Is it your big dream to own a practice? Do you imagine what it would be like to run your own business? Maybe being an employee is just not for you. Here are some common misconceptions that students have about money when it comes to starting or buying a practice.
Treloar & Heisel
In our work, we see many recent dental graduates with huge debt loads — $300,000, $400,000 or even $500,000 right out of school. They end up in our practice, often overwhelmed with how to pay down their debt. And while most of them know that their income is solid and poised to grow, they still grapple with whether it makes sense to pay off their debt, or to minimize their loan payments and, instead, set aside money for the future.
Your ability to generate revenue is your greatest asset. If something happened to you, it would have a significant impact on your cash flow. Whether you’re just starting your training or you’re already in practice, one of the first things you need to do is protect your ability to earn an income. While health insurance will help pay to get you back to good health, an entirely different type of insurance is required to replace the income you forego while you are unable to work. This insurance is called disability income, or “DI” for short.
When it comes to finances, there are two important areas where a young person can actually do something that has impact on his or her future. The first is to create a budget (yes, you may groan, but it’s true — and be advised that is not the topic of this post). The second is getting smart about your credit score.
In this edition of Let’s Talk, Christian Pearson, national director of dental partnerships at Treloar & Heisel, Inc., continues the conversation with Stephen Trutter, director of consulting and partner at Ideal Practices, as they discuss what students and new dentists can do now to prepare for private practice ownership.
When I present at conferences or industry meetings, new dentists often approach me, eager to know whether there are any opportunities in private practice ownership these days. “Can anyone do a startup?” they ask with some trepidation. After all, the word on the street is that it’s not easy.
I’m frequently asked what advice I would give to a new dentist. I compiled this list based on my years of experience advising dentists on their personal and practice finances and hearing, “I wish someone had told me this sooner.” These pointers should help you make thoughtful financial decisions, largely without regret.