Soaring inflation and the lingering effects of the pandemic have greatly impacted the current business climate. Dental practices are suffering from lower profit margins and the rapidly rising costs of doing business. Against the backdrop of these challenges, there’s one question in the minds of dental professionals: When is the right time to expand my dental practice?
An Expert In Dental Transitions
Dr. Kyle Roth, D.D.S. has been a practicing dentist for almost two and a half decades. After a first career phase in finance, he returned to dental school to pursue something more fun and more fulfilling. After years of practice, he transitioned into a new phase of his career, motivated by his passion for dental practice transitions.
His company, Encompass Dental Transitions, provides solutions for those looking to buy or sell a dental practice, which is what led to their partnership with Benco, whose Practice Lifecycle team exists to help you navigate all the twists and turns of the life of your practice.
How Do I Know When to Expand My Dental Practice?
Dr. Roth recently spoke with the Daily Floss to answer one pressing question: How do you know when it is time to expand your practice?
#1 When You Need To Add Staff Members
Every practice owner has to start thinking about hiring more hygienists and assistants to their team. This allows room for the practice to grow.
One indication that shows your business needs new members is when patients have to wait more than two weeks to get an appointment at your office. If that’s the case for you, it’s time to hire part-time assistants and hygienists. You’ll need those extra hands to grow and get ahead.
More staff means there will be more people to care for your patients. Delegating preventive care to hygienists and dental assistants gives dentists more time to focus on complex procedures like surgery and restoration.
What’s more, adding new staff members is usually a sign it’s time to begin considering adding a new operatory.
#2 When You Need To Add an Operatory
You’re not just losing money if you keep referring patients to your competitors because you can’t perform specific procedures or treatments. You also run the risk of losing them as patients.
Are you looking to add more specialized treatments to your general practice? Then it’s time to expand your space.
Dr. Roth says that it is time for an additional operatory “when your backlog is growing to the point where people are just calling another dentist because they can’t get in to see you. That should be a telltale sign.”
He also believes that plateauing numbers are a sign that you might need to expand. You want to see “a nice upward slope from quarter to quarter,” he says, and if that slope begins to flatten, it may be time to expand your space so that you can expand your offerings.
Dr. Roth believes firmly that you can, and should, always be growing somehow. “It was always obvious to me that I need to keep moving, keep moving, keep moving, spend a lot more on marketing, bringing those people in to the point where I can’t handle them all,” he says, “And then when I see we’re busting at the seams, then opening another operatory.”
#3 When You Need To Upgrade Your Dental Equipment
Outdated equipment could be hurting your business. The same goes for an old-looking dental clinic.
Patients today don’t just look at the dentist’s quality of work. They also scrutinize your clinic and your equipment. Keeping up with advancements in your industry will surely widen your client base.
Dental equipment is a long-term investment. Additionally, you could cut down on maintenance costs with new equipment.
When it comes to purchasing specific equipment, Dr. Roth balances a wait-and-see approach with a policy of constant growth.
“I try to trail the technology curve a little bit. Now that I’ve been doing this for a long time, I don’t need to be the first to own some new gizmo that doesn’t have a real proven track record.”
“I used to be the first in on new equipment all the time, but then I had so many machines sitting on the sideline, leaving me thinking: Why did I buy this thing?”
However, Dr. Roth believes there are purchases you need to prioritize.
When it comes to what you need to buy, it starts with going paperless: “There’s no comprehensive list, but by now […] everything needs to be digital. Sensors are cheap. Computers are cheap. Infrared cameras are cheap. Those things are absolutely essential at this point.”
Dr. Roth sees the trend toward digital dentistry continuing in coming years. “I think digital impressions are kind of necessary now. And I really think in about a year or two, I’m gonna tell you that a CT machine is absolutely necessary. I think it’s fairly necessary now. You certainly can get by without it. But as the prices come down on them and the technology gets easier and easier to read…they’re just getting better and cheaper.”
