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Articles

The Professional Advisory

  1. Is it Time to Move?
  2. Staging A Dental Practice
  3. The High Cost of Dying
  4. Deal-Busters
  5. Patients - Attract and Retain
  6. Should I Stay or Should I Go?
  7. Is There a Buyer for Every Practice?
  8. Good, Better, Best - The Market has Spoken
  9. Smooth-Sale-ing
  10. Buying Time
  11. Patients, Patience, Patients
  12. A Real Patient
  13. Why Do a Practice Valuation? I'm not Selling
  14. Irrational Exuberance or The New Normal?
  15. Do dental equipment and dental technology affect a practice value?
  16. Finding and Being a Mentor
  17. Bigger is Better
  18. Daves Top Ten List for Buyers (Vendors should read this too!)
  19. How Well Do You Know Your Practice?
  20. Dave
  21. What will happen to dental practice Values in the next 10 years?
  22. Your Premises Lease is an Important Asset
  23. What are Associates Thinking?
  24. There is Life Outside the GTA
  25. When Is the Right Time to Sell My Dental Practice?
  26. Mergers are a Viable Option
  27. Is Your Associate an Asset or a Liability?
  28. Has your Practice Facility Kept Up With Your Billings?
  29. The 100 per cent of Gross Myth
  30. The Past, The Present and The Future
  31. Caveat Emptor
  32. Overpaid Long Term Staff
  33. Selling your Practice in Stages
  34. A Potential Pitfall of Selling Shares
  35. Value in Your Practice Through Balance
  36. Only Trusted Staff Can Defraud You
  37. To Own or Not to Own Practice Real Estate? That is the Question.
  38. Coping With A Large Patient Base
  39. Successful Dental Practice Transitions
  40. Taking Care of Business
  41. The Investing Dentist Phenomenon
  42. Two areas to focus upon that could negatively impact the value of your practice
  43. Organize your Debt in Order to Sell your Practice
  44. Having a Better Team
  45. How Do I Prepare My Practice For Sale
  46. How Do I Prepare My Practice For Sale? Part 3
  47. How Do I Prepare My Practice For Sale? Part 2
  48. How Do I Prepare My Practice For Sale? Part 1
  49. Advice to My Son or Daughter Graduating from Dental School
  50. Transition - What to Expect
  51. Discussion on Digital X-Rays
  52. Partnerships and Shotguns
  53. Strategic Planning - How to Get Started
  54. Calling All Vendors - Practices have Gone Up in Value
  55. Purchasers: Expect to Pay More for a Practice because of Lower Professional Corporation Tax Rates
  56. Matrimonial Practice Valuations
  57. Purchaser's Guide to Affording a Practice
  58. Location Improvements Throughout Your Career
  59. Small Practice Valuations
  60. Partnerships – The Best and The Worst
  61. Changing Location When the Opportunity Comes Along
  62. Visual Presentation of Your Practice
  63. Presentation of Charts
  64. Your Premises Lease Can Be Your Worst Enemy
  65. How to Select an Appraiser for Your Practice
  66. How Are Your Billing Ratios?
  67. It Pays to Invest in Your Tangible Assets
  68. The Importance of Separate Financial Statements
  69. Five Time Frame Levels to Sell a Practice
  70. 12 Suggestions to Safeguard Computer Data
  71. How to Buy a Visible Practice
  72. Why is there a shortage of good practices today?
  73. The Importance of Equipment in the Purchase of a Practice
  74. The Balanced Practice
  75. Will My Practice Be Saleable in The Future?
  76. Buyer Be Aware
  77. Excess Profit - The Second Key
  78. Patients and Profits are the Keys
  79. Plan Ahead

Volume 22: Location Improvements Throughout Your Career

Download the PDF version now!

I write this article at a time when three of our clients are currently in different stages of transition of location. Their experience helps me focus on the importance of location improvement throughout your career.

1) NEW PRACTICE SET-UP

Rent usually costs from five to seven per cent of your gross income, which is generally similar to dental supplies and laboratory bills. The latter two are variable expenses and can be controlled on an ongoing basis but rent is a fixed expense and you have to live with your decisions well into the future. In order to control costs, it is advantageous to limit the amount of square footage especially
when setting up your practice as a new venture.

Find a great location with reasonable, affordable rent that at the same time is visible to potential patients and if possible, is expandable as you move into the middle of your career. After the first couple of years as your billings increase, your rent should begin to fall into the seven to nine per cent range. By the time you have been in your practice for five years your rent should be in line with the acceptable five to seven per cent range.

Landlords always increase your rent but with time your practice billings also increase. If your rent is increasing faster than your billings you are falling behind in your ability to control expenses. You should consider moving your practice if the opportunity comes along. The amortization of new leasehold is affordable if your new location increases your production. This could also be your opportunity to expand.

2) TEN TO THIRTY YEAR OLD ESTABLISHED PRACTICE

This phase of your career is critical. These are the money making years. Is your location limiting your billings?

Many practices move to larger facilities in this period. Without moving or expanding you will sell your practice in its original location that is 30 to 40 years old. Generally, purchasers find these facilities visibly old, too small and with no ability to expand and grow because you have not done so in the past 30 to 40 years.

I have had dentists tell me that it takes three moves to get the facility you would like. Certainly, it is additional capital investment to move but in the long run you will find it stimulating and rewarding. Now is the time to have larger operatories, staff rooms, a private office and a more visibly appealing practice for your patients.

Moving to a better location is an investment in your practice. This is also an opportunity to adjust your location to better relate to where your patient base is now located as was addressed in a recent article. (Article 19)

3) THIRTY TO FORTY YEAR OLD ESTABLISHED PRACTICE

If you have correctly completed Section 2), as outline above, then this phase is easy. You have a contemporary facility that is spacious, well located, eye appealing and in demand. The concept of spending money on leaseholds in order to sell your practice is not necessary. Your practice should present itself well and be a turnkey sale.

If you did not achieve Section 2) then your practice is apt to be sold to a larger practice for the patient base. In this case make sure you have a short lease that will permit the practice to be moved. Typically, the purchaser would like you to move with your patients to the new facility for a two-year transition.

Generally speaking, if your rent and wages are under control then your total costs are under control. Remember, the percentage for rent is a ratio of your gross rent as a percentage of your billings. Typically higher costs per square foot relates to the location’s ability to attract patients. Higher rent per square foot can be overcome with higher gross billings.

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