How to Start a Dental Practice in 2021

Why Start a Dental Practice? 

Starting or buying a dental practice is an exciting stage of a dentist’s career. However, I have spoken to many dental professionals over the years who have been wary about taking on the responsibility of buying or starting a new dental practice. 

But my advice is to take the plunge if you have a desire to own your own business. Success and profits are far easier to come by if you are in charge of your own destiny. There are several reasons why this is the case. 

Why start a dental practice

The Financial Incentive 

Money may not be everything to a dedicated dental professional, but ideally no-one does all that training to settle for less than they are worth. I have seen dentists who are associates and struggle to live a comfortable life. This is not the case for dentists who invest in themselves and start a dental practice. This is because: 

  • Earnings are higher than for associates. 
  • Equity is always in place. 
  • Owning means that wealth can grow. 

Who would not want to benefit from all of these? 

Despite the pandemic challenges of 2021, we predict dentistry as an industry to continue to grow, as new methods, digital dentistry and the demand from patients continues to grow. The question I’m asking is, can anyone really afford to miss out on being part of this exciting, evolving and lucrative industry?

The Tax Incentive 

Tax is an unavoidable burden for most people, but it’s possible to optimise your tax position by starting up a dental practice. I often find myself advising clients about the numerous tax deductions they are eligible for once they are running their own dental practice. These deductibles include:

  • Staffing costs, such as salaries. 
  • Insurance, banking and interest costs.
  • Marketing expenses.
  • Equipment.
  • Energy and other bills.

It’s easy to see that all the important costs of setting up and running a dental practice are tax deductible, which only makes the case stronger to owning your very own dental practice.

Dental Practice Funding

Securing a practice acquisition loan is not as hard as people might think. If anyone does not believe me, try it. Undoubtedly, 2020 has thrown a little spanner in the works, but it is still attainable. Do not let a limited net worth, a mountain of monthly expenses or a significant amount of debt be a problem.

There are options for dental loans out there, and they do not all come with extortionate rates of interest. It’s more a matter of knowing where to look, which is something a commercial finance broker can help you with. 

We have helped clients secure funding countless times and I know that funding acquisitions should never be seen as a mountain that cannot be climbed. The opportunities are there to be grasped with both hands. Our team of commercial finance experts help dentists everyday raise finance for start-ups and acquisitions.

Low Cost Practices are Available 

I’m not going to pretend that anyone will find the ideal practice to buy right on their doorstep, unless they are very lucky. But, for any dental professional whose goal is to be successful, this should not be a problem. 

In popular urban locations, practices can be priced at the higher end of the spectrum, but rural areas can provide the best value for money. For instance, it’s possible to pay significantly less for a practice in the Cornish landscape than it is for one in London. 

Finding a dental practice for sale that is excellent value may involve moving across the country, but it provides the perfect opportunity for skilled professionals to build their brand as well as a reputation, profits and wealth. 

Starting or buying a dental practice is not a risk to be avoided, it’s an opportunity to be embraced. I have been in this business for many years, and I have seen clients transform from being an associate dentist getting by on the job from day to day, to a successful business owner using their clinical skills, while also reaping the large financial rewards they deserve. 

Welcoming the opportunity to set up and grow a dental practice is just the start. Then it’s time to complete the work of setting up a practice. I will talk about the steps that need to be taken in the following chapters. They are:

  • Choosing the right practice. 
  • Creating a business plan. 
  • Financing the purchase.
  • Due diligence.
  • Putting a team in place. 

Let’s start off the journey of dental practice success together.

Choosing the Right Practice or Starting One Up 

Taking the opportunity to start a dental practice means either finding a dental practice for sale that is the right fit or starting a brand new practice from scratch. Before examining the finer points, such as location and turnover, there are major decisions to be made.

Is it better to buy an existing practice or start one from scratch? Should the practice be public service (NHS in the UK), private or mixed? Should the property be leasehold or freehold?

Buy a Dental Practice or Start From Scratch? 

There are two main options when it comes to starting out as a dental practice owner for the first time. They are to either: 

  • Buy an existing practice.


  • Set up a practice from scratch.

