prevent bumps in the road.

Starting a Dental Practice from Scratch

Why New Owners Make This Choice
• control of location, size, and design
• ability to choose dental equipment and technology
• ability to choose décor and furnishings
• ability to hire one’s own staff
• ability to implement one’s own systems and practice vision

A common characteristic of a new owner choosing this strategy is recognition that creating and controlling the practice environment is advantageous to purchasing someone else’s practice environment.

• likely to remain in the location longer
• longer life for equipment and furnishings
• a larger portion of the initial investment is an asset with positive tax consequences
• ability to plan and create your dream office
• ability to choose an area with less competition and more growth potential

• cash flow can be a problem
• no or few patients when you start the practice
• no track record or history to build on
• more time and effort required to plan and get the practice started


Purchasing a Practice

Why New Owners Make This Choice

• an already existing patient base with a track record

• includes an existing team of experienced dental auxiliaries
• has a more predictable cash flow than a start-up
• existing patient base can refer new patients
• normally there is untapped potential for growth within the existing patient base
A common characteristic of a new owner choosing this strategy is his or her need or desire to have a pre- dictable income generated from the newly purchased practice on day 1.

• income from the practice is available immediately
• new owner can be busy and productive on day 1
• less time is needed to purchase a practice than to start a practice from scratch
• peace of mind of having a track record to build on

• the need or desire to make equipment or furnishing changes, which cost money
• the new owner may not be well accepted by the existing dental team
• employee salaries can be high in a mature practice, which can strain cash flow
• the new owner may not be pre- pared technically to provide the services rendered by the previ- ous owner