Geoff Long examines how you can approach raising finance for a dental practice
Specialist dental accountant Geoff Long explores the options for dental professionals looking to set up or purchase their own dental practice.
The opportunity to one day own your own dental practice is probably one of the key motivators for many young dentists starting out. It is a chance to run your own business, make a real contribution to the health and wellbeing of your local community and to take a practice in the direction that interests you most.
And it is certainly the case that helping people to realise this dream is one of the most satisfying and enjoyable aspects of my job as a specialist dental accountant. There are lots of options available.
Here are a few thoughts on how to go about financing this next, crucial stage in your dental career.
- Seek specialist dental financing advice
Just as my firm offers specialist dental accounting support, there are also financing options available that are tailored specifically to meet the needs of dental practitioners. With that in mind, your first port of call when discussing how to raise funds to purchase a practice is to talk to a specialist dental accountant. Advisers at your average high street bank are unlikely to have the necessary specialist knowledge required to help you assess what you’ll need to purchase a practice. Which is why going straight to the experts is likely to save you time and money in the long run. A dental accountant will talk you through the bigger picture about what is going on across the whole dental sector, in terms of financing, and will have a wealth of experience that goes beyond the scope of most lenders’ in-house advisers.
- Do your groundwork
Your dental accountant will be able to help you to choose a suitable financing strategy. But it is absolutely crucial that you then approach any prospective lender with a clear business plan. Again, specialist dental accountants are invaluable here because they deal with hundreds of other dentists in the same position as you. They will have an idea of the state of the market in the area you’re thinking of moving in to, but also have a sense of market trends too. They’ll help you to create a plan that will show the bank that your proposed practice is viable. They will also help you to understand all of the costs that you will face. Not just the purchase price, but also your tax liabilities and any potential loan costs in the coming months and years.
- Find a lender – and don’t be afraid to ask questions
Banks will generally want to lend – it is how they make their money after all. But of course they will only do it if they are happy that you are a sound investment. That business plan, as well your own personal and professional credit history will all come into play as you shop around for a lender who is willing to support you.
Other factors to consider
However, there are also many other factors to take into account from your own perspective, as you weigh up the relative merits of different lines of credit for the purchase. It is well worth carefully considering a few key questions. So, for example, ask about the term of the loan. Ask about the interest rate – will it be fixed, or will it be linked to the national base rate? What will this actually look like over the term of the loan? And find out if there any costs you’ll need to pay up front, or any that you will need to pay if you want to repay early. If there are, what are they – and can you afford them?
Talk to a specialist dental accountant
Finally, your specialist dental accountant can help you to make a judgement call on whether the practice you’re looking to invest in really is worth what it is being sold as. Over the years, I’ve worked with many dentists and watched the performance of huge numbers of practices, large and small. They are not all created equal. So, take the time to sit down with someone who has a clear, objective overview of the market you’re about to enter – before you make any kind of serious financial commitment.
Geoff Long is a specialist dental accountant based in Stevenage, Hertfordshire. He advises on a wide range of dental tax issues and regularly writes for the dental press. Geoff has over 20 years’ experience with dentist’s accounts and is recognised for his proactive approach to dental taxation and business problems.
Geoff can be contacted on 01438 722224 or email firstname.lastname@example.org