Without a doubt, the costs of running a dental practice, or any type of medical practice, has been on the rise in the last several years. Usually, with many businesses, if the cost of the product or service rises, that will then translate onto the customer to make up that extra cost. Unfortunately this does not always apply in medical healthcare practices. Dental practices experience many extra costs that other businesses do not necessarily have to invest in, such as capital equipment that can often be very expensive.
What Costs Dentists Need to Consider
This may come as a surprise to some but there are many dentists that are happy to go through their entire career as an associate dentist without the aspiration to buy or start-up their own dental practice. However, with the rise of the pandemic and the consequences that many dental associates have experienced as a result, there are now many dental associates realising that there are so many benefits to opening their own private practice ,without the NHS contracts weighing them down.
Being your own boss and working for yourself can be incredibly hard and it comes with a lot of challenges that you may have never even anticipated. After being in the game for over 20 years, Samera has got you covered. We have a few costs you need to anticipate that are often forgotten about or overlooked when people decide to start their own dental practice.
Staff Costs in a Dental Practice
One of the main costs many do not consider are the staffing costs. Most dental practices will feature different types of specialist dentists, often including an orthodontist who can typically earn between £60,000 – ££80,000 per year. In order to grow clientele you may also want to employ a separate hygienist, who will also retain a high-earning salary.
Although you may be aware of the costs of each of the dentists you may be employing, it is also very important to factor in any other staff members you will need. Each dentist will usually require at least one assistant – this will be highly dependent on how many dentists you have working in your practice. A receptionist will also be necessary and depending on the size of your practice, you may have to hire two receptionists.
Staffing costs themselves are a huge cost for any practice, however, what you need to take into account is that when your practice becomes more successful, your staffing costs will rise as a result. It is especially important that these costs are accounted for and managed properly when you are starting out.
Click here to read more about retaining a great team.
Finance costs need to be controlled and reviewed to ensure that you are getting the best deal on market. Some lenders charge 3.75% above base rate, while others may charge 2.5% above base rate. It is important to shop around the market to see these differences, as the difference between these percentages over the course of even one year can be substantial.
If you have started a squat practice, costs may be even higher. However, once established, these costs can be reduced by a well thought out refinancing package.
Managing Cash Flow
Buying equipment is a huge strain on many dental practices and sometimes buying the necessary equipment out of cash flow (or working capital) may seem to be saving on any long-term loans or interest. However, buying these things straight from your cash flow can create a big strain on the cash available to the business.
Should anything unfortunate happen (e.g. Covid-19) you need to ensure that your business has the necessary reserves to save itself. Always consider whether to buy with cash or finance over the longer term. There are many financing options available to you should you need any information of what type of finance would be best for your situation.
Rent and Business Rates
If you are paying rent for your dental practice that can often be a big cost for you. In some areas of the country it would be cheaper to buy the freehold if possible, so it is always worth asking. It is also important to note that lease payments rise on a very regular basis, thereby increasing your costs further.
This one is a fairly obvious cost, but it can take its toll on your dental practice. You will need necessary office equipment such as a computer, desk and chairs for your reception area. You may even want to furnish your waiting room, which can be an expense you need to factor in. However, your largest expense will come from purchasing the necessary dental equipment for your surgeries. A dental chair, lighting, dental tools, X-ray equipment, anaesthetics, sterilising equipment and even consumables such as mouthwash and toothpaste are all part of equipment costs that you need to consider.
These do not all have to be bought outright all at once. There are many financing options that are lenient and can help your dental practice in the long run. Although you may factor in the costs of financing all the equipment you will need, you also need to factor in the costs that are included in keeping all your equipment up-to-date and maintained. You will also need to factor in the costs of lighting, heating and cleaning services of your dental practice.
Click here to find out more about asset finance for dentists.
Although these costs will be a considerable amount, they are essential when it comes to setting up and running a functional and successful dental practice.
Overall, the costs of running a dental practice are high, like many other medical healthcare practices. Often with dental businesses it can take some time and hard work before you start to see increasing profits. However, these profits are more than worth the costs of running your own dental practice and being in charge of your own business.
Further Information on the Costs of Running a Dental Practice
For more information on raising finance for your dental practice, check out our Learning Center here.