Tips on Writing a Dental Practice Business Plan
From operational structure to making financial projections, a strong business plan is invaluable to any dental practice business. Here’s everything you need to know when writing your business plan.
If you run a dental practice or group of practices, then you’ll know just how difficult the last few years have been. The COVID-19 pandemic saw dental practices go from busy waiting rooms with a steady stream of patients to emergency appointments only. With rent and expenses still to pay, many businesses struggled to make ends meet during the government enforced lockdowns. However, those with great planning are now recovering at a faster rate. How do they accomplish this? By having a great business plan.
While none of us could predict the impact of a global pandemic, having a plan is a good start for protecting your business from the unexpected. Whether you are starting a new dental practice or you already run an existing group, there’s no better time to write a business plan. Even if you are not completely sure about the future of your business, then this process will help you to identify opportunities for growth.
Even amidst turbulent times, people will always need dentists. According to research carried out by the General Dental Council (GDC), around two-thirds of dentists expect income to fall over the next year. So, writing a business plan can help you to take control of your situation and bolster your opportunities, making you a better candidate for finance or drawing the attention of the industry’s top associates.
Ready to learn more about writing a dental practice business plan? Keep reading to discover everything you need to know.
Why do I need a business plan?
We already touched upon the importance of a business plan for a dental practice in the introduction, but you may still be wondering if it’s really worth your effort. Creating a business plan from scratch, especially if you are already content with the way your business is going, might seem like an additional task you don’t have time for, but the benefits of a strong business plan can help you to identify risk factors earlier and even bring fantastic new opportunities.
For example, a comprehensive business plan shows investors and lenders that you truly understand the current state of your business, and have put thought into where you hope it’s going. When it comes to seeking finance for a new practice, or shifting to a different finance product after a period of growth, lenders will be keen to see your business plan, so they can identify areas of risk as well as strengths in your operation.
Your business plan shows your operational structure, such as whether your business is a dental partnership or you are the only stakeholder. Equally, if you have already recruited, or plans to recruit, associates then this will help you to stand out to your lenders and show you are investing in the business going forward.
So, it’s clear that a comprehensive business plan is vital to the success of any growing dental business.
What is a dental practice business plan?
A business plan is a comprehensive document that covers all aspects of your business. From operational structure to financial planning, recruitment and marketing strategy, a business plan is often written by the business owner with support from the associate team and any external consultants. For dental professionals, this may differ - you’re already an expert in your own medical field so you may instead opt to work with a business expert and specialist dental accountant to create the plan in line with your expectations.
The purpose of a business plan is to outlay the business current circumstances and where you hope to take it. Remember: a business plan is a living document, so don’t worry if you’ve been running our operation without one or if you haven’t updated yours for a few years.
Writing and maintaining a business plan gives you the opportunity to take a step back from the day-to-day operations of your practice - often a key difficulty for dental professionals who see patients while also running the business - and equips you with the knowledge you need to make vital decisions about the future of your practice.
What should I include in my business plan?
Now you know what a business plan is, and why you need one, it’s time to look at how to write one.
Any good business plan requires an executive summary. Since a business plan is often a long and detailed document, the executive summary will give any reader insight into the key points covered. For example, the structure of your business, an overview of your financial situation and a brief insight into your future plans should all be included in an executive summary.
So, how do you write an executive summary? Of course, you may have written one before, or have a business consultant on hand to support with writing the plan. But if you’re working on this alone, or need some motivation to get started, then this is what we recommend
- Write your executive summary last: Once you have completed the entire document, you will be better placed to identify and summarise the key points, and writing it at the end saves you having to go back to it several times. Remember, an executive summary typically appears at the front of the document, even if you wrote it after completing the other pages.
- Keep it under two pages: The more concise your executive summary, the better. Some business professionals will recommend trying to summarise your business plan in a single page, but if you find that’s too restrictive then aim to keep it under two.
- Consider the reader: Keep in mind who is reading the executive summary. Often a potential investor or a lender will read this section to get a better idea about your business, so ask yourself: what matters to them? The executive summary is a great opportunity to highlight key facts and figures, such as a growth in appointments, investment in new equipment or the recruitment of a new associate.
- Summarise each section: As the name suggests, an executive summary is just that… a summary. So, take the highlights from each section and include these in your summary.
When writing an executive summary, always try to remember what it is used for and why it is important. Investors and lenders will often screen applications by reading the executive summary, so if you have any important information hiding in the depths of your business plan that could work in your favour, make sure to include it at the start.
If you are in the process of applying for finance, then you might want to adapt the executive summary to highlight the key areas of concern and any risk factors that your lender is looking for. Don’t worry if you’re not sure where to start, the team of industry experts at Rangewell will help you to ensure your finance application is fully comprehensive and your executive summary, and business plan as a whole, reflects this.
