Posted by Amy Carbone on Jul 18, 2022 9:00:00 AM
Dental school may not have taught you everything you need to know before opening your own practice: there are some essential business concepts to master before you start seeing patients and addressing their dental issues.
Your practice is about helping patients, of course, but it’s also a business. Here are the general areas to research, why they matter, and how they'll help your practice succeed.
1. Business Planning
Business planning matters, because every business needs to have plans and goals. But it's about more than just having an idea in your head of where you want to go with your practice, and how fast you want to get there.
Why It's Important
You'll need startup funds to begin your dental practice. Many people end up requiring financing via a business loan, which requires good credit and often a formal business plan that demonstrates how you will make your practice successful and why funding your practice is a good investment for the lender. ADA Members can download this free dental business plan checklist from the organization.
How It Works in a Dental Practice
To create a business plan that shows a potential lender your practice will provide a return on their investment, you need to clearly describe what you do, why it's a good idea or why it matters, and how the location plays into your success. You'll need to show your expected financial returns, so the lender can see how they'll be paid back the money you're borrowing from them.
In addition to reviewing your business plan, your lender will also want to review your personal and, if applicable, business credit scores and histories.
If you have any problems with your own personal credit score, or you don't have a lot of credit history, you can begin to work on this area of your personal finance. Personal credit scores can range from a low score of 300 to a high of 850 and can impact many things, including loans, lease approvals, and more. Scores can change day by day, but a generally consistent or increasing trend is a good indicator to lenders.
Many metrics are considered to create your score, but important indicators include the amount of credit you have used versus what you have available (utilization rate), the length of time accounts have been open, your historical payment history, and more. That means if you’ve been paying student loans on time for a while, that can actually help your credit score! If your score could use some improvement, some steps to take include:
- Check your credit report. You can pull your credit report annually, for free. If you have open credit cards, you may have a monthly credit report as an existing benefit. This type of report should not negatively impact your credit score in the way a lender inquiry would.
- Review your report for accuracy. As with anything, mistakes happen. If you see anything strange on your report, it’s in your best interest to sort it out. Contact the lender or company in question to have incorrect information removed from your report.
- Settle or pay off any accounts in collections. If you had an account sold to a collection agency, settling with them, paying off the debt, and having the report marked as paid on your report is a step in the right direction.
- Pay off open accounts with high balances. This will help lower your credit utilization rate, which can improve your score. If your income has increased significantly since you first opened your cards, requesting a limit increase can also help with this.
- Use a monitoring service. Again, you may have access to a service that monitors your credit report for changes and negative marks through an existing account. There are a number of businesses that provide this service, and allow you to keep an eye on your performance and model how you could improve your score.
While you’re in the process of opening your business, it’s important to note that businesses also have credit scores. The same general best practices for managing your personal credit also apply to business credit; you can read more about the basics of business credit here.
2. Attracting and Retaining the Right People
The right people will give their knowledge, skills, and abilities to make your dental practice successful. But finding those people can be difficult if you're not sure what to look for or how to go about getting them. And once you find them, you need to keep them and help them grow, or they’re likely to leave your business and join someone else’s.
Why It's Important
Finding the right personnel includes posting job listings, interviewing candidates, and hiring new employees objectively. Remember that you'll need to follow national, state, and municipal hiring laws. There are also laws and regulations around payroll, benefits, and related areas, and you'll have to make sure you're following all of those, as well. These are essential components of your Human Resources (HR) function. In the HR space, these concepts are sometimes called “talent acquisition” and “talent management” or “talent retention.”
How It Works in a Dental Practice
With an unemployment rate below 4% as of June 2021, it’s safe to say that dental staff are in demand. This means it can be hard to find talent, but also difficult to keep it, as competitors may already be understaffed and offering lucrative benefits (increase in salary or hourly wage, more paid time off, continuing education benefits, signing bonuses) to attract their own new employees.
While you can consider those items as part of your own compensation packages and hiring plans, creating an environment where people want to work is also valuable. Here are some steps to take:
Clearly Define Roles and Responsibilities.
Everyone has responsibilities, but understanding where those begin and end is a big part of managing personnel correctly. In fact, clearly defining an employee’s role via a job description is one of the 10 benefits of defining an employee’s purpose, according to Forbes Human Resources Council.
That's not to say that people's jobs can't change over time, but anyone who starts with your practice should have a very good idea of what they're required to do — and what's not their job — right from their very first day of work.
Reward Great Employees.
If you have an employee who is truly great, make sure you reward them. This can come in the form of hard-dollar compensation such as bonuses or annual salary increases, but can also be in the form of a PTO reward, a meal, or a simple Thank You. A little employee appreciation can go a very long way—celebrate employee wins and successes as often as possible.
Manage Personnel and Conflict.
Humans are, well, human and sometimes even the best of friends don’t get along. The way you handle conflict between employees who may be in conflict will be important for future employee relationships.
Ignoring conflict and letting people “sort it out for themselves” can drive a wedge through otherwise great teams. At the same time, trust falls and hand-holding likely won’t do much good, either. Addressing conflict and the why behind the conflict is often the key to resolving it and maintaining a culture where employees want to come to work.
Recognize That Not Every Employee Is a Perfect Fit.
In some cases, your practice may not be the right home for an employee. Issues may arise that lead to involuntary termination, and can’t-miss opportunities may pop up for high potential team members who then decide to leave on their own. It’s okay for both of these things to happen. The key is developing a procedure for employee separation so that you ensure your practice is covered when they occur.
You need to market yourself, your practice, and your skills. Learning how to do that can take time, but understanding the principles of marketing is a worthwhile skill for you to have before starting out.
Why It's Important
Let’s say you decide to skip marketing your practice. You get your loan, hire an amazing team, secure your location, and open your doors. And then… no one shows up. When you’re getting started, marketing is how you tell the world about your new practice, and it’s also how you get new patients to find you. Long term, it’s also how you continue growing your practice and patient list so that your income doesn’t decline.
How It Works in a Dental Practice
Dental practice marketing should cover several different areas, from your physical location to local and print materials to a digital presence. Today’s buyer spends much of their research time online, so digital marketing should be a primary consideration.
In a dental practice, your digital presence should include everything from creating and maintaining a website to listing your organization in directories like Google My Business. Ensuring your practice information is listed on insurance carrier websites, dental or medical review sites, and social media is also important. You may consider online advertising through sites such as Google, Facebook, or Yelp to help push awareness even further. As you grow your patient list, you may also consider communicating with those patients via email marketing or regular blogging.
Offline, your immediate community is your customer base, and seeing your practice as a part of that community is important. Your local marketing may include:
- Membership in local chambers of commerce.
- Participation in festivals, fairs, and other in-person events.
- Local advertising such as flyers, mailed postcards, and signage.
- Introducing a referral program for patients.
- Co-marketing with nearby businesses.
Marketing in advance means you’ll be prepared before you open your doors, so you can start bringing in patients right away, and growing your practice.
Planning To Start a New Dental Practice?
Of course, as you prepare to open your practice, it’s a good idea to understand what skills you can build and what skills you should consult with a professional about. For understanding the intricacies of personal and business insurance products as well as financial management, a team that specializes in the dental market space outside of your organization can be a tremendous asset.
If you're considering starting a new dental practice, start preparing today by reviewing our extensive checklist.
About Treloar & Heisel
Treloar & Heisel, an EPIC company, is a financial services provider to dental and medical professionals across the country. Our insurance and wealth management divisions assist thousands of clients from residency through retirement. We strive to deliver the highest level of service with custom-tailored advice and a strong national network.