There are pros and cons to both of these options and there is no right or wrong, it’s up to the individual which option is best for them. When clients approach me about making this decision, I advise them about the different aspects they need to take into account, which I will share with you.

Buying an Existing Dental Practice

Buying an existing practice can bring certain benefits:

  • There is already a good patient base.
  • The dental surgery has a good reputation. 
  • There is a proven potential for good financial returns. 
  • The necessary equipment and design features are in place. 
  • There is already a good team of professionals in place. 

Whether these benefits exist can be discovered as part of the due diligence process, which I will talk about in more detail later. Some practices come with plenty of cons as well as pros. Such as:

  • Out-dated dental practices.
  • Out-dated dental equipment.
  • Poor reputation.
  • A patient base that is used to these methods and may be averse to change.

When buying an existing dental practice it’s important to make sure that the business is a sound investment which provides good prospects for growth and profits. 

Start a Dental Practice From Scratch

It is likely that starting a dental practice from scratch will probably be more expensive, but often a savvy entrepreneur can set up a practice on a tight budget. The building will probably need some re-design and all the equipment will need to be purchased.

A complete new team will also need to be hired. You need to be aware that this process can be costly and time consuming. Marketing will also need to be a major concern as there will be no ready-made patient base. This can be especially problematic if there is competition in the area. 

However, there are also potential benefits to be had from starting a dental practice from scratch. 

  • There is no previous client perception in place.
  • State-of-the-art equipment can be purchased for use.
  • The surgery can be designed precisely to requirements. 
  • A hand-picked team can be put in place. 
  • A suitable visible location can be found.

It’s important to research the area and the business potential thoroughly before making a decision to start a dental practice from scratch. 

Once the decision to buy a dental practice or set one up from scratch has been made, there are other important decisions to consider. 

Leasehold or Freehold? 

I’ve worked with clients who purchased freehold dental practices and those who have purchased leasehold dental practices. Personally, if I was looking for a dental surgery for sale I would choose freehold every time, but many times the freehold is never available.

Therefore, it’s wise to focus your efforts on choosing a practice or premises in a great location, rather than just thinking about freehold or leasehold.

Of course, it depends on how good an opportunity a particular practice is, but banks tend to look more kindly at applications for finance when a freehold property is involved.

Anyone looking at a leasehold dental practice for sale needs to make sure that the lease has at least 15 years to run and be aware that banks will only lend to the end of the lease. This is a vital consideration for anyone wanting to obtain acquisition finance. 

Location of the Dental Practice for Sale 

As I mentioned earlier, location can be an important factor in getting value for money when buying a dental practice. Often the best deals, and opportunities, can be found when the purchaser is willing to travel or move to a less popular location. When considering the purchase of a dental practice, and thinking about the location, it’s important to take into account several factors:

  • Is the local population booming or falling? Access to a patient pool is essential for growth. 
  • Does the location of the proposed or existing practice have great visibility for prospective new patients?
  • Is travel to the location viable, or will a move be required?
  • If a move is needed, how easy and affordable is it to secure accommodation?
  • What plans are there for the area over the coming years? For instance, the building of new housing could greatly increase footfall at the practice and potentially increase its value quite quickly.

What Opportunities Does a Practice Present?

In some respects a dental practice is the same as any other business; stability, profitability and growth are all vital to success. This is why it’s so important to ask for an array of information from the vendor before signing any contracts and committing to the practice being the right option. 

  • How many patients have been seen in the last 12 months?
  • What types of treatment are most prevalent?
  • What are the most outstanding treatments at the practice?
  • What do exam recall rates look like?
  • What is the patient retention rate?
  • What marketing strategies are being used and how well are they working?

Of course, always ask for evidence of responses, so that a full picture is available. 

While looking for the right dental practice for sale, it’s a good idea to start on the next step of the process, creating a business plan. 

Creating a business plan 

“The value of a business plan simply cannot be overstated. Putting ideas and concepts down on paper is invaluable and the act of researching and compiling data about your competitors and the market will prove to be very useful in the years to come.”

Stefan Topfer, The Importance of Business Planning

I started this section with a quote that I wholeheartedly agree with. A well put together business plan is at the centre of every successful business. It’s also an essential factor in successfully obtaining acquisition finance. I have had this conversation with many clients over the years. If they cannot show how they are going to be a success, why should the bank have faith in them?

