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For a lot of dentists, apply possession is a lifelong skilled dream. In case you are lucky to personal one or two places that generate sturdy income and command a sizeable, loyal affected person base, then it’s possible you’ll be dreaming about opening extra places. The excellent news? Profitable multi-practice possession is attainable if you end up geared up with a stable plan and a transparent route.
Whether or not you have got two places and wish to increase to a few, or you have got three places and aspire to increase to 5, listed here are some finest practices to think about as you concentrate on your subsequent steps.
First: Don’t Overlook the Significance of Operational Consistency
Once you determine to take the leap into multi-practice possession, you need to begin from the 30,000-foot view. It’s tough to scale and protect the worth of your apply(s) with out creating an aligned, constant enterprise mannequin that may be simply repeated throughout each location.
Begin by outlining your objectives for growth. Are you planning to apply the identical sort of dentistry at every workplace? What model are you constructing, each internally and externally? From an inner perspective, spend time designing scalable processes, similar to related buying strategies, human assets manuals, affected person administration approaches and payor mixes that your workers can apply persistently, no matter the place they work. When these elements of your apply are aligned, your small business will grow to be extra interesting within the eyes of lenders, future workers, distributors, potential buyers and patrons, and even sufferers.
Other than big-picture consistency, you additionally must ponder what dangers and alternatives will come up from rising the quantity of your work. For example, when you open your second and third places, you will note an uptick in bank card funds and affected person knowledge, which can have totally different cybersecurity and privateness implications. You’ll want to ensure that your operational processes, procedures and programs can handle these adjustments, and that you simply make new investments as wanted.
Higher Place Your self for Observe Financing
Earlier than you dive into the financing course of, that you must clearly talk your growth objectives and strategy to your crew of advisors, together with your dental-specific accountant, lawyer and lender. The extra you talk along with your lending, tax and authorized groups, the extra ready you’ll be to determine the metrics and benchmarks you’ll want to attain to qualify for future apply financing.
Earlier than they approve your mortgage for growth into extra places, banks wish to take a look at your apply’s historic efficiency after which gauge it towards the brand new alternatives you have got out there. When you’re speaking with a lender, that you must be ready with a method and reasoning behind your growth objectives — as a result of the extra places of work you open, the extra the financial institution will inquire about your qualitative and quantitative causes for increasing.
So, what’s your “why?” Do that you must open new operatories to fulfill extra sufferers’ wants? Are you attempting to faucet right into a traditionally underserved market? Be ready to totally articulate what you want and why potential lenders ought to take a danger on you.
Make a private connection
It’s important to construct a stable, trusted relationship along with your lender, notably as you embark on the trail towards turning into a multi-location apply proprietor. Ideally, you may collaborate along with your lender to set efficiency benchmarks that may justify why they need to begin and proceed lending to you. For example, some lenders might want you to hit particular money stream markers at your present workplace location earlier than you open a brand new one. They wish to guarantee that your first apply has sufficient liquid money available (and optimistic trending money stream) to soak up debt with out pulling money from the apply. Your lender can also need you to hit X quantity of revenue per chair or a selected income quantity earlier than permitting you to borrow extra funds for growth tasks.
No matter what metrics you identify, the hot button is to obviously talk along with your lenders to grasp what it can take for them to be comfy with you opening a second, third or fourth location. Setting the suitable expectations on the outset will show you how to plan strategically for the long run. Additionally it is important to make sure that your tax, authorized and advisory groups are looped into your communications with lenders. This enables your crew to place you to snap up alternatives once they current themselves, similar to tax advantages and incentives, or whether or not to purchase or lease properties to accommodate your places of work.
Plan for the lengthy recreation
Earlier than you stroll into a gathering with a lender, ensure you have a accomplished marketing strategy that not solely covers your short-term objectives, but additionally explores the place you wish to go, as you cement your standing as a multi-location proprietor. Let’s say that you simply personal a single-office apply in Dallas, and you might be hoping to borrow funds to open second and third places in San Antonio and Austin, respectively. Nonetheless, your dad and mom stay in Atlanta, and you plan on increasing your footprint to the Southeastern US within the subsequent 10 years to be nearer to them as they age.
