When you’re considering buying a dental practice, price, location, and monthly traffic aren’t the only factors worth weighing. The practice you purchase has the potential to make  your career or tank your career. That’s why we encourage our practice purchase advisory clients to consider multiple factors and pitfalls before rushing into a deal that’s too good to be true. 

We want to see you equipped, empowered, and ready to make a smart business decision that will put you and your dental team in position for meaningful long-term growth. For the benefit of your financial future, and theirs.

Before you sign on the line, consider these three lessons far too many dental practice buyers have learned the hard way: 

1. The ‘status quo’ isn’t easy to change.

You may come into your new practice with big dreams and even bigger changes in mind. But it’s hard to turn a big ship. Chances are, despite your best efforts and good intentions, the way things were done will remain the way things are done. 

I know this isn’t what new dental practice owners want to hear. 

I can’t count how many stories I’ve heard of young dentists coming into their practice and expecting to add operatories, grow the staff, and increase weekly traffic through the clinic…. Only to realize there physically isn’t enough room for additional chairs. And the location the clinic is in doesn’t lend itself to significant client growth. And the staff is less-than-enthusiastic about a faster work pace. 

Another detail that can be difficult to change is who’s on staff. Consider this scenario: Say the owner of the practice you want to buy only works one or two days a week, and has a couple of associates who cover the remaining appointments. But you want to work 3-4 days a week. If you purchase that practice, you may need to reduce the hours your associates work, or expand your office. Both of which are significant changes that may not go over so well with ‌current staff. 

The status quo is the status quo for a reason. While there’s always room to make small improvements, if the practice you’re considering buying is significantly different from the practice you want to run, it may not be the right deal for you. 

Thinking about buying a dental practice? Download our free guide: 5 Essential Questions to Ask Before You Take the Deal.

2. Small contract details can make a big difference.

I strongly recommend every dental practice buyer have multiple parties review the purchase contract, including your accountant, your attorney, and your wealth advisor. 

Here are a couple of examples that underline the importance of a careful contract review: 

It’s not uncommon for a dental practice owner to employ their spouse, adult child, family member, or friend. It’s also not uncommon for a purchase contract to include a retainer agreement requiring this key employee to stay on staff. While that retainer agreement may not be a dealbreaker, it’s also not something you want to discover two days after the ink has dried. Especially if that employee is difficult to work with, resistant to change, or underperforming. 

A second scenario that could be avoided with a careful contract reading is a corporate dentistry situation that shackles your operations. Some corporate dentistry practices lead buyers to believe they’ll become ‌a partner in the business. But a closer look at the contract reveals they’re basically paying to become an employee. They don’t have the latitude to operate as they want, and they’re unable to leave when they’re ready. 

I don’t want you to find yourself in either of these unpleasant situations. That’s why I urge every one of my dental clients to work with a wealth advisor, a CPA, and an attorney before they take the deal. 

By the way, at Cook Wealth, your wealth advisor can be your CPA. Our joint advisory teams and knowledgeable advisors can manage both aspects of your finances, so no detail is overlooked. 

3. You should build your wealth while you own your practice. Not just when you sell it. 

True or False: If you buy a dental practice now, you can sell it when you turn 65 and retire comfortably on the proceeds. 

What’s your best guess? A lot of dental practice owners would answer “True.” At least, they’re living like it’s true!  But the reality is, if you want to enjoy a comfortable retirement, you have to accumulate the majority of the savings you need while you own the practice—not when you sell it. 

In a perfect world, you would buy a small practice for $750,000 and sell it 25 years later for $2,000,000. Unfortunately, that’s easier to hope for than to execute. Not only is the market for dental practices fairly small, it takes considerable investment to build up the value of a practice. 

The surer way of profiting from dental practice ownership is to pay back your purchase debt as quickly as is reasonably possible. Then work with a wealth advisor to save and invest your profits year-by-year, while minimizing your tax burden along the way. 

It’s great to sell your practice at a phenomenal profit. But the only sure way to come out ahead is with a customized financial savings and investment plan that proactively grows your earnings while you work.

At Cook Wealth, we help dental practice buyers and owners manage their wealth and feel confident in their financial future. 

Our personalized financial plans, tax strategies, and acquisition advising help dental professionals make the most of every dollar—and build a life they enjoy. To learn more about our comprehensive services and knowledgeable advisors, book a free intro call with our team.