Buying a dental practice is an exciting step for many dentists, offering the opportunity to build financial security and take ownership of their careers. However, acquiring a practice is complex, and making informed decisions can make the difference between long-term success and costly mistakes. Below, we explore current market trends, valuation methods, the role of brokers, and practical considerations for managing a successful dental practice after purchase.

Avoiding common mistakes when buying a dental practice is essential to setting yourself up for success. Here are some of the most frequent pitfalls and tips on how to dodge them.

1. Getting Caught Up in the Looks and Latest Gadgets

Picture this: a stunning office with top-of-the-line equipment, a spacious waiting room, and brand-new treatment chairs. It’s all very exciting, but don’t let it cloud your judgment. While a high-tech, modern setup may look appealing, it doesn’t guarantee a healthy, profitable practice.

Many dentists make the mistake of prioritizing aesthetics and technology over solid fundamentals like cash flow and patient loyalty. A shiny office can certainly be a plus, but remember, you’re buying a business, not just a collection of fancy tools. So, before getting swayed by the latest gadgets, make sure to examine the practice’s financial health and steady patient base. A practice with strong fundamentals will set you up for long-term growth much more than a high-tech space alone.

2. Misjudging the Benefits of a Startup Practice

It’s easy to be drawn to the idea of starting a practice from scratch, designing every detail to fit your vision. But the reality of a startup is often more demanding and expensive than many new dentists anticipate. Startups require a large upfront investment and can take several years to become profitable. If you’re still working as an associate to maintain steady income, it may be difficult to dedicate the time and focus needed to build a successful new practice from the ground up.

On the other hand, buying an established practice offers a quicker path to profitability. With an existing patient base, trained staff, and operational systems already in place, you can step right into a steady revenue stream and avoid the heavy lifting of a startup. If you’re aiming for faster financial returns and prefer a setup where you can hit the ground running, buying an established practice might be the better choice. Avoid the common pitfall of underestimating the demands of a startup—consider what will work best for your current lifestyle, goals, and financial needs.

3. Underestimating the Local Market and Competition

Location is a make-or-break factor when buying a dental practice, not only because of accessibility but because of the level of competition in the area. Unlike opening a restaurant with balloons and a grand-opening sign where people can try it out, attracting patients to a new dental practice can be tough. People are less inclined to switch dentists frequently, and in competitive areas, it’s even harder to stand out.

Look at the local landscape before you buy. Research key factors like how many practices are already in the area, the population-to-dentist ratio, and if there are patient needs that aren’t being met. Some areas may already have a well-established dentist with high ratings and hundreds of reviews, which may make patient acquisition harder for a newcomer. Knowing your market will help you gauge whether your new practice has strong growth potential or might struggle to attract new patients.

Once you’ve chosen a promising location and practice, the next step is to dig deep into the financial and operational details to ensure it’s the right fit. Here are some critical factors to focus on as you evaluate a potential dental practice purchase:

1. Check the Practice’s Financial Health

Looking into the financials of a practice is one of the most essential steps in the buying process. This includes analyzing revenue patterns, expenses, and cash flow. Ideally, the numbers should show steady revenue growth, manageable expenses, and healthy cash flow—all signs that the practice has a solid foundation for future earnings.

If you’re not comfortable with numbers or aren’t sure what to look for, a dental-specific accountant or financial advisor can be a valuable resource. They can help you review financial statements and spot any potential red flags, like high debt or stagnant revenue growth. A practice might appear profitable at first glance, but if expenses are too high, it might not be as successful as it seems.

2. Look at the Patient Base and Retention Rates

One of the biggest benefits of buying an established practice is gaining an existing patient base. To get a sense of how solid that base is, ask about the number of active patients, their visit frequency, and patient loyalty. A practice with frequent patient turnover might indicate issues with service quality or even recent staff changes that affected patient satisfaction.

It’s helpful to look at data on patients who’ve visited in the past year to understand how many are actively engaged. Also, if the practice currently refers out certain services, like orthodontics or endodontics, think about whether you can bring these in-house. This can be a quick way to increase revenue while offering more convenience to your patients.

