Financing the Expansion of Your Dental Practice
Business at your practice has been great: your client base is constantly growing, your workforce is productive and you’re meeting your carefully laid out goals for your practice. So, what now? It could be the perfect time to expand your practice! If you’re thinking about expansion, there are a few things to consider first and to think about when it comes to financing.
Are you ready to expand your dental practice?
You first need to determine if expansion or purchasing a new location is the best move for your dental practice right now. This can depend on five different factors:
- 1. Do you have a regular, positive cash flow?
- 2. Can your short-term financing no longer keep up with your practice’s needs?
- 3. Have you outgrown your current space?
- 4. Is there a better area of town with more visibility and a more convenient location for your clients?
- 5. Are you hoping to add more technology?
If you can answer “yes” to a majority of those questions, you know you are ready to explore expansion.
What are your expansion options?
There are three main options when looking to expand a dental practice:
- 1. Moving to a new location – this means you plan to move your practice to an entirely different space. This can be beneficial if you have outgrown your current site, are in an inconvenient location for your clients or are hoping to add more features to your space.
- 2. Second location – this is an excellent option if your first location has been successful and a second location would help broaden your visibility, client base and workforce.
- 3. Acquisition – this option may be less risky than purchasing a second location, but you must properly consider the risks: are the clients and employees at this practice loyal to the owner? How is this practice currently performing? And, how will it impact your current dental practice?
How can you finance the purchase of a new location or expansion?
When you begin exploring your financing options, you want to be sure you have a solid team of advisors to help you through the process. These advisors could be a banker with specific programs for dentists, a real estate broker, a contractor with experience in dental practices or a business consultant to help adjust your business plan. Learn more about the importance of advisors when developing your dental practice here.
You want a clear picture of your current finances before taking any major steps. This will require reviewing your current financial position and any outstanding debts. Evaluating your finances can mean consulting with your current banker or financial advisor. However, your current financer may not always be the right partner for your expansion plans. We recommend exploring all of your financing options in your local market and identifying what banks or lenders are experts in small businesses or dental practice loans.
Deciding it’s time to expand your business is a big step. It can be an even bigger step figuring out how you can make it a reality. Be sure you have a thorough understanding of your current financial position and local market options before making any big business decisions.
For more information on how you can prepare to grow your business, contact the Business Banking team at Bankers Trust.