In the first section of your business plan, you should aim to give an overview of the business, including details of any partners or associates. If you are the principal dentist, then look to include some information about your background, such as past relevant roles. In addition, if your business is a partnership, you should include their details as well, as this is particularly important for lenders to know.
Remember, a dental partnership can only exist between two dental professionals as stated by the General Dental Council. So, if you are just starting out and not sure whether you qualify for a partnership, or if you should structure your business in another way, then take a look at our definitive guide to starting a dental partnership.
Organisation and operations
In keeping with the business structure, this is your chance to lay out the operational plan of your business. Where is your practice located and how many days a week do you operate? What are your hours of operation? Do you provide NHS services, private clinics or a combination of the two? And is there an out-of-hours service? Along with the answers to all of these questions, this is an ideal place to highlight any specialisms, such as cosmetic dentistry, that may be of interest to potential investors or associates.
The operations section should also include the details of any assets, such as property and equipment. In fact, we recommend dedicating a subsection specifically to equipment as this is such a vital part of running a dental practice. Keep a record of all new equipment, whether it’s purchased or rented, and how often it requires maintenance.
Your financial situation is a critical part of your business plan. This section will explore all aspects of your financial situation, including information about any initial investment, your ongoing running costs and details of any finance you have received or plan to apply for.
If your dental practice is already established, then this is an opportunity to include your previous year’s financial statements and highlight any significant areas of growth or focus. Equally, if this business plan covers a new practice, even if it is a small squat practice, then details of your income and outgoings are important.
While NHS practices may be restricted to a certain pricing structure, a private practice will need to include information about the price of dental services in the financial report. From here, you can determine whether your prices are in line with market averages and whether you need to increase your prices at regular intervals.
You should always work with a specialist dental accountant to gather the key financial information for this section of your business plan. You might be in the same boat as many other dental professionals during this difficult economic period and be considering refinancing to consolidate debt or looking to transfer to a different finance product that provides better terms for your current situation. General accountants can also be useful, but why opt for general when there are specialised accountancy firms that work solely in the medical sector and understand everything from your practice’s cash flow through to capitation schemes?
Whatever your intentions, be sure to speak to the team at Rangewell, who will not only help match you with a number of specialist industry lenders, but will also support you in the application process and work with you to determine which product is best suited for you. We can also help match you with trusted dental accountancy firms that have worked with some of the country’s most successful practices.
Sales and marketing strategies
While often paired together, sales and marketing require their own strategies that work together to achieve common goals.
A good marketing strategy will allow you to reach and communicate with your intended audience. In your case, this will likely be in the local community. So, advertising, social media, email marketing and PR will all play a role in spreading the word about your practice, boost your online presence and, ultimately, help you to get new patients through the door. Often, dental professionals will invest in outsourced marketing support, as this is often an area that is pushed aside in favour of other more pressing matters.
Of course, any external consultancy support requires investment, so this could be a good opportunity to seek investment or finance that bolsters your marketing budget, so you can both appoint an expert and invest in proven methods like Google and Facebook advertising.
When it comes to sales strategy, it’s more focused on generating the necessary leads to guarantee a consistent flow of appointments. This is particularly important for private practices, particularly those offering specialist dental care services. Ensure your partners and associates are aware of the pricing structure and give them the tools they need to determine whether there is an appropriate opportunity to upsell.
Sales in the dental industry is heavily reliant on the trust of your patients, so it’s often better to go for a soft-sell approach rather than making your patients feel under pressure to purchase your service. As with any business in the healthcare industry, you will need to work with experts in your field and feel confident in your messaging. Look to include all of this, as well as any future plans for growth, in your business plan.
Whatever your sales marketing plans, get in touch with Rangewell to discuss your finance options and ensure you have the funds you need to drive your business forward and achieve your sales and marketing goals.
The importance of a business plan for dental practice finance
As we’ve already discussed, a comprehensive business plan is important when it comes to securing finance. A finance application isn’t as simple as just asking for funds for a project or to cover a difficult time, and not all practices will be offered the same terms. A strong business plan that shows you fully understand your current circumstances and demonstrates you are equipped to take on the next financial period will work in your favour with lenders.
The business plan also helps you recontextualise your practice as a business rather than an extension of your career - justifying future expansion and goals such as adding new associates, expanding the premises or upgrading equipment. All of these goals then require funding, which is in turn only granted to those with sound business plans - reinforcing the need to complete one no matter which stage of your business you are at. Even if you’re approaching retirement age and want to sell the practice, sometimes a business plan is still crucial in securing added investment to upgrade equipment to appeal to certain buyers so you can benefit from the most lucrative sale possible.
So, if you are looking to secure finance or considering refinancing your dental practice, get in touch with Rangewell’s team of dedicated experts and we’ll help you to find the funding solution that works for you.