A business plan. Your practice simply has to have one. It’s going to lay out all the detailed information that helps you set your practice on the road to success. It’ll include market analysis, a marketing plan, competitive analysis, cash flow projections, and more.
In essence, a business plan allows you to track, monitor, and evaluate the progress of your practice over a period of time. It allows you to gauge how your practice is progressing against your original projections for your business. This, in turn, will make it easier to make an objective evaluation of your practice’s progress.
And it functions as an essential marketing document. It helps show stakeholders in your business that your practice is sustainable and worth investing in, whether that investment is monetary or time-based.
Your business plan should be a living document. As you gain experience and achieve goals, the plan should be modified to reflect changing goals and knowledge you have gained during the time the practice has been in operation.
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Business plans provide you with a detailed guideline on what steps you need to follow in order to ensure your practice is a success and that it achieves both your short-term and long-term goals. They are an invaluable strategic tool that every dental plan should carefully consider and craft before opening their business.
Each individual business plan will be unique to you and your business. However, here are some guidelines you can follow to make the process of creating your business plan easier. Some basic elements any business plan should incorporate include:
The executive summary is perhaps one of the most essential parts of the plan. It’s a short section at the start of the plan that summarizes the plan as a whole. Typically, this section is one to two pages in length.
Some elements that should be summarized as part of the executive summary are:
- Legal structure: Key to establishing your practice, determine what type of business it will be. If you’re setting up a partnership, this section should also include percentage ownership of each partner. Other elements that you should mention include resources like attorneys and accountants who will be part of your support team.
- Services provided: Explain which dental services you will be providing in your practice. This section will also clarify what your practice’s unique value proposition will be — what sets it apart from those of your competitors and other dentists near you.
- Goals: List the overall goals of your practice by priority. You should start with the mission statement and then list out the specific goals.
- Market analysis: An analysis of the dental landscape in your area and your practice’s ability to meet your identified needs.
- Marketing strategy: A quick summary of which strategies you will be employing. This section should be a response to the market analysis, and you should go into more detail in the marketing plan part of the business plan.
- Break-even point: This will also be part of the financial plan and analyses how viable your practice is at the current time.
- Operations plan summary: Summarize what systems you have in place in order to increase the growth of your practice. You will need to go into more detail in the operations plan section.
- Organizational / staffing structure: A summary of how many staff you have, their responsibilities and roles, and a forecast of personnel needs.
This section is key when you approach lenders for loans. It should be enticing to potential lenders and explain how you plan to make your practice a success. Therefore, it should be persuasive and compelling.
While this section goes at the start of your plan, you should write it last. This is because it is a summary of the rest of the plan, and you will need to have a detailed plan completed before you can write it.
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Description of products and services
In this section, you should elaborate on the types of services your practice will provide patients. Explain whether specialty services will be performed in-house or will be referred to outside practices and doctors.
If you’re acquiring an existing practice as opposed to opening a new one, clarify any changes you’ll be implementing to the products and services the practice is already offering.
This is where you detail the operational systems that will help you run your practice, meet your goals, and measure how effective you are at achieving your aims.
It will describe how you will procure the products needed to keep the business running, what personnel will be part of your business, and how you will manage your inventory. You’ll also detail factors like hours of operation, any licenses and permits you’ll require before opening, dental insurances that your practice will and will not accept, schedule for equipment maintenance, and so on.
One of the most important parts of your operations plan is detailing a one-year action plan. This will serve as a template for you to follow and help you detail what steps you need to take to ensure your plan is a success.
This section is the ‘nuts-and-bolts’ part of your plan and is likely to be the longest section of your business plan. Managing operations efficiently helps increase profitability and decrease stress. Without an efficient operations plan, you will find meeting objectives and goals a challenging task.
Market analysis and marketing plan
This is where you’ll document data on how your competitors operate. Some parts of your competitors’ practices you may want to look at include their online presence, SEO rankings, how they manage their digital content, and any other marketing efforts you think is relevant.
Once you have conducted a market analysis of your competitors, you’ll also need to document your own marketing plan. Elements you should include as part of your plan include an overview of your intended market and the type of patients you plan to target, their income level, age, and lifestyle.
