Opening your own dental practice? Whether you are planning a new practice or purchasing an existing one, the cost of a dental practice can be high. You may find it necessary to secure loans to turn your dream into reality.
If you need financing for a dental practice, submitting a well-crafted business plan can make the difference between approved and rejected. Here are tips on how to create one.
When you're creating a dental practice business plan, it's important that you include all pertinent information and organize it in an easy-to-navigate fashion. Potential lenders need to be able to thumb through your business plan and quickly find the sections they're interested in.
Don't start with your introduction or summary. Instead, start with the core of your business plan — the narrative.
Include an overview of your dental practice. Your overview should give a concise but complete picture of your dental office goals, what your practice is going to look like, and what sets it apart from other dental practices in the same area. At a minimum, make sure you answer these questions:
Lenders will likely want to see data on what your competition is doing. Include a full analysis of your competitors' online presence, content, SEO (search engine optimization) rankings, and other key data.
Then, add a detailed marketing strategy that discusses your plan for your own practice, such as your website design ideas and content map. Be sure to clearly indicate if your practice will take a different approach than your competitors and why.
The operations section of your dental practice business plan is likely to be the longest.
Here, you'll include the details about the day-to-day operations of your office, such as office hours, equipment needed, ideal patient flow, and what dental insurances you do or don't accept. This section should give lenders a clear picture of the fundamentals of your practice and how your office will function.
Include operational key performance indicators (KPIs) that you will use to measure success in your practice. Some KPIs you may choose are:
Include a section in your dental practice business plan that discusses your staff. Make sure this information is listed in your plan to help illustrate the size and function of your office.
For example: How many hygienists and dental assistants will you need? Do you plan on working with associate dentists now or in the future? How many admin staff members will you need to book appointments, greet patients, and file insurance? Make sure this information is listed in your plan to help illustrate the size and function of your office.
You'll also want to cover your dental business management structure. Lenders generally want to know that you have a plan for how your office will function and that you have a system of support to help you get started. Include information about what kind of business structure your practice will have and a list of your financial partners, business associates, attorneys, and other management professionals who will be forming your team.
The financial section of your dental practice business plan is of the utmost importance to potential lenders. Be sure to include the following:
To lenders, how you manage your personal money may make a big difference. You may want to include a personal financial statement in your business plan that details your current startup capital and how you've allocated your existing resources to your business.
Lenders could also want to know how you plan on using the startup capital that they're providing for your new dental practice. Write a section that informs potential financial supporters of what equipment you plan on purchasing for your office, how much you'll pay to rent or buy your office space, how much you'll pay your employees initially, and other monetary needs.
Last but not least, you may want to include information about how much money you estimate your new dental practice will make over time. Discuss how many appointments you expect to have and how that number will grow. You could write about how much profit you estimate you'll make after the cost of expenses like office mortgage or rent payments, employee pay, and other overhead costs. Then, you may want to include a projection of how long it will take you to pay back the loan or investment at a forecasted rate.
The executive summary is essentially the introduction to your business plan, but it's important not to write it first.
Instead, write it at the end once you have a complete picture of what your business plan includes. The executive summary should be two pages or less for maximum impact.
Your appendices section should include a professional dental office layout, full graphs or charts with data referenced in earlier sections of your business plan. Include timelines for expanding your practice, service fee schedules, and your resume or cover letter.
While business planning for your dental practice, remember that your practice is its own entity, and your personal insurance coverage may not provide protection.
While working on a business plan for financing a dental practice, you should consider your business insurance coverage needs. Because the potential impact of your choices can be high, you’ll want to speak with an experienced advisor who has worked with dentists opening a new practice.
In addition to a tailored business owner’s policy, which is required by the bank, other coverage types include business loan insurance, business overhead insurance, data breach insurance, and much more. Some banks may also require disability and life insurance policies as a condition for closing.
To learn more about the ins and outs of your insurance options to help protect your practice, download your complimentary copy of our Practice Owners Guide to Business Coverage.
Treloar & Heisel, an EPIC Company, is a premier financial services provider to dental and medical professionals across the country. We assist thousands of clients from residency to practice and through retirement with a comprehensive suite of financial services, custom-tailored advice, and a strong national network focused on delivering the highest level of service.
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