The fact is, a business plan is more than just a plan to get the bank on your side, it is a tool for understanding your business. It can be used to monitor, track and plot future earning projections. It is a way to control your business’s fate.

A business plan helps anyone who is starting or buying a dental practice to clearly see their current position and the way ahead. It also means that financial professionals can see the reliability and promise of a dental business, before they make a lending decision. 

What to Include in a Dental Practice Business Plan 

A well-written business plan needs to be comprehensive and succinct. It should cover all aspects of the business, without going into minute detail. Items to be covered include:

The aims and objectives of the business. 

Make sure that aims are well-considered and transparent. It’s also important to make sure that these aims reflect the personal CV of the practice owner. 

The services that are available at the practice.

Make sure that the resources, facilities, products and qualifications are in place for all of the services that are included. 

Information about the market and competitors. 

Research should be completed so that details of the current market, and the level of competition, can be provided. Consider the threats the business may face, even any worse case scenarios, and the opportunities it can explore. I have found that a SWOT analysis is often useful at times like this.

It helps with full exploration of strengths, weaknesses, opportunities and threats that can be summarised in the business plan. 

The cost of purchasing and running the business. 

This is a good indication that all financial implications have been considered. Remember to recognise the risks of hidden costs and indicate that there is a mitigation plan in place. This information helps banks to recognise the reliability of the business. 

How the practice is going to be run. 

Proposed hours of operation should be included. This information needs to be backed up by details of the amount of staff required and the working hours that will be needed. 

Financial forecasts.

Anyone looking to buy or start a dental practice needs to have informed knowledge of how the financial situation looks for the coming months and years. Banks also need to see that they are lending to a business that is going to be profitable. Be realistic with the figures that are included and back them up with research and evidence where possible.

How to Format a Business Plan for a Dental Practice

Any good business plan should have three distinct sections; the executive summary, the narrative and the financials. It should also include appendices with relevant charts and graphs. It’s vital to understand the importance of each section. 

The Executive Summary. 

This is the most important part of a business plan when looking for acquisition finance. Lenders like to know important aspects about a dental practice business before they provide any funding. Details of what services are going to be provided, how much funding is required and how it will be repaid should be included in this section. 

It’s important to make the executive summary persuasive. Include details of the vision for the future and why the business is such a low risk when it comes to lending. What will make the business succeed?

The Narrative. 

The main section of a business plan should be broken down into defined parts, for ease of reading and understanding. These parts should include.

  1. A business overview including aspects such as structure, staffing, loan repayments and risk management.
  2. Location of the business. Is this likely to change as the dental practice succeeds and grows. What are the strengths of the location?
  3. Marketing and analytics. What demographic will marketing be aimed at, what form will it take and what will the investment be? Make sure that the marketing strategy for the practice is clearly defined. 
  4. Operating the business. What will happen on a daily basis? What sort of equipment will be used at the business and what supplies will be needed? All aspects of the day to day running of the business should be included here. This includes how the business will be managed and what the staffing requirements will be. 

The Financials.

In the final section of a business plan, the finances of the dental practice should be addressed. This should include projected income and cash flow figures, together with any assumptions on which these figures have been based. Provide a comprehensive vision of the financial standing and future of the practice. 


This part of the business plan is where supporting evidence and background information is provided. This can include charts, graphs, action plans and schedules. 

Putting a business plan together may sound like hard work, but it is an essential aspect of buying or starting a dental practice. Once the plan has been completed, it’s time to consider funding options for the purchase. 

Financing the Purchase of a Dental Practice

Remember that it’s not necessary to have a particular practice in mind when applying for funding, as long as there is a plan in place. Every dental professional has a different story when it comes to setting up a dental practice. Check out our unconventional story, for instance! Whatever the story is, it’s important to go about securing finance in the right manner. 

Options for Funding a Dental Practice Purchase

From experience, there are three main options when it comes to acquiring funds to buy a dental surgery; one of which is the most common. 

