So you want to own a dental clinic — that is an exciting decision! The question is, will this be a wise investment?
In this article, we explore the potential advantages and disadvantages of owning your dental clinic, helping you make an informed decision. While we are not here to give financial advice, we do believe that our experience in the dental fitout industry provides valuable insights to help you with your choice.
We also outline the most common costs to consider when planning your clinic fitout, enabling you to calculate the estimated return from patient numbers and operating costs.
When opening a dental practice, you’ll need to budget for the full range of employee expenses. This includes salary, payroll taxes, and employee benefits. Generally, this should account for approximately 25% of your overhead costs.
Lab fees and dental supplies should account for between 10% and 14% of your overhead costs. Pediatric dentists typically spend less on lab fees, while orthodontists may spend more.
Whether you lease or buy, this will comprise a large portion of your expenses. The cost will depend on your location, the local market, and the standard of the facilities.
Your dental clinic profit margin should be at least 40%, meaning your business has sufficient revenue to cover costs. To calculate a profit margin, divide the amount of profit by the revenue, and multiply by 100.
If you anticipate your profit margin being too low, reducing costs is essential. The first step is evaluating all current dental practice costs to see where reductions could be made. This may include finding new suppliers, optimising equipment, and negotiating your rent.
By calculating practice overheads, you can determine how much turnover is required to cover them. With this in mind, you can also invest in a new fitout and target a 5% return to ensure the project pays off.
Fitting out a dental practice is a big investment, whether you have a new space to design or are renovating an existing building. Key considerations include the type of site, the location, the desired finish, and the type of equipment you need.
As a cost estimate, you can get a basic fitout starting from $300 to $350k (with no equipment). If you want a more architectural fitout and the highest quality equipment, the prices will be higher. In our full article, we explore all these considerations to help you understand the full scope of costs, including:
In the 20th century, practice ownership yielded higher returns due to the low initial setup costs. With rising setup costs in recent decades, potential returns have been lower. However, this is still a strong investment when compared to other traditional investment options.
Data indicates that the dental industry is thriving. As household disposable income and insurance memberships rise, industry revenue has climbed. Even with the disruption of the pandemic, demand has resurged every time the restrictions were lifted. This reassures us that the industry has the resilience to endure major challenges.
The ageing population also drives demand, with people over 65 constituting the fastest-growing target demographic. So even if practice prices were to drop, clinic ownership still offers strong financial security and job stability. Source.
Could this be the year you start your new practice? Establishing a new clinic brings many decisions and considerations.
Selecting your clinic location is crucial, considering local competition and demand, target markets, site suitability, accessibility, and neighbouring businesses.
You will need to meet the right legal requirements, including building consent, resource consent, and building code compliance. If in doubt, ask our team for advice or read our article about dental practice consent.
Key financial steps include developing a business plan, estimating expenses, and obtaining funding. Funding solutions may include personal savings, business loans, leased equipment, or dental-specific loans from a provider like DLL. For more information, read our full article on how to finance a dental practice.
Leasing a clinic means lower upfront costs but you will have less control of adjustments to the premises. You will also need to negotiate terms with your landlord, including rent, duration, and key responsibilities.
On the other hand, buying a clinic gives you full control over customisations and builds equity for the business. However, this does come at a higher upfront cost.
For a more in-depth comparison, read our full article on buying vs leasing a dental clinic.
To enhance the patient experience and increase retention, the clinic design must be considered. It should also be optimised for functionality and ergonomics to benefit staff. You’ll also need to factor in accessibility, both inside and outside the clinic building. Download our Inspiration Guide for more guidance.
Building in a new site is generally more efficient than renovating because the risk of unexpected problems is far lower. You’ll also have more freedom to customise the clinic according to your preferences. Converting an existing house may be tempting but it generally raises unexpected complications.
When fitting out your clinic, you’ll need to plan for compressed air, extraction systems, suction, and plumbing lines. This is often overlooked, causing expensive design adjustments later in the process. To avoid this, we recommend a no-obligation site assessment as early as possible.
When starting a practice, you’ll need a range of equipment, including chairs, stools, dental imaging, 3D printing, dental suction, dental compressors, dental sterilisation, small equipment and more.
At Dentec, we can supply everything you need, whether it be a complete package or a one-off purchase. For more information, read our article about selecting the right equipment for your clinic.
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