How to Finance a Squat Dental Practice
Kick-off your journey as a dental practice owner and discover everything you need to consider.
Starting a dental practice from scratch is known as a squat dental practice, often with just one surgery. Learn more about financing a squat dental practice with Rangewell.
Starting a dental practice from scratch is expensive, but may prove highly profitable in the long run for an experienced and business-savvy dental professional. For many dentists, opening their own practice is an ambitious and alluring goal, as they aim to further progress in their careers, take ownership of their brand and build something from the ground up.
The ‘high street’ dental market is worth over £7bn in the UK, with the private sector making up £3.6bn of that and the remainder falling under the NHS. With over 41,000 practising dentists operating across the UK, it’s no surprise that many of these are starting their own private practices within both established and growing communities.
In a recent guide, we discussed the full process of buying an existing practice with our comprehensive piece: how to buy a dental practice… but what about if you want to start your own dental practice from scratch? From understanding the initial setup through to making sure your business is compliant, securing finance and completing the whole project, we’ve got it all covered, so keep reading to get started.
What is a squat dental practice?
A squat dental practice is a dental practice set up from scratch, often with just a single surgery.
The dental industry is certainly feeling the impact of the coronavirus pandemic. As a result, many dentists are choosing to move away from larger corporate or NHS practices in favour of setting up their own squat dental practice. You may also find that buying a dental practice is harder than you thought, with demand outstripping supply, leading you to consider setting up your own.
In order to start and successfully run a squat dental practice, you need both the necessary dental qualifications and skills, as well as entrepreneurial acumen. Keeping this in mind, you need to make the best decisions for your practice and ensure your patients are always getting the best possible service, all while making a profit for yourself.
Things to consider when opening a squat dental practice
When setting up your practice, the first decision you need to make is the practice location. Are you planning to start a new dental practice within your existing community, where you are already known as a dentist, or have you identified a new location that lacks existing dental resources? Choosing a location for a squat dental practice is absolutely critical to the success of your business.
For example, if you open a new practice in an area where the local community is already loyal to a large dental practice, then you risk failing before you start. So, make sure to carry out extensive research about the location you choose for your practice, including the local population and property prices.
Consider elements you may never have considered before, such as car parking, local transport links etc. You should also be mindful that some perceived positives can actually work against you. Take, for example, a practice location near a busy train station. You may look into footfall figures and be astounded, but remember that most passersby are commuters and are not likely to register for a practice unless they live or work close to it.
The recent pandemic has only made locality more important, with many patients seeking services and retail alike closer to home. While measures are now lessened, it’s worth considering whether the cultural impact of staying local will remain and affect dentists.
Once you’ve chosen the area, it’s time to find a property that best suits your needs. Since you are starting a squat practice, you probably don’t need a lot of space, but you will need suitable parking for your staff and clients. Equally, you’ll have to choose a space that’s affordable from the outset, and that you can ensure funding for as you get established in the local area.
If you choose a property that was not previously a dental practice, you may need to apply for planning permission for change of use.
As we stated above, the pandemic brought with it a return to a sense of local community. Many people are still working from home with no clear plans on returning, so it makes sense to open a practice in a residential area rather than in a commercial office park. However, that may not be the case for the long term, and there is a lot of vacant commercial space available, so you have to weigh up your options before deciding which is right for you.
As with any healthcare business, there are many compliance considerations to ensure your practice is safe for your clients and staff.
You must register under the CQC (Care Quality Commision) as a new provider and registered practice manager. The CQC will provide policies and procedures you need to follow, this will cover everything from the way you set up your actual surgery though to staff recruitment and training.
Registration as a new practice can be a costly process, so it’s important to take the time to put together a comprehensive business plan so your lender can determine whether they are able to support your application.
When it comes to opening your own single surgery practice, you may need finance to cover the initial setup costs. While running a dental practice, even a small squat practice, can be profitable, it is also a costly process to undergo and requires a robust financial support package from lenders that understand the industry.
Before opening a dental practice, you may need to renovate an existing space to make it suitable for your needs. In addition, since you are starting from scratch, you are unlikely to have all the dental equipment required to open even the smallest of surgeries, so you will need funding to buy or rent this equipment.
Another significant investment upfront is staff salaries. If you intend to be the principal dentist at the practice, you will still need to consider your own salary alongside that of any associate positions and support staff, including any nurses, admin staff and a practice manager.
As with any new business, you have to frontload any investment and, as a result, it may take weeks or even months to turn a profit. This is where your finance application comes in. While many lenders will fund a squat dental practice, you will want to get the very best finance and terms for you, especially as every penny is vital at the start of your business.
When you’re buying an existing practice, lenders can do due diligence and research into it to ascertain how reliable an investment it is. This helps them weigh up the risks of investing in you. When planning a squat practice, however, the lender must instead base their decision on your experience and business plan.
To maximise your chances of acquiring finance, you’ll need to write a great business plan that showcases your competence not just in dentistry, but in business fundamentals. It is worth potentially involving a third-party expert in this process to help strengthen the business element. Luckily, we can help.
At Rangewell, we’ll help you to find the best finance to match your current needs and future plans. We will help you tailor your application to showcase your best assets and experience, with our knowledge of lenders meaning we know how to help your project seem appealing rather than risky. We work with the whole of the lending market, including a number of specialist healthcare finance providers who understand what it takes to start a squat dental practice, and how best to support that process.
As already discussed, even if you intend to be the sole dentist at the practice, you will still need to recruit a small number of colleagues to support the business. If you already have connections in the industry from previous roles, you may have practice managers, administrators and nurses in mind. At the start of your business journey, you may not have the financial resources to ensure the salary that they need, so you might want to consider offering senior colleagues a profit share or another means of guaranteeing reward for the team.
Whatever your decision, make sure you have an experienced accountant on your side who can recommend the best financial plan and recruitment process for your support staff.
While dentistry is the business of delivering a healthcare service, there is always a bottom line to consider. Ideally, you want to develop a loyal customer base who will return for treatment and regular checkups - as well as acting as advocates for your practice in the community. As an established dentist, you will already have dedicated clients, many of whom may follow you to your own practice if the location and other factors meet their needs.
However, what about finding new potential customers? Budgeting for marketing and advertising is paramount to the success of any new business, especially one that relies so heavily on the trust of its existing network like a dentist practice. It’s also worth trying other techniques such as asking your current clients to provide testimonials, investing in your own practice’s website and even delivering leaflets to homes and businesses in the local community.
Whatever your marketing strategy, you can’t do it for free. By finding the right finance provider, you will be able to allocate funds to every area of your business from equipment to recruitment and customer acquisition, so you can start off on the right foot and transform your own squat dental practice into a profitable business as quickly as possible.
Ready to start your dream practice today? Kick-off your dental practice funding application today with Rangewell.