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You should also clearly set out how you plan to set your business apart from competitors and maintain your own customer base. For example, if you operate in close proximity to another dental practice, how will you ensure patients looking to find a dentist visit your practice over that of your competitor?
Make sure to conduct a SWOT analysis. This is an analysis of your practice’s strengths and weaknesses, as well as the market opportunities you can take advantage of and the threats that your practice faces. This will help you better personalize your marketing plan to your goals while also considering outside factors that could hinder those goals and detailing how you will overcome those issues.
Your marketing strategy should focus on developing awareness of your practice amongst prospective patients. This will include the use of internal marketing (brochures, posters, newsletters, etc.), external marketing (direct mail, email, advertising, online marketing through websites and social media, etc.), and customer service to ensure your patients have a good experience and keep on returning to your practice.
One key element of the marketing plan for modern dental practices is to map out their website design. Having a well-designed website can help you stand out from competitors and can be hugely beneficial in attracting patients. For example, suppose patients are able to make a dentist appointment online quickly. In that case, they are more likely to choose your practice over a competitor that makes it difficult to schedule an appointment.
If your marketing strategy is going to be significantly different from that of your competitors, you should also explain the rationale behind your choice as part of your strategy.
A financial plan is a key component of the marketing plan and will be the section that’s of most interest to potential lenders. If you’re approaching banks or other individuals for a loan, this section will help them make an informed decision over whether or not to lend to you. Due to its importance, this section should be carefully planned out and meticulously written.
For new practices, the financial plan will be based on 12 and 24-month financial projections, as you won’t already have an existing performance to base it off. Some key elements that you should include in your financial plan include:
- Income projections over a 12 and 24-month period
- Your personal financial statement
- Collateral you’ll offer in exchange for a loan
- The total amount of funds that will be required by your practice for a 24-month period
- A plan for how the funds will be allocated
- Cash flow forecast
- Historical financial analysis looking into the viability of a dental practice
- Supporting documents that may be required by the lender, including a copy of your credit report, historical financial statements, five-year financial projections, and any other relevant document
Your financial plan should lay out a plan that accounts for the impact of outside financial influences that will affect your finances. These influences include competition, the economy, seasonal variations, and business cycles, as well as any other factors that will impact your practice’s financials.
Business plan checklist
If you’re just getting started on creating your business plan, there are a variety of templates and checklists that are easily available online. One free downloadable and printable checklist that you can use is this one.
Before you get started on making your business plan, the American Dental Association (ADA) you make sure to ask yourself some important questions, including:
- Can you describe your potential dental practice in detail?
- Do you have an actionable marketing plan?
- Who is in the market? What are they doing right — or wrong?
- What pricing and payment policies are you considering?
- What’s your growth strategy?
These will help provide you with a guideline you can refer back to when writing your detailed plan.
The ADA also provides a business plan checklist that is tailored to dental practices. You can download the checklist here.
FAQs about dental practice business plans
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How much does it cost to open a dental office?
While start-up costs will differ based on where your practice is located and the types of services you plan on offering, the estimated cost of starting a dental practice can be upwards of $450,000, with up to a third of that being equipment costs.
How profitable is a dental practice?
On average, dental practices can have about a 25% profit margin. This profit margin can be more, depending on your specialty, location, and overhead costs. It is also possible to increase the profit margin of a dental practice in a variety of ways. For new practices, it your business plan allow you a profit margin of at least 40%.
How much does a dental office make a year?
The amount you earn is dependent on the type of services your practice offers, including whether or not you offer specialty services. On average, general practices earn around $770,000 a year, while specialty practices can make around $1.1 million annually.
How do I write a business plan for a mobile dental clinic?
If you’re planning a mobile dental clinic, the process for writing a business plan is similar to that of writing a plan for a traditional practice. The steps you need to follow will be the same, and any lenders will expect you to present the same information as part of your business plan.
Remember, the executive summary and the financial plan are two key aspects of your business plan when approaching lenders. A well thought-out and well-written business plan does not only make your practice more appealing to lenders but it also provides you with a blueprint to follow in order to achieve personal and business-related goals. So when you’re writing out your business plan, regardless of whether it is for a traditional practice or a mobile clinic, make sure to include all the relevant details.