Buy vs. start a dental practice: Which is better for new dentists? 

Investing in a dental practice – either one that is well-established or setting up a practice from scratch, calls for a significant financial investment. So, it is critical for dentists to think through the options and weigh up the pros and cons.  

Buying into an established dental practice 

Buying a stake in an existing dental practice is usually achieved through one of two avenues. 

The first is the more organic route, where a dentist joins a practice following graduation, and is subsequently given the opportunity to buy into the business, often as a partner.  

The alternative is to buy a practice outright. This opportunity may arise if a sole practitioner is selling – often as they head into retirement.  

The upsides of established dental practices 

A key advantage of buying into an existing dental practice is the existing patient base and flow of practice income that is available from day one, and which can be readily tracked.  

This not only helps with financing arrangements (as lenders like to see two, preferably three, years of practice financials), it can also provide more immediate flow of revenue if there is an established client base. 

An established dental practice will also, in many cases, have an experienced practice management team, who can explain the history of the practice and provide valuable ongoing support to help manage practice income.    

As an added plus, a dentist buying into an established practice will often see the business through fresh eyes, and may recognise opportunities to expand the practice offering (and therefore potentially increase revenue) through a refresh or rebrand. 

The potential challenges  

Buying into an established dental practice is often an ideal choice for new dentists, who may be able to benefit from the business acumen of more experienced partners. But it’s not without downsides.  

A primary issue is cultural fit. The importance of practice culture cannot be overstated. And any dentist buying into a practice needs to be comfortable with the culture across medical and support staff. One issue that can be problematic is high turnover of staff. This highlights the value of speaking with practice staff to gauge retention rates. 

It is also worth making sure there are no financial ‘bombs’ lurking out of sight. Having access to several years of financial statements will show a distinct revenue trend. A drop in practice income, for example, won’t be obvious from just one set of financial reports. 

Financial statements will also illustrate whether the practice equipment is fully depreciated and ready to be replaced. While this may represent a potentially large future expense, it can also be a chance to modernise the practice.  

Finally, look for continuity of care. In successful practices, continuity of care helps to ensure patient numbers don’t fall away when a new dentist takes over all or part of the business.  This can even mean having conversations around restraints that prevent the existing owner setting up a competing practice nearby. 

Starting a new dental practice 

Starting a dental practice from scratch is generally not recommended for new graduates. A level of exposure to running a practice – something that comes with experience, is essential before launching a new practice. 

Notwithstanding this, a new practice does offer compelling upsides.  

It’s an opportunity to take advantage of gaps in the market. These may occur in locations where a dentist sees unmet demand for reliable, consistent patient care. 

It is also a chance to be in control of the design, culture and strategy of a practice.  

There are noteworthy downsides, though. Setting up a new practice can call for potentially up to a $1 million investment. On the other side of the ledger, without the backing of an established customer base, it can take time to build a steady flow of practice revenue.  

Your choice. Your team of experts 

As trusted experts across dental practice finance, Avant Finance works closely with dentists when they first start out. So, you certainly don’t need to feel as though you are ‘going it alone’. 

Whether you decide to buy into a dental practice or start your own, we encourage you to speak with Avant Finance’s team of medical finance experts to understand the possibilities open to you.