  • Loans from banks and other financial institutions. This is the most common option. 
  • Bank of mum and dad. In certain families this may be an option, and repayment arrangements are likely to be more flexible. 
  • Self-funding. Some dental professionals have the resources to do this. However, it’s not always a good idea to invest the majority of savings as any business comes with some inherent risks attached. Having substantial personal financing in place helps with maintaining a comfortable lifestyle during any lean periods for the practice. 

From working with clients over the years, I realise that most often a lending institution will need to be approached. If this is the case, there are certain factors to consider when deciding on the best time to apply for a loan. 

When to Apply for a Loan From a Bank or Financial Institution

Competition for lending is high, so it’s important to have the best opportunity of being in the successful percentile. With this is mind, here is what I would advise.

  • Prepare for lending more than 12 months in advance as banks will scrutinise documentation for the previous 6-12 months, and take note of any issues. 
  • Make sure that everything is in order and that good financial acumen is apparent. 
  • Have a history of making payments on time and a strong credit score. 
  • Know what the business aspirations are and whether practice purchase or start-up is the aim. 
  • Have a team of professionals in place. At the very least, this should include a dental accountant, dental solicitor, and a financial planner for life insurance and disability insurance.
  • Hire a commercial finance broker, such as Samera Finance that can help you secure funding on the best terms available.
  • Understand the difference between lending. Some banks will offer a conventional loan while others will offer a loan which is specifically aimed at start-ups and small businesses

Make sure that all of this is in place before applying for funding from a lender. 

What a Lender Will Consider

Any dental professional who is looking to buy a dental practice usually needs to have a deposit of at least 10%. When approaching a lender for the rest of the money, there are certain factors they will consider when making their decision. These include: 

  • The history of any earnings as an associate dentist.
  • Management of personal finances.
  • Living situation of the applicant. Is the accommodation rented or owned?
  • Career in dentistry and level of management experience. 
  • Ability to repay any loan that is provided. 
  • Any personal savings that are in place. Showing a propensity to save rather than make rash purchases is an indication of being low risk for lending. 
  • Evidence that tax payments are up to date. 
  • The personality and character of the applicant.

Bearing all of these points in mind, I would say that the most important thing is living within your means. This does not mean that going on great holidays, buying a luxury car and paying for private tuition for children are all no-go areas.

It simply means that there should be a balance between spending and saving. Banks need to see sensible financial behaviour, sensible use of credit and wise investment of money. 

Approaching a Lender for the First Time 

Remember that although lenders are there for the same overall purpose, they all have slightly different policies and processes in place. Some have a specialist team in place to deal with business loan applications, others do not. It helps to do research when buying a dental practice, and find out as much about the lender as possible.

This is where a commercial finance broker who knows dentistry is worth their weight in gold, as they know which lenders are most suitable for which clients.

Whichever lender is chosen, they will want to know that they are providing finance to a reputable borrower and that they can rely on the money being repaid as agreed. With this in mind, any professional who is looking to invest in a dental practice should be prepared to prove their financial reliability when they visit a lender. This is likely to include:

  • Providing comprehensive bank statements for at least six months (professional and personal). 
  • Providing associate accounts for at least three years, to verify income. 
  • Providing evidence of regular saving.
  • If there is no regular saving pattern, there should be proof of what earnings were spent on. This could include professional expenses, or home improvements. It’s important to be able to show wise spending choices. 

It makes sense that banks, and other lenders, want to verify that borrowers are a good risk. These loans are usually unsecured; so they want to be as sure as they can that they will get the money back. 

When speaking to clients about their lending situation, I always stress how important it is to be able to show that they are proficient at managing money, and ideally have significant savings or investments. 

What Can You Fund for a Dental Practice

Generally lenders will allow you to borrow between 70%-80% of the lending value and you are required to have a 20% cash deposit. 

When setting up a squat dental practice, lenders will often fund 50%-70% of start-up costs.  Lenders will fund more than you think. They will usually allow one surgery to be fully fitted. They will fund building costs which include decoration, alarms, costs of architecture etc.

They will also fund equipment such as dental chairs, x-ray machines. Your reception area can also be funded and staff facilities and they will allow some money for marketing as well. 

