How To Choose Bank Loans for Your Dental Practice – Dental Practice Management
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Every venture in this world needs financial investment. Same is true for dentists also. Establishing a new dental practice or expanding an existing dental practice also requires investment. But then it gets tricky. Arranging finance is not easy and any wrong choice can put you in a financial spot.
There are two types of dentists who will need to raise the money for a dental practice
Young or New Dentists (Who are planning to start a dental practice):
- Every young dentist who passes out from the dental school/college has the dream to establish his/her private dental practice.
- All of them have the aspiration to establish the best and most comfortable dental clinic where patients will just feel like home.
- It will be a dental practice which they hope they will be proud of.
- But these are the hopes of a young mind.
- In a dental college, we have the liberty to dream because it does not cost money.
- But the moment, a young dentist steps out into the commercial world of professional dentistry, the reality comes as a big surprise.
- Things do not seem as easy as the young dentist had imagined.
Experienced Dentist with few years of experience (Who are planning to expand their existing practice)
- The goal here is expanding an existing dental practice.
- Upgrade it with new & modern equipment.
- Expanding your practice to multiple locations.
- Hiring more dentists and dental professionals to work for your dental brand.
- Other business investments for your dental practice.
From here the real problems of Dental Practice Management Starts.
Barring a few who have a strong financial backing or doctor/dentist background, for many first time dentists, it becomes a huge task.
At such a time the first point of worry for the young dentist is how to arrange the initial finance to start a private dental practice.
Please note that establishing a dental practice is like peeling an onion that has multiple layers. There are many layers of problems to solve when a young dentist is planning to start a dental practice.
Getting the finance is just the beginning of the journey. There are many other things to solve before a dentist can hope to start a successful private dental practice.
You will have the following questions in mind before starting a clinic
These questions are mentioned below.
- What is a correct & good dental clinic?
- What is the minimum investment required to set this up?
- Can I get a bank loan to finance my requirements?
- What will be the timeframe required?
- What kind of a place will be suitable to open the clinic?
- How to go about the interior?
- Where can I source all equipment & tools from?
- Where can I get good staff?
- How do I get patients coming in?
- When do I start maintaining accounts & record books?
We have previously discussed all the above points in another article, that tells you how to create a best dental practice with minimum investment. You can read the article here. (It will open in a new tab)
But within the scope of this article, we will focus our discussion to
“How To Arrange the Initial Finance for the Dental Practice”
This is the most stressful aspect of setting up a dental practice.
Whether you plan to have a small to moderate or a posh dental practice, the role of initial financial investment is very crucial. That can set the tone of your future progress.
But before you get into arranging the money, keep these points in mind:
Start Low to Moderate: In our experience and keeping in tune with the ever-changing financial scenario, it is always better to start small to moderate with plans for expansion in the future depending on the growth your practice is showing.
Starting low keeps you flexible: Do not commit to a big spending from the onset. Raise and spend the investments in an incremental manner. It is just common sense. As the saying goes in relation to money – Do not put all your cash into one venture, all at the same time.
Starting Low Gives you time to make correct choices: Starting a dental practice involves a lot of purchases. When you have just raised a substantial money from the market then in the excitement of setting up your practice there are always chances for you to go berserk in your spendings. Be careful and starting low will keep you in check. It gives you the time to analyze the spendings.
Starting low gives you a Saftey Net: You must have heard stories where people have gone all out in their spendings and to their dismay, the venture did not succeed. A young dentist gets swayed by the romantic stories where the protagonist puts all the money in the line and narrowly succeeds. Such stories do happen but 1 in 10,000. So, its is better not to be 1 in that 10,000 when you have raised a lot of money from the market.
With these points in mind, lets us start decoding the issue of arranging the initial investment for your dental practice.
There are 3 ways for you to arrange the money for your dental practice:
1 # Ask your parents or very close relatives
The safest way to arrange money provided that your parents have adequate finance left with them to support you without much strain. In this mode, you get the required finance within the family without the worry of paying it back(along with interest) within a certain period of time. This relaxes you considerably and you work towards a successful dental practice in a better frame of mind.
Problems: Though this is the safest way to get the finance for your dental clinic, but it has some loopholes.
- It makes the young dentist complacent as he/she has no psychological financial burden. This sometimes results in the young dentist not being motivated to work hard enough.
- There have been cases, where parents have given away all of their retirement funds or sold a land to generate money in order to help their child start a dental practice. Though they do it out of their love but we request you to think 1000 times before doing so. Such financial decisions have the power to put your family in a financial logjam. What if the practice does not click or takes a lot of time to gather pace? Then your family will have no financial cushion left.
So, if you are planning to take a loan from your family then it very important that you sit down with your family members and have a very open discussion about the financial possibilities.
Also, never ever force your family to lend you money somehow even if they have to sell something valuable. This approach in most if the instances might not work out well for you.