I want to continue to address the question many new dentists ask: How much does it cost to start a new dental practice? Here are tips to save money when acquiring a dental office building.
I successfully started two dental offices and I’m not even a dentist! If I could start and run profitable dental offices, pay dentists, then any dentist can definitely start their own practice. Not to mention they will make excellent money too.
Here are the best places where you can save significant amounts of money and increase your odds of making it:
In particular, I’ll focus on the costs of building or acquiring the dental office building itself.
Land Acquisition. This is where costs can become the most variable. Dependent on the city, state, the economy, and the country, real estate prices can fluctuate tremendously. To give you an idea: The typical 6-operatory dental practice would fall in about a 1800-2400 square footage range. So the price can range depending on the cost of commercial real estate land in the location you want to set up. For example, 2,400 square footage of land for a Dallas operatory could cost around $1,500, while a piece of land for the same size in San Diego can cost $5,750. Not to mention, you’ll want a well researched, strategic location with enough foot traffic and patients to pay for that space.
There’s a lot of other expected and maybe unexpected costs that come with this too —i.e., consulting with a realtor, making sure your location is zoning compliant, and if you have enough space to accommodate HIPAA and other guidelines for dental practices. Not to mention if you have the right operatory sizes for your spaces dependent on the type of dentistry you work in. Whether you’re planning to start a general practice, orthodontic, periodontics, or something else.
Construction Costs. Now that we’ve covered the gist of land acquisition, we need to also consider constructing the office itself. According to the Dental Clinic Manual, it estimates a cost of $100 to $200 per square foot just for construction —this doesn’t account for equipment or supplies. With that “typical" 2,400 square footage 6-operatory office, you’re looking anywhere between $240,000 to $480,000.
As you can see by this simple estimate, the costs add up really quick. You’ll totally maximize your stress by purchasing a new building —I highly advise not starting here!
Once you have proven that you can meet your payroll every pay period, pay your rent every month, cover all of your supply expenses, and pay yourself what you need, if you still want to build or buy a building, even if it means paying yourself a little less, then go for it!
If you get yourself into enough debt, you may become one of “those" dentists who recommends PFMs as the standard treatment for all their patients; needed or not. Don’t put yourself into that situation!
I was unemployed and had limited funds when I started my first office, so I really needed to keep my building expense in check.
Fortunately, I found a small dental space in a strip mall that was about to be vacated. Don’t be afraid to start with a smaller office to save money.
How do you find an empty office space that has already been built out for a dental office?
It may take a little time and some luck but you can do it. I found my first empty office by just driving around neighborhoods and found my second vacated location from a tip I got from a friend. These empty, former dental office suites are out there, waiting for you to move in for little to no expense. You can find one too!
And even better, you can totally negotiate your own sweetheart lease for that vacated dental office space you find. Landlords are usually highly motivated to get these spaces rented.
If you play your cards right, the landlord may pay you, in terms of initial abated rent and a build-out allowance, to sign a mid to long term lease! The landlord at my first dental office was highly motivated and so I was able to negotiate four months of free rent and get $5,000 towards office renovations.
Later, I found a second vacated office that was much larger and negotiated another favorable lease for my second location.
Don’t be afraid to walk away if the negotiation doesn’t fit your budget. Again, the goal here is to start an office you can financially succeed in!
Starting a new dental practice doesn’t require the most expensive, big, shiny new building to make a profit. To be financially successful, you’ll want your first goal to focus on minimizing debt.
Plan your Budget and Do Your Research
Here are a few articles to help you get started:
Don’t hesitate to read more, shop around, ask around, and do your homework to find the best, profitable place to put your office.
Don’t be afraid to get a little “scrappy" by searching for an old, available operatory to rent. Then assume everything in real estate is negotiable —because it is! And don’t be afraid to say no and walk away if the negotiation doesn’t fit your budget.
In my other article, I also share ways to save when investing in major equipment.
So, what do you think? Comment below what other tips or resources you would recommend for a dentist looking to rent their first dental office, or potentially looking to build one.