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Guide to Starting a Dental Practice
There are numerous decisions and steps involved with transforming your goal of starting a practice into a reality, including identifying your practice vision, building your team of advisors, finding an ideal location/office space, negotiating a lease, constructing and equipping your office, developing a brand and external marketing plan (logo, business cards, website, etc.), hiring and training staff, developing business systems and protocols, etc.
In order to provide you with some insight into the role of your commercial real estate agent and the journey that lies ahead, we would like to provide you with the following guide to utilize throughout the process:
1. Develop Your Practice Vision
As with any business, the first step is to identify the service you will be providing and to whom you will be providing that service to. While identifying the service you will be providing is likely an easy task, defining your target clientele is equally important and can be a little more complicated. What is the demographic profile of your desired patient base? What is the age range of your desired patient base? Will your practice revenue be derived from primarily Fee-For-Service, PPO, or Medicaid patients (or a combination of these)? How many operatories/treatment rooms do you need? What hours would you like your practice to be open?
2. Build Your Team of Advisors
There are numerous steps to take and decisions to be made in order to successfully navigate the start-up process and ensure that your practice is positioned for success. Therefore, it’s critical for you to build a strong team of professionals who can assist you with making the right decisions and getting all of the pieces of the puzzle in place so you are ready to hit the ground running when you open for business. Your team will typically consist of a tenant rep., lender, equipment rep., contractor, attorney, practice management consultant, marketing firm, accountant, and insurance agent. During the course of our careers in the dental industry, we have developed close working relationships with many experienced, local advisors who we respect and trust to take excellent care of our clients. If you need any assistance in putting together your team of dental advisors, We can help you find experience experts within Connecticut, Massachusetts, Rhode Island, Vermont and Maine.
3. Financing Pre-Approval
Prior to beginning your property search, it is imperative for you to secure financing pre-approval so we know you will have the ability to obtain the necessary level of financing to turn your practice vision into a reality. Obtaining financing pre-approval prior to beginning your property search will also enable us to provide the landlord with evidence that you are a credit worthy tenant and help facilitate negotiations once we locate an ideal property. Your lender will typically require a copy of your CV or Resume, Personal Financial Statement, and last two years of tax returns in order to complete the pre-approval process. The landlord will also require this same information to evaluate your creditworthiness, so it’s helpful to gather this information at the start of the process.
4. Property Search
Once you have determined the vision for your practice and obtained financing pre-approval, we will work together to identify a property that fits your needs. If you have already identified the market area where you would like to start your practice, we can begin our property search immediately. If you would like to obtain demographic information in order to identify a particular market area that fits with your practice vision, we can provide you with basic demographic information or we can obtain more specific dental-related demographic information by utilizing a dental demographics specialist. Once we have analyzed the demographic information, identify the market area where you would like to start your office and begin your property search.
5. Letter of Intent
Upon finding an ideal location for your practice, you or your broker can contact the Landlord or Landlord’s Broker to make them aware of your interest in the office space and obtain the economic terms the Landlord is seeking for the space. You or your broken will then draft a Letter of Intent to further demonstrate your interest in leasing the office space. The Letter of Intent is a non-binding document that simply serves as a tool for negotiation between the two parties. The Letter of Intent will provide the basic economic terms of the lease such as the Base Rental Rate and Tenant Improvement Allowance in addition to other important business terms such as Exclusivity Clauses and Assignment Provisions. The negotiation of the LOI is intended to be conducted in such a manner that each exchange between the parties is progressive and ultimately culminates in mutually agreeable terms that will serve as the foundation for your Lease. While the amount of time necessary to negotiate and finalize the LOI may vary, this process typically takes 2 – 4 weeks.
Upon arriving at mutually agreeable terms in the Letter of Intent, the Landlord will instruct their attorney to draft a Lease. Some states do not allow Brokers/Agents to provide legal advice to their clients, so we highly recommended that you employ an attorney to assist you with reviewing the Lease. As with the Letter of Intent, there will likely be several exchanges between each party and their respective attorneys before the Lease is finalized. While the amount of time required to reach a consensus and finalize the lease can vary, this step typically takes about 4 weeks in most cases.
7. Office Space Design & Equipment
Once you have negotiated an LOI for a particular office space, you may want to obtain a CAD file (electronic drawing of the office space) so that you can begin designing the layout and choose the equipment for your office. We encourage you to begin the office design process as soon as possible and utilize a dental equipment company and contractor to complete this task.
8. Obtaining Construction Bids / Creation of Construction Documents / Permitting
This step is critical to the process and needs to be completed in a timely manner. To begin this step, you will need to meet with your contractor(s) to review the office space design to ensure that it meets your municipality’s building codes and decide upon the finishes for your build-out (countertops, flooring, paint, etc.). Once these decisions have been made, your contractor(s) will provide you with a construction bid. Upon awarding the project to a particular contractor, the contractor will need to prepare Construction Documents for the appropriate municipality, which should take approximately 2 weeks to complete. Each municipality is different and the amount of time it takes to receive a construction permit can vary greatly. The permitting process can vary in length depending on the city or municipality in which your start up is located.
Once your contractor receives a building permit, they can begin construction of your practice. In general, you should anticipate construction to take about 90 days to complete. Having a contractor that is familiar with “medical” construction is critical due to the many nuances involved with building a dental practice compared to other types of businesses.
10. Branding / Marketing / Hiring & Training Staff / Business Systems
In the months leading up to opening your doors, you will need to work with your marketing firm and practice management consultant to establish a brand for your practice, implement a marketing plan, construct a website, hire and train your staff, implement business systems, etc. so that you will have appointments on the books and be prepared to take excellent care of your patients immediately upon opening your practice.
11. Certificate of Occupancy
This is the final step before opening your doors to patients. Once your contractor has completed the construction of your practice, they will call for the City to make a final inspection. Upon passing that inspection, the City will award you with a Certificate of Occupancy and you can open for business!