Start-Up Vs. Purchase
3 Critical Advantages to Purchasing a Practice
As dentistry becomes more competitive, more young dentists buy practices, while fewer start practices from scratch. This shift is driven by the many advantages that practice purchases have over start-ups. The 3 most critical are:
1. Immediate Income
Buying a practice should provide immediate income, from day one. Start-ups must weather periods of loss, grow to a breakeven point, and then grow further to begin to generate personal income. You can’t know how long that will take, or be certain it will happen.
2. Less Financial Risk
The risk of financial failure and bankruptcy is far less with a practice purchase. Each year we see or hear of dentists who started practices, and ended in bankruptcy. Practice buyers begin with a patient base that has already proven that it can pay operating expenses and provide an income for the owner.
3. No Leasehold Improvement Expense
A start-up must borrow a large sum of money and then spend it on leasehold improvements. Unless start-up dentists buy the real estate before or when their leases end, these investments are lost. Landlords retain ownership of leasehold improvements. With practice purchases, leasehold improvements already exist.
George D. Stollings, DDS