3. Assess the Staff and Their Patient Relationships

A strong, stable team is often key to retaining patients. Many patients form bonds with familiar staff members, from the front desk to the hygienists. Understanding the team dynamics and evaluating each member’s skills and job satisfaction can give you a sense of how well the team will support the transition—and how smoothly patients will adapt to you as their new dentist.

If the current staff is well-trained and committed to staying, your transition will likely be easier. But if there’s high staff turnover or if essential team members are planning to leave, you may face operational challenges that could affect patient satisfaction. Take time to meet the team, discuss your goals, and see if they’re on board to support the practice through the change and beyond.

4. Review the Lease and Facility Details

Don’t overlook the importance of the lease for the practice location. The lease terms can significantly impact your costs and flexibility. Review the agreement carefully: Are there rent hikes coming up? Does the lease allow you to terminate early if needed? Are there restrictions that could affect your operations, like signage or facility use limitations?

A favorable, long-term lease can add stability, but if it’s short-term or includes a termination clause, you could face unexpected costs or the hassle of moving. If anything in the lease seems complex or concerning, a dental-specific attorney can help you identify potential issues and negotiate terms that protect your investment.

Buying a dental practice is just the first step. How you handle the transition can make all the difference in keeping patients on board and setting the stage for long-term success. Here are some key ways to make the transition as smooth as possible:

1. Build Connections with Patients and Staff

When ownership changes hands, both patients and staff may feel a bit anxious about what’s ahead. For patients especially, a new dentist means a change in routine, and they might wonder if their level of care will be the same. Take time to introduce yourself personally—let patients know what they can expect from you, reassure them about any continuity in care, and be transparent about any changes you have planned.

Connecting with the staff is equally important. A supportive team can make your transition smoother and reassure patients that their trusted staff members are still on board. Spend time getting to know the team, ask about their routines, and show your appreciation for their roles in the practice. This helps everyone feel confident in the new direction and fosters a positive environment.

2. Maintain Current Systems Before Making Big Changes

It can be tempting to start revamping the practice right away, but sudden changes can create unnecessary stress. Instead, spend the first few months observing how the practice runs—look at how patients are scheduled, how the team interacts, and what the workflow looks like. Getting a clear picture of what’s working and what might need adjustment will help you make thoughtful, informed changes down the road.

If you do plan to bring in new technology or offer additional services, give the team and patients time to adapt. Explain the benefits of each change and why it’s being made, so they feel included in the process. Gradual, well-communicated improvements are far more likely to be accepted and appreciated by both patients and staff.

3. Prioritize Patient Retention

Keeping your current patients is crucial as you settle in. One of the biggest risks during a transition is that patients may leave if they’re uncertain about the new dentist. Building a strong patient retention strategy can help ease those concerns. This can include personalized follow-ups after appointments, satisfaction surveys to gather feedback, and friendly reminders for regular check-ups.

Make sure your front desk team is ready to provide warm, positive interactions, as they’re often the first people patients encounter. Train them in patient-centric communication so that every patient feels valued and welcome. When patients feel genuinely cared for, they’re more likely to stay loyal, refer others, and become long-term supporters of your practice.

Working with a dental practice broker simplifies the buying process, especially for first-time buyers. Brokers help match you with practices that align with your goals, budget, and location preferences. They also provide valuable market insights, guiding you through due diligence to assess a practice’s financial health, patient base, and lease agreements. Brokers assist in negotiations, help secure favorable terms, and connect you with dental lenders. Many brokers also have relationships with legal and accounting experts who can review contracts and financial documents to protect your interests.

Beyond the sale, brokers often facilitate the transition of patient records, staff, and equipment and may offer post-acquisition guidance on marketing and practice management. Leveraging a broker’s experience can streamline the buying process and lay a strong foundation for a successful practice.

If you’re looking for expert guidance throughout every stage of buying a practice, consider reaching out to a trusted, specialized team like Henry Schein – Tier Three. Their experienced advisors can help you make confident, informed decisions, so you can focus on building a thriving practice.

Buying a dental practice is a significant commitment. By conducting thorough research and due diligence, you’re better prepared to choose the right practice. Whether you’re looking for an established patient base or a high-potential location, a strategic approach will set you up for a rewarding and profitable career as a practice owner.