dental business plan

Executive Summary
2:30 Dental is a new dental office in Miami, FL, and will be started by a young dentist out of school, who will purchase an existing dental practice from a retiring dentist. This purchase will essentially allow the practice to have an existing customer base. Some investment may be needed to bring the equipment, and the medical records, up to date with modern standards. The dentist will target a variety of high-margin and value-added markets in order to attract high lifetime value clientele. Many dentists seeks these customers, but Miami has a higher-than-average growth rate in population and is a strong market for many high-margin services. As such, it is expected that the clinic can be profitable quickly. The operational structure will be similar to that of most dental practices.
Company Description
2:30 Dental is a dental office located in Miami, FL. The office will perform a variety of services. The core service will be basic dental – cleanings, fillings, etc. It will refer specialty dentistry to other offices. 2:30 Dental will also perform value-added services that leverage the skills of the staff, such as Botox injections (Harnois, 2017), as these services can be a valuable source of additional income. There will also be a focus on higher-margin procedures such as porcelain veneers, implants and endodontics (Kesner, 2017). Furthermore, the dentist loves children, and wants to place some marketing emphasis on that market in particular.
Market Analysis
At the macro-level, the market for dentistry services is mature. IBIS World reports the total market size to be $129bn with a compound annual growth rate of 2.1%. That group feels that industry revenue will continue to increase in the coming years because of "increased access to dental care and greater disposable income" (IBIS World, 2017). The Bureau of Labor Statistics records that there are 105,620 dentists in the US today, with a growth rate of jobs at 1.9%, which is larger than the population growth rate of 0.81% (CIA World Factbook, 2017), supporting IBIS' assessment that there is some market growth owing to more than just population growth.
However, dentistry markets are localized, which means that a new office is best set up in an area with a growing population, or where there is a favorable dentists-per-capita ratio, in particular if disposable income rates are high. Population growth in Miami-Dade County is generally higher than the national average, meaning that there is new demand for dentistry even without spending growth (Rabin, 2016).
Strategy Formulation
There are high fixed costs associated with running a dental office. Systems for maintaining electronic health records alone can run into the tens of thousands. Entering the market without a customer base typically requires a dentist to take losses – for years sometimes – in order to build a book of business. 2:30 will enter the market by purchasing an established practice from a retiring dentist. Buying an existing business allows for some customers to be retained, and but still gives the new dentist the freedom to rebrand, and begin to pursue markets that offer the strongest revenue potential.
By focusing on high revenue activities, the office will be in a better position to be profitable, despite an environment of escalating costs. The dentist needs to be more profitable than average in order to pay back student loans associated with going to dental school, as these add to the cost base in the short-to-medium term.
Impact of Technology
Dental technology creates both costs and opportunities. Changing information technology means that 2:30 can start with a cloud-based document management system, which can provide efficiency and compliance advantages over other offices that are struggling with different systems. But as technology changes, there are significant risks associated with keeping up, and costs. It is worth noting that technology used in dental care is also changing, can be expensive, and represents an opportunity for the office to open with upgraded equipment that can provide 2:30 with advantage in the competitive marketplace.
Business Operations
Operations are focused on patient activities – marketing, intake, service and post-service. The service element is divided into the work that the dental hygienists do and the work that the dentist does. There is also an administrative component to the office, and it is necessary to seek efficient processes while simultaneously delivering the best possible service to the patient so that their business is retained. It is important to foster high customer lifetime value by creating loyal patients.
Management and Ownership
The dentist is both manager and owner of the office. However, an office manager or administrator usually handles the day-to-day tasks. That person will also take a lead role in the marketing of the clinic, thus allowing the dentist to focus on the day-to-day operations.
Organization and Personnel
The office will have a small staff consisting of one dentist, two part-time office administrators and two hygienists. The office will have a flat structure with the dentist being the "CEO" of the organization, outlining strategy, tactics and playing the lead role in patient care.

Capital and Usage
Upfront capital will be required to buy an existing practice. The amount of the capital will be determined by the value of the practice to be purchased – a cost determined by the present value of future earnings of the practice, with perhaps some adjustments for asset value. Some capital will be set aside for equipment upgrades, as many retiring dentists have made insignificant investment in their practices.
Capital will be financed for the most part. The dentist has some family money available, but also has student loans because there is a limit to that money. It is important that approval for bank financing is granted prior to investment in a dental practice, but is often is because most dentists and dental offices are long-run viable businesses that any bank understands.

Financial Information

Below is a sample income statement for a typical dental practice:

source: The Curious Dentist


References

BLS.gov (2017). Occupational employment and wages: Dentists. Bureau of Labor Statistics. Retrieved August 5, 2017 from https://www.bls.gov/oes/current/oes291021.htm

CIA World Factbook (2017). United States. Central Intelligence Agency. Retrieved August 5, 2017 from https://www.cia.gov/library/publications/the-world-factbook/geos/us.html

Harnois, P. (2017) The journey into total facial esthetics with Botox. Dental Economics. Retrieved August 5, 2017 from http://www.dentaleconomics.com/articles/print/volume-100/issue-11/features/the-journey-into-total-facial-esthetics-with-botox.html

IBIS World (2017). Dentists in the US: Market research report. IBISWorld. Retrieved August 5, 2017 from https://www.ibisworld.com/industry-trends/market-research-reports/healthcare-social-assistance/ambulatory-health-care-services/dentists.html

Kesner, M. (2017) Four ways to increase revenue. Dental Economics. Retrieved August 5, 2017 from http://www.dentaleconomics.com/articles/print/volume-103/issue-7/personal-enrichment/four-ways-to-increase-revenue.html

Rabin, C. (2016) South Florida population hits 6 million for first time. Miami Herald. Retrieved August 5, 2017 from http://www.miamiherald.com/news/local/article68048512.html