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Associate, Buy, or Start, Which is Right For Me?. Wendy Pesavento Owner, Chicago Practice Sales www.ChicagoPracticeSales.com Managing Partner, Cutting Edge Practice www.CuttingEdgePractice.com 773-502-6000 Dentalbiz@icloud.com. Overview. Associateship Buying Your First Practice
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Associate, Buy, or Start, Which is Right For Me? Wendy Pesavento Owner, Chicago Practice Sales www.ChicagoPracticeSales.com Managing Partner, Cutting Edge Practice www.CuttingEdgePractice.com 773-502-6000 Dentalbiz@icloud.com
Overview • Associateship • Buying Your First Practice • Starting A New Practice
Associateship Options • Employment Arrangement • Independent Contractor
Independent Contractor Agreement Provisions Parties Term Conditions Use of your name for marketing Compensation Covenant Not to Compete Termination Assignment Rework Notice Enforcement Severability Right to Counsel
Parties Who are the parties who are bound by the agreement? Personal or Corporate?
Term • Usually 12 months • Renewal Options • Employment at Will
Conditions What The Owner Provides What You Provide Your Payroll Taxes Malpractice Insurance Current Dental and DEA License Continuing Education Professional Dues Health Insurance ½ of Lab Costs • Office Space • Dental Equipment & Supplies • Utilities & Maintenance • Salaries, Taxes, and Benefits for Support Employees • Marketing • ½ of Lab Costs
Use of Your Professional Name • Website • Social Media • Other Marketing
Compensation $10,000 ($200) ($100) ($1,000) =$8,700 X 35% =$3,045 ADD + Gross collections for services rendered by CONTRACTOR MINUS - Amounts of any returned checks or refunds MINUS - Any outside collection expenses for CONTRACTOR'Saccount MINUS - CONTRACTOR incurred laboratory expense paid by OWNER EQUALS= CONTRACTOR net collections TIMES X thirty-five (35%) percent EQUALS= Net compensation due CONTRACTOR
Covenant Not To Compete • Distance • One location • Multiple Locations • Varies from Urban to Suburban to Rural • Years • Violations or Unprofessional Conduct • Damages
Key Points • Who are the professionals who will support me in buying a practice? • Where do I find practices for sale? • How will I know if a practice is a good fit? • What is the process to buy a practice? • Is it better to buy or start? Wendy Pesavento and Sharon Bogetz, Managing Partners www.CuttingEdgePractice.com
Who Will I Need To Help Me Buy A Practice? • Attorney • Incorporation, sales documents, lien search, lease negotiations, real estate purchase, closing • Lender • Financing approval letter and loan • Appraiser familiar with dental valuation • Accountant to assist in asset allocations • Building inspector • Transition consultant
Where do I find practices for sale? Dental Society Journals Business Brokers Internet Business Brokerages Grapevine
How Do I Know If A Practice Is A Good Fit? SWOT Due Diligence • Equipment • Financial • Systems • Patient Files • Data and Reports • Staff • Clinical Work • IDPR • Google • Social Media
SWOT – Objective Assessment Strengths What does this practice do best? Weaknesses What are the problems in this practice? Opportunities What are the untapped opportunities? Threats Who are our competitors?
How Do I Know If A Practice Is A Good Fit? How much will I earn? Is there a credible practice appraisal? Do the Seller and I have a similar philosophy of care? Are there any procedures that the seller is referring? Does the practice have a predictable and emulatable new patient flow? Are there opportunities for practice growth? Are the equipment and facility desirable? Does the practice have modern office systems? Is the staff willing to support a new doctor? Can this location draw walk in patients? Does this office have a good online reputation? Is the Buyer a reasonable substitute for the seller?
Cash Flow Opportunity Practice A Practice B Revenues $800,000 Expenses ($600,000) Net Income $200,000 Loan ($80,000) Pretax Salary $120,000 Revenues $800,000 Expenses ($400,000) Net Income $400,000 Loan ($80,000) Pretax Salary $320,000
Predictable and Emulatable New Patient Flow • How many new patients does this practice receive each month? • Where do these patients come from? • How much does it cost to attract each category (referral source) of patients? (ROI) • Are any of these patient referral sources not likely to continue under new ownership?
Purchase Process • Preliminary financing approval • Practice data • Visit practice • Financial due diligence • Offer • Patient base and equipment due diligence
Purchase Process continued • Loan • Sales contract • Lease or buy space • Close • Transition
Is it better to buy or start? Buy Start Pros Usually better location Your build, equipment, staff, and patients Cons Slower cash flow Takes longer to build Learning curve is steep Pros • Immediate cash flow • Loan easier Cons • Need to transition patents and staff • Sellers build, staff, patients, and systems • Seller quality of work
How To Start-Up A Dental Practice Sharon Kantor Bogetz, MBA, MEd Owner, Midwest Dental Solutions www.MidwestDentalSolutions.com Managing Partner, Cutting Edge Practice www.CuttingEdgePractice.com 847-370-9131 Sharon@CuttingEdgePractice.com
Develop The Master Plan Strategic Business Plan • Financial Plan • Construction Plan • Dental Equipment Plan • Technology Plan • Staffing Plan • Marketing/Internet Plan
How Is That Accomplished? Knowledge Support Financing Location
1. Financial Plan • Incorporation • Quickbooks • Pre-Construction Budget • Business Plan • Loan Acquisition • Construction Budget • Operational Budget Forecast
2. Construction Plan Once the site is selected and the architect completes the drawings: • Interview Contractors • Interview Cabinet Makers • Solicit Bids • Compare Costs • Check References • Review the details • Select Vendors • Review Contracts
3. Dental Equipment Plan • Interview Equip Reps • Interview Factory Reps • Make Equipment Selections • Entertain Bids • Compare Costs • Review the details • Select Vendors • Review Contracts
4. Technology Plan • Interview Contractors • Entertain Bids • Compare Costs • Check References • Review the details Make the Decisions • Digital X-rays • Digital Pan – Cone Beam • Practice Mgmt Software • Paperless • Wireless Reception • Cable/Phone System • Wiring • # Screens in Operatory
5. Staffing & Systems Plan • Budget For Staff • Salary & Benefits • Work Schedule • Job Descriptions • Office Manual • OSHA/HIPAA • Employee Forms • Recruitment • Interviewing / Selection • Reference Checks • Training / Scripting • Staff Evaluation Forms • Standard Operating Procedures • Payroll Management • Uniforms Experienced V.S. Non-Experience • Customer Service Training • Productive Scheduling • Cash Flow Management • Dental Insurance • Recall System • Huddle
6. Marketing & Internet Plan • Practice Name Selection • Practice Marketing Niche • Target Population • Logo Design • Domain Name Selection • Stationery Design • Brochure • Signage • Direct Mail Campaign • Print Ad Campaign • Internal Referral Program • Employee Discount Program • Personal Networking • Website Design • Social Networking • Internet Campaign • SEO & PPC
Start Marketing During Site Selection • Consider signage opportunities when selecting a site • Consider walk-in opportunities • Consider window views/street visibility • Review the demographics
Complete a Competitive Analysis • Who are your top 3 competitors? • How do you find out about the competition? • Who gets the most patients? Why? • What are they doing?
2 Most Cost Effective Ways To Market Website 2.Outside Signage
Thank You Sharon Kantor Bogetz, MBA, MEd Midwest Dental Solutions 847-370-9131 Wendy Pesavento Chicago Practice Sales 773-502-6000 Partners, Cutting Edge Practice, Inc www.MidwestDentalSolutions.com ChicagoPracticeSales.com www.CuttingEdgePractice.com