This is why it is important to include all your costs when you are applying for a loan for a start-up. It will increase the size of your loan as a percentage. 

The Process of Due Diligence When Buying a Dental Practice

Once you know you have the financing in place to acquire a dental practice, it’s essential to know that you are investing in the right one. Any queries, questions or doubts you may have should be addressed before any decisions have been made.

It’s too late to have regrets and doubts after you have signed contracts. This is an investment in the following years of a dental professional’s life, so it’s important to make sure everything is in order. 

Having a Valuation Carried Out

The process of due diligence starts with the seller supplying all of the relevant information required to prove that the practice is viable. While this is happening, you should arrange to have the practice independently valued. This means that you have the peace of mind of knowing that all the money you are paying is a good investment. Never just take a seller’s valuation at face value. 

Having the Right Professionals in Place 

There are certain aspects of due diligence that dentists themselves are best placed to examine, such as the way the practice operates and the treatments that are provided. However, when it comes to legal and financial considerations, a specialist dental solicitor and dental accountants should be part of the team. 

It’s never a good idea to proceed without this expert help. Professionals know what questions to ask and what to look for in accounts and financial records. I have worked with many clients to coordinate the due diligence process, during the dental practice acquisition process, so I know how important an expert eye is. 

What is Included in the Due Diligence Process?

“Due diligence is the process of evaluating a business from all aspects before making a purchase decision…It includes specific elements that can vary based on the situation and the nature of the business. Due diligence protects both parties but primarily the purchaser. It can uncover potential liabilities and financial matters and make sure nothing is hidden.”

Jean Murray, The Balance, 2018 

Include everything that pertains to the viability of the business in due diligence. Do not leave anything to chance. From the building itself, to treatment lists, accounts and software, everything needs to be completely transparent and checked in microscopic detail.

Too often I have seen clients getting ahead of themselves. Take a step back from the buying edge and make sure every aspect of the practice is viable, before taking the leap into purchasing. 

There are several different points to consider when checking documentation during the due diligence process; too many to list here. However, I have found that some of the most important checks to complete include:

  • Are the services currently provided at the practice a good match to the services that can be provided should the sale progress?
  • Is the ethos of the seller similar to the ethos which will continue?
  • Does billing match procedures that were carried out?
  • Does cash recorded match what is reflected in tax returns?
  • What are the current wage demands of the practice?
  • What are the property rental terms?

This is only a fraction of what should be considered as part of due diligence when buying a dental surgery. Take time to make sure that every detail has been scrutinised. This is an important business and life decision that is being made, so do not take any chances. 

Remember to obtain a guarantee from the seller as to the accuracy of the information provided. This provides protection against any future financial or legal issues caused by misrepresentation. 

Putting a Team in Place 

Putting a team in place

The UK’s General Dental Council provides details of standards for the dental team. Your nation’s governing dental authority may provide similar information. When putting a team in place, you need to screen for people who will adhere to these standards and to the aims and culture of the practice overall. 

Why a Good Fit is so Important

When a dental practice is purchased, there is often a professional team already in place. This does not mean that these people are the best fit for the new practice. I’ve worked with several clients who have quickly found it impossible to operate effectively because of a significant clash in practices and differences between the culture of the old practice and that of the new one.

Just because someone has a wealth of qualifications and a good record does not mean they are the best fit for the business that a new purchaser is trying to grow. For instance, I have heard people complain about dentists who have no sense of humour and are not the best with people who are nervous.

The dental industry at this moment in time is more than just dental qualifications, your practice needs to have more than just experts, it needs to reflect the character and ethos you are trying to sell. If one of the aims of a practice is to specialise in providing care for people who have a phobia of dental treatments, this type of professional would not be a good team member. 

What are the Most Important Qualities?

There is a good chance that people already working at the practice, and/or those seeking employment, will have similar skill sets. However, the qualities they have may be very different. One of the most important tasks for any new dental practice owner is to decide which qualities are important to smooth running of the surgery, such as:

  • The ability to work as a team. 
  • Problem solving ability.
  • Reliability. 
  • Friendly and compassionate. 
  • A level head.
  • An empathetic nature. 
  • Good time keeping. 