If you happen to don’t share these detailed plans (and the aim behind them) with potential lenders, they are going to be hesitant to soak up the chance of lending to you. Take into consideration the questions they might ask: How will you break up your time between your places of work in different geographic markets? What is going to your schedule seem like? What are your hiring and transition plans on your Texas-based places of work if you pivot to develop your small business additional east? Develop an in depth, strategic plan and keep on with it — and above all, do not forget that consistency is vital.
Observe due diligence when researching lenders
If in case you have labored in dentistry for some time, you will have traditionally relied in your skilled community to seek out assets to help your apply. Nonetheless, exhibit warning when looking for lending recommendation. The choice that labored for the dentist subsequent door might not be relevant to your scenario. Every banking establishment has its personal lending and prequalification necessities, merchandise, and credit score and underwriting phrases. Carry out ample due diligence and analysis lenders’ expertise in serving conditions like yours.
For example, if you’re seeking to construct a portfolio of latest actual property, it’s possible you’ll select a lender that has expertise in that enviornment, versus a lender who strictly has expertise with apply acquisitions. Discover a lending companion that has the identical imaginative and prescient and objectives as you do, plus the suitable capabilities that can assist you hit your private {and professional} benchmarks.
Search Alternatives to Improve Worth
Once we meet with dental shoppers, one of many first questions we ask is: “What drives worth in your group?” Is it your apply’s model? Is it constant staffing? Your distinctive worth drivers are important to rising your present apply and they’re additionally crucial to your success as a multi-practice proprietor.
Step one towards rising the worth of your apply is to have clear numbers. Just be sure you have separate charts of accounts, authorized paperwork (suppose constructing leases, for instance) and monetary statements for every location with the intention to simply segregate the worth of 1 workplace from the others in your portfolio. This train additionally places you within the best-possible place for a future sale if that’s your final aim.
Additionally it is very important to know what worth means within the eyes of your sufferers. For example, do you have got tenured workers members which have established a powerful rapport along with your sufferers? Do they intend to stick with your apply by way of its growth to a number of places? If not, how lengthy will they keep on all through the transition? Are these phrases written of their contracts? These particulars could seem minor, however they’re pivotal to understanding your apply’s worth and the way to keep it by way of your progress trajectory.
Other than inner operations, it is usually vital to hunt alternatives to extend worth by way of apply instruments and know-how. Examples of technical worth drivers embody the absence of paper charts, digital radiography or fashionable apply administration software program that integrates with different key programs in your apply.
Keep in mind that skilled valuators (like our crew members at Aprio) aren’t in search of single traits when assessing apply worth; we objectively search for a end result of attributes that can provide us a transparent image of what your apply is price at honest market worth. Get an goal, impartial opinion to make sure you have applicable measurements of worth for every of your apply places.
Making ready to Increase in 2024?
Aprio is the single-source progress companion for dental practices of all sizes. Our crew gives deep trade experience and complete advisory companies throughout accounting, tax, apply transitions and wealth administration. In case you are all for partnering with Aprio in your multi-practice possession journey, attain out to your Patterson territory consultant to start out the dialog or go to pattersondental.com/practice-transitions.
Initially revealed in Benefit by Patterson Dental in Winter 2024.
Trent Watrous, CPA, CVA, CFE, CEPA is the chief of Aprio’s Nationwide Dental Observe, the place he oversees a crew of skilled dental accountants and enterprise advisors who assist dental apply house owners make knowledgeable, sound enterprise choices. Leveraging his intensive expertise as a tax advisor, auditor, forensic accountant and professional witness, Trent educates and coaches his shoppers to navigate the advanced monetary challenges that include being a apply proprietor in right now’s quickly altering and aggressive enterprise atmosphere.
Kelli Henley, CPA, CVA®, focuses on advising multi-location apply house owners on transition planning and apply gross sales, valuations, and purchases. She brings to her position intensive information and expertise in advanced revenue tax technique, structuring and compliance in addition to enterprise valuations particular to the dental trade. When working with apply house owners, Kelli strives to construct lasting relationships and coaches her shoppers on accounting and monetary issues to allow them to handle their practices and navigate transitions in possession with confidence.
