A dental squat practice is a a start-up business, usually run as a single chair operation in a leased suites of rooms.
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How to Finance a Squat Dental Practice
Kick-off your journey as a dental practice owner and discover everything you need to consider.
Dentistry is an essential service that everyone needs, and successful dental practice can be a highly lucrative venture. Many dentists start their entrepreneurial journey with a small single surgery practice, known as a squat practice, and then work towards growing their customer base and business over the next few years.
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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.
A squat dental practice is a dental practice set up from scratch, often with just a single surgery. To establish yours, you'll need the support of finance lenders to help you raise the funds you need. However, your exact needs will depend on how you approach the purchase. If you'd rather buy an existing practice, read our full guide on how to buy a dental practice.
Understanding your funding options
Setting up a squat practice can let you cut the cost of running your own dental business, but you need to ensure you have the right type of funding for each purpose. There may be a number of different funding opportunities available to you, which will help you to:
- Acquire premises
- Acquire dental equipment and assets
- Provide working capital
- Market your new practice
- Deal with tax
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.
In all cases, buying or renting a premises is expensive. Once you've chosen a location, speak to Rangewell and we can help you understand finance options for buying property to help give you insight into the sort of premises you could afford. Commercial mortgages help dentists become commercial property owners and establish a pathway to long-term asset wealth.
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 likely need dental equipment finance.
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.
Managing cash flow with working capital loans
Dentists are always in demand - but simply opening the door on your first day will not see a line of patients file in. You may have to fund all the outgoings of your practice for months until you achieve the patient numbers you need to cover them.
Working capital finance is designed to provide the working capital you need. It's often used to provide cash to pay staff and suppliers while business is slow during the early weeks and months of a new practice, or during a period of growth. It is usually designed to be repaid in the short- to medium-term, once the practice is fully on its feet.
Market your new practice
It is essential that as a practice owner and business manager, you invest in marketing. Inadequate marketing is one of the key reasons for the failure of start-ups. People need to know where you are and what you offer. the local press can be important to spread your sales message, but a good quality website is essential and you should give consideration to search engine optimisation (SEO). Setting the website up before the practice opens should be a priority.
Your website does not have to be elaborate, but you must have a professional-looking site that shows your practice, and your contact details. A map might be useful to ensure that potential patients can find you.
The costs of your marketing will probably be £10,000 or more in your first year, so you might look at an unsecured loan to provide them.
It is not something you can skimp on. Without marketing, you will have no patients - and without patients, your squat practice will not last long.
Tax is an issue for every new business. A large quarterly VAT or annual tax demand is inevitable if your business is doing well, and it can cause problems with your cash flow, particularly when it falls at the same time as other costs.
Tax loans help you to spread the cost of your tax demands into affordable monthly payments, helping ensure that your business does not have to go through a cash flow drought, and can help you avoid issues with HMRC and potential financial penalties.
Benefits of a tax loan include:
- Better control of your cash flow
- Fixed, predictable monthly payments
- Quick and simple to arrange - ideal if you have an urgent demand to deal with
Finding financial solutions for dental professionals
As a dental professional, there are many financial solutions that you can call on. But finding the most appropriate solution for your needs takes a thorough understanding of both of the lending market, and the products available on it.
At Rangewell we have the expertise you need. We know the lenders who can offer the most competitive rates for the dental profession, and we can help you find the most appropriate solution for your particular needs.
But not all lenders will offer the most competitive terms. Looking for the most competitive deal for your squat practice, and across the entire market, takes time and expertise - time which you probably don’t have. We know the lenders who can offer the most competitive rates for the dental profession, for all types of finance, including Professional Loans, Unsecured and Secured Loans, Invoice Finance, Asset Finance, Merchant Cash Advance, Commercial Mortgages, Growth Finance and more.
If you are looking at the finance you need to grow your dental practice, you need to look at the finance you need first. Get in touch to start this journey.
The funding you can find includes:
- business loans for dentists
- refurbishing your dental practice
- start-up finance for your dental practice
Last update: 17 August 2023
Frequently asked questions
Have a question?
For many dentists, earning a salary as an associate is not enough. So although the prospect isn't an easy one, the alternative of starting and running a squat practice is an exciting one.
To start with, squat practices are essentially single surgery practices until they have enough patients to fill their second surgery. Some of the challenges facing small squat businesses include:
- It usually takes around two to three years to grow the business to a point where you can make a profit.
- Often, costs are high, and the profits are low
- Small practices may struggle to afford staff, meaning the owner may undertake some of the tasks that a manager or an admin would otherwise be dealt with.
- If the owner falls ill or wishes to take a holiday, the income will stop immediately.
There should be some things to consider when applying for a loan:
- Be cautious of the equipment and your installation dates
- List then names of all partners, dates of birth, home addresses and passports
- For limited companies, provide all director's names and their home addresses
- If you have been living at your current residence for less than three years, a previous address will be required
- Have a copy of a recent utility bill to confirm applicants or directors house residency
- Make a clear list of all suppliers with builders estimates
- Deals over £100,000 may require a business plan and cash flow forecast
- A personal asset and liability statement may be needed for larger projects
- Beware of personal tax positions and seek advice from a broker and an accountant
Some dentists throughout their career quite happily as earning a salary as an associate. The idea to buy a practice rarely comes up, and they might not think about how to own a practice. For other dentists, opening up their own dental clinic is an exciting prospect. There are reasons for and against opening your own private practice, but there are some important things to think about.
- It can take some time to grow your dental practice into a profitable venture
- The initial costs can be high, and profits coming in low between £40,000- £60,000 a yeat
- A lot of smaller practices find it hard to afford an entire team, meaning the owner may need to step up and do the jobs that the admin may potentially do.
- Dental practices rely very heavily on the owner, so the income could immediately stop if there is illness or holiday to consider.
On average, a dental practice in the UK can expect an annual turnover of around £500,00 with costs including:
- Materials: £40,000
- Lab fees - £36,000
- Staff cost: £82,000
- Other expenses (including associate fees): £275,000
Which will leave a yearly profit of £90,000.
Each every dental practice is different, so this should be considered as an average cost.
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