JORDAN A lot of young dentists who buy practices also have big mortgages. Can you sleep at night knowing you have $1 million of practice debt, $1 million of mortgage, maybe an old $200,000 student loan out there and a car loan? It’s a lot to carry. It was different when the rates were 2%. And to think that things are going to go forward at 6% is not necessarily comfortable, even though maybe you have the cash flow for it. AISLING I think for me it was also having that plan, like Shane said, have a five-year plan and a 10-year plan of what that looks like for you personally and professionally. Also look at what you are earning as an associate, because you’re different from your classmates. If you have a spouse, what is their income? Can you survive with just their income potentially for the next five years until you can start taking money out of your practice? How long does it typically take to start a new practice from conception to opening day? AISLING For my very first office, I started thinking about it about 18 months before. The first six months of that was really just educating myself. I found it quite hard to find startup education, but I did a lot of online courses. I just tried to surround myself and really delve deep into the decision of doing a startup versus purchasing. Also getting to know the landscape in Canada because I’m from Ireland, so that’s different. One day I walked into Scotiabank and said: “I’m an associate at an office and I’m just starting to think about the process. I’m probably not eligible for anything yet. I’m still building my credit in Canada.” And they said: “Actually, this is our 12-month plan that will get you started. This is your step by step.” It was a very broad framework, but really it was at that 12-month point that I opened the door and I saw my first patient at my office. MICHAEL Generally, I would recommend dealing with the healthcare team at your bank, especially on the acquisition because when I’m dealing on the legal side, it becomes so much more difficult to deal with a general banker who may ask you for items that are not necessarily applicable to a dental practice. It makes the transaction and your life much more difficult. JORDAN You’ll have to go through what’s called an Annual Review during the financing process, so it’s best to deal with someone at the bank who understands dental practices. It will make your life much easier. A healthcare specialist is not going to drive you nuts asking for millions of unnecessary documents. It’s less time for you, less time for us, and just means you can focus on your business. JULIE Keep in mind that having life insurance is an absolute must here. The bank will require it as collateral for the loan. I’ve had numerous dentists call me while sitting in their banker’s office saying that they’re buying a practice tomorrow and life insurance just doesn’t work that fast. So please start it earlier rather than later. Also, when you’re younger and healthier, it’s just that much easier to get life insurance. MICHAEL To that point, I closed the deal yesterday where the deal was delayed by one month for that exact reason. What are some things to consider when partnering with a colleague to purchase or start a dental practice? AISLING (laughing) Don’t do it. JORDAN It’s like getting married. MICHAEL Really make sure you know the person you’re going to partner with on that dental practice. One thing I often caution newer dentists is that you’ll have a more experienced dentist who will recruit a less experienced dentist and say: “Well, I have the experience. I’m going to do the admin; you do the dentistry.” Ultimately what happens is the dentist who’s doing all the work realizes there’s not that much admin, and they can probably do that, or hire an office manager for a reasonable price. JORDAN Joint dental practices are more common now than they ever have been. But I agree, the problem is usually around fairness. Someone’s doing more for the practice than the other. If you are going to get involved in a minority interest, in my opinion, you want a pathway to at least 50% to eventually take over that practice. 39 Issue 4 | 2024 | SupportingYour Practice
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