It’s important that members of the team possess qualities that are in line with the aims and culture of the practice. 

Step Back and Evaluate

It’s never a good idea to make snap judgements about members of a team that is already in place. It is also a bad idea to take over the new practice and implement too many changes right off the bat. Do not forget that everyone needs time to adjust to a new situation. Step back from the day-to-day operations for a little while and simply evaluate how people work and how they interact with each other. 

It’s also important to speak to people and ask them about their aims and aspirations. This will help to make it apparent if they are going to have issues working within the practice’s new regimen as it will be operated. 

Hiring New Members of the Team

There may be a need to hire new team members for a dental practice that has just been purchased. It’s possible to list available posts with the British Dental Journal, your nation’s dental governing body or journal may provide a similar service, or to ask a specialist dental professional recruitment agency for help. It’s important to do the groundwork before the job is listed and/or potential candidates are sought. 

  • What qualifications and experience are necessary for the role?
  • What services are to be provided by the individual?
  • What additional skills would be advantageous?
  • What qualities are important to you?

The ideas and requirements that are collated help to formulate a description of the job role. They are also a big help during the interview process. 

The Interview Process 

Depending on how many candidates there are, it may be a good idea to reduce the list by conducting a telephone interview to narrow down the list of candidates. This telephone interview should consist of asking the candidates why they want to work for this particular practice and how they see themselves as a good fit. Anyone who has not done their research, or is obviously not the right fit, can be weeded out. 

During the interview itself, the questions should reflect the real world within the practice. Here are some questions that may be useful to ask:

  • Give an example of how your working practices fit with the aims of this surgery.
  • Tell us about how you would go about implementing an improvement to processes; give an example. 
  • Explain how you would handle a nervous patient.
  • Explain what you would do if a patient was late. 

It can be useful to take a look at some questions that dental industry candidates have been asked. 

Welcoming New Team Members

Once the right team is in place, it’s important to make sure that they remain satisfied in their work and continue to stay motivated. High motivation levels lead to good standards of productivity and performance. These good standards are essential to the survival and growth of any dental practice.  

In order to keep motivation levels high it’s important to:

  • Provide a comprehensive induction package. 
  • Have an open, learning-based culture. 
  • Communicate the aims and culture of the practice. 
  • Hold regular staff meetings. 
  • Implement a fair on-going assessment and appraisal process.
  • Encourage self-development and training. 

People who work in this type of environment are more likely to want to contribute to the on-going success of the dental practice. Additionally, it helps you have an environment that is enjoyable and friendly, not only for your patients but also your staff. Having a positive work environment will allow employees to want to work hard and stay motivated. 

Summary on Buying or Setting up a Dental Practice

Buying or setting up a dental practice is a means of establishing autonomy as a dental professional. It provides the opportunity to expand on ideas and develop new processes. It also brings with it the financial advantages of investing in equity and controlling your own future and career.

There are several opportunities that exist which enable dental surgeries to be purchased at a reasonable cost. However, it’s important for any prospective purchaser to be flexible when it comes to the location of a practice. Moving may be necessary in order to secure the best opportunity for growth and success. 

It’s important to decide which is the best type of practice from a personal perspective. Public service (NHS in the UK) practices tend to have a more regular guaranteed income, whereas private dental practices tend to allow more room for innovation and can grow rapidly in the right circumstances. 

Lending is readily available to buy a dental practice, but it is important to show good management of income; evidence of savings, investments and wise spending being a distinct advantage.

Acquiring a dental practice involves a large financial investment, so a comprehensive due diligence process is essential. It’s important to work with professionals including a specialist dental solicitor and professional dental accountants, in order to minimise risk. 

Once a dental surgery has been purchased or set up, it is important to ensure that registration has taken place with the relevant governing bodies and the right team is in place at the surgery. Everyone working at a dental practice should be invested in its culture and ethos. 

Once all of this work has been completed, it’s all about operating the surgery as effectively as possible, providing a high standard of care and optimising profit levels to  grow the business. I will look at this in more detail in the next chapters, Marketing and Scaling a dental practice. 

Next Section:

Marketing a Dental Practice

Other Sections:

Grow a Dental Practice

Sell a Dental Practice

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