STARTING A NEW DENTAL OFFICE?
Whether you’re fresh out of dental school and ready to take the plunge into owning your own business or have worked under another professional as an associate and think you can run the practice better, you’ve got your work cut out for you.
One of the biggest mistakes you can make when opening your own dental office is not doing your homework before you make your big decisions. As a professional with decades of school behind you, you should know by now that nothing good ever comes without adequate amounts of research.
Dental space advisors may refer to your homework as “due diligence” or “underwriting” when discussing your options for you new dental space. In order to be fully prepared to give a large sum of money to a landlord, contractor, consultant or architect, it’s important to understand exactly what you want – and exactly what you’ll be getting.
Before you get caught up in the excitement of earning your own business after so many years of working for others, do your research on a few important topics.
Due diligence combines the logical, financial part of your brain with the creative part that wants to create the perfect new dentist office space. In the real estate world, due diligence is a transparent process, and is simply your way of saying that you plan to confirm that what is being portrayed to you is, indeed, factual and accurate information.
Compare your research homework, otherwise known as due diligence, to finishing a large jigsaw puzzle. One piece may contain information about property locations, while another may contain information about zoning constraints. Without each piece of the puzzle, it’s difficult to see the entire picture. Your puzzle pieces are likely to include information about the following, along with many other issues that are relevant to the future success of your new dentist office.
- Market conditions
- Financial analysis
- Potential consultants
- Environmental issues
- ADA compliance
- Economic situations
With each piece of information, you may have to find it or create it yourself. The trickiest part is to know where to obtain the information and to compile it in a way that is easy to understand and relatable to what you are hoping to accomplish. While dentistry is your specialty, you may want to consult a professional advisor to help you glean relevant information from your vast resources.
Determining which questions to ask can be almost as time-consuming as the process of compiling information into a relatable report. When due diligence and underwriting are completed correctly, your practice is well on the road to a solid financial footing that is the result of your dedicated research into the sound decisions required for success.
COMPONENTS OF DUE DILIGENCE
The due diligence process basically comes down to two important elements:
- Investigating companies and people
- Researching construction issues and physical locations
Due diligence can also be broken down in several different ways, but regardless of how you organize it, the due diligence process involves confirming or gathering information on the following:
- Lease documents
- General contractors and construction
- General operations such as attorney, insurance, software, vendors, etc.
- Site evaluation
- Demographic and market conditions
Completing your underwriting process for your new dentist office is a matter of asking important questions about these topics, compressing the information and applying it to your practice.
Whether you are dealing with a consultant or a vendor, the most important thing you can do is to check references. Many new businesses make the mistake of asking for references but never checking them, and investing the time and energy in the beginning can save you hours of headaches and thousands of dollars in the long run.
While the field of experts is fairly small in the dental world, this can be good news and bad news. You may have limited options when it comes to vendors and consultants, but your homework just became easier.
Always choose professionals that you are comfortable with, but make sure that you are educated about their services before you settle into a comfortable relationship. Avoid consultants that seem to be strongly pushing you one way or another. Always ask specific questions when checking references in order to obtain specific information.
Once you’ve sufficiently investigated the people you’ll be working with, the next part of your underwriting is completing your physical homework. This includes finding or constructing your new dental office space.
You can’t start the process of looking until you know exactly how much space you need. Once you’ve outlined your space requirements, you can move further into the due diligence process by fitting your space requirements into possible building spaces. During this process, you may also learn more about your space requirements, which can quickly lead to new choices and opportunities for building locations.
During your lease due diligence, you’ll need to research the following main issues:
- Specific space components
- Lease documents or legal issues
- Analysis of the surrounding area
- Building characteristics
- Market demographics
- Rental properties in the area that are comparable
After scanning all this information, you may be ready to run out the door and abandon the idea of starting your own practice. Fortunately, while you’re an expert in all things dental, there are also experienced professionals available to help you understand and complete the due diligence process.
You wouldn’t encourage your patients to put their oral health into the hands of dental space advisors, and you should never put the important needs of your practice into the hands of an inexperienced advisor. With the right foundation, your practice will be set up for success for the long term.
Many aspiring dental practice owners choose to hire out the due diligence process to an independent resource. This may help to simplify your life and allow you to concentrate on the areas in which you excel, such as patient care and dental technology.
When starting your practice, compare the process to buying a home. Before buying, you always want to research the surrounding area and all it has to offer, and your business should be given the same treatment.
Phelps Commercial Realty can help you with your due diligence process, freeing up your time to focus on the important decisions you need to make regarding your future. Contact us today to speak to one of our experienced dental space advisors.
While due diligence is an essential part of opening a new practice, it doesn’t have to take up all your time. Depending on the information you need and the complexity of your situation, underwriting can take anywhere from two week to two months. Regardless of the time you are required to invest, due diligence should not be taken lightly if you hope to run a thriving business.