#4 When You Need To Improve Your Facilities
Similarly, a well-designed, comfortable, and aesthetic clinic will attract more business.
And the right moment to make these upgrades? Is right now.
“Most of the biggest buyers right now are people that graduated in the last 10 years,” says Roth, “And anybody that’s graduating in the last 10 years has never developed film, they’ve never filled out paper charts with colored pencils.”
“10 years ago, the dentist could hold off and say, ‘Look, I’ll reduce my sale price so that this guy can buy some new stuff for the office.’ But you got to think of it from their side. These guys are coming in. They don’t wanna have to envision what it’s going to look like. They come in and go: ‘Yeah, I like this office. I could work here.’”
New graduates entering the workforce don’t have experience renovating a building; they’ve never owned a dental office before. They are not likely to be eager to take on the responsibilities of a new practice AND extensive renovations, all at the same time.
Upgrading may seem expensive at first, but in the long run, modernizing your practice will allow you to treat more patients and make more money.
The returns outweigh the costs. It’s better to invest in your practice than to keep running a money pit.
#5 When You Need To Ensure the Value of Your Dental Practice
When it comes time to sell your practice, there are several key factors that impact how quickly the practice will sell.
“It’s gonna be hard to sell without upgrading your equipment,” Dr. Roth says. The best time to begin preparing to sell your practice is 5 years before your planned retirement.
If your practice is your family’s nest egg, you need to be ensuring the value of your practice before it is time to sell. Estate planning is an essential part of retirement, and your practice plays a central role in your estate planning. Dr. Roth has often seen sad cases where an older dentist passes before the practice can be upgraded or valuated, adding financial stress to an already-grieving family.
“Because they haven’t already been working with a broker, a transition person, there’s no current valuation on their office … There’s no doctor working in the office anymore. They’ve been closed. Half the staff has left, patients have been picking up their records. Now we’re in a situation where the practice is worth nothing. And it happens a lot, a lot, a lot.”
Closing a practice before selling it can lead to rapid devaluation. Dr. Roth explains the math: “The old saying is [a practice] goes down in value 20% per month until it’s worth zero. But I think it’s more like 50% in the first month and then 20% a month after that.”
When a practice closes before a plan to upgrade or valuate the business, the results are frequently tragic. “I often close the doors and hand the key back to the landlord or whoever’s got the loan on the business,” says Dr. Roth. “We just close the doors, it’s worth nothing.”
The best way to maximize the value of your practice is to begin to prepare before it’s time to sell. As retirement approaches, doctors often consider just selling their practice as-is to save on the costs of buying new equipment just to sell the practice right after. Unfortunately, the reality is that choosing to sell your practice before upgrading it will cost you more in the long run.
The worst thing you can do for the value of a practice is to let it sit on the market. Modernizing your practice and your equipment now will pay off in huge ways 5 years down the line when it is time to sell.
Holding back will only cause you to lose more money. Take the big leap!
The Key to Selling Your Practice
Ultimately, growth isn’t something that you should think about in seasons or phases. It is not a one-time endeavor. The best time to grow your practice is right now!
As Dr. Roth says, “Having had 36 practices of my own, I never knew a time where there was not a time for growth or to expand. I’ve never gotten to a point where I’ve been completely happy with where we are and keep it there.”
“That’s the old expression: if your business is not growing, it is dying. So I’ve always pushed as hard as I can with everything I can. I think it’s always the time to grow.”
Grow Your Practice with Benco
With almost a century of success in the industry, Benco has the advantage of thinking forward in decades. Our experience has enabled us to become America’s most innovative dental distributor. We can provide you with everything you need to keep your practice up and running. Our experts help dental practices realize their marketing, support, financial, and more goals.
Are you looking to expand your practice? Benco can give you access to America’s largest and most complete dental showrooms for practice design, equipment, and cutting-edge technology. Contact our Practice Lifecycle team today and let us help you maximize the potential of you dental practice in every phase, at every turn.