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CDA Oasis Conversations: Which alternative is best: to buy or open a practice?

David editedDavid Chong Yen, from DCY Professional Corporation of Chartered Accountants, comes back to talk with Dr. Suham Alexander about the suitability of one of two alternatives: buy or open a dental practice. 

Interview Highlights

At some point in their career, most dentists make the decision to own and operate their own practice. However, sometimes, the bigger decision lies in whether they should buy an existing dental practice or open a practice from scratch.

In this video, David Chong Yen, DCY Professional Corporation Chartered Accountants, discusses three different scenarios and the rationale behind each dentist’s choice. 

The basic decision-making framework involves evaluating your own personal circumstances

  • Current cash flow needs to support yourself, dependents
  • Debt load
  • Net worth (what you own – what you owe)

Watch the video interview

3 comments

  1. Recently, I’ve seen an increase in openings of new dental offices. ALSO, I’ve seen a large number of failures including those then being bought out by chain dental offices at discounted, scared, pricing.

    I’m REALLY concerned about new dentists who are opening up without truly analyzing the consequences of having 3 or 4 offices around them. Or they simply don’t realize how much debt they will take on and how to manage the staff they need.

    On the other side of the equation are some of the people running the valuation firms that are significantly overvaluing practices only to have them bought out and fail because the numbers weren’t crunched properly by an accountant or someone without A VESTED INTEREST in making money off both the buying and selling doctors (yes this is actually happening).

  2. I started from scratch twice, and it wasn’t easy. I wish I could find a reasonably priced practice, however practices are way overvalued and the owners seem to think dental equipment maintains full cost after 30 years of use. In the Vancouver area, practices are going for 120% of annual gross, which is way above the national average. This said, if I had to do it all over again, I would associate with an old dentist with the intention of buying in… Or not… I think ownership is overrated. You are at the mercy of your employees. They are no show on you or quit in a heartbeat. There is no loyalty. The corporations attract them with better pay and benefits. Some even break your equipment by slamming it around or dropping it. Good luck getting them to pay for it. The patients can smear your practice at the littlest insurance mistake with online comments. Associates don’t have to deal with this. You can take a month vacation without worrying about paying your staff or paying the ongoing clinic expense. Good luck!

  3. Each has it pros and cons. Buying an existing location will cost more and put you in debt, but you will make more in the first 3 years and be able to pay it back. Starting from scratch will cost you less, but you will have a very low income in the first 2 years till you break even. Which option you go with depends on your personality.

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