Dental Practice Asset Sales vs. Stock Sales—Explaining the Differences | Pacific Health Law

For many dentists, becoming a practice owner is the natural transition after gaining at least a few years of clinical experience. When done right, starting your own practice can be both professionally and financially fulfilling. However, the road to practice ownership can also be overwhelming, especially if you don’t set the proper expectations or plan ahead.

What You Can Expect

How To Start a Dental Practice With Confidence | Pacific Health LawMake no mistake — starting a dental practice will consume a lot of time and resources. If you have kids, this will be your next one and if you don’t, this will be your first baby!

Between the search for a location, securing a lease, building out the dental practice, and equipping the office, you should give yourself approximately one year to a year and a half of lead time until you open your doors for business. So don’t quit your associateship position until your practice is open for business, and possibly after the first year of business (if you need continued cash flow).

Here are a few things to keep in mind when preparing to start a new dental practice. The earlier you can figure each part out, the easier things will be down the line.

The Vision Thing

Though you may have been dreaming of starting your practice since starting dental school, now is the time to get serious about transcribing your vision. It always helps to get that vision down in writing. Answer these questions:

  • How do you want your practice to look, feel, and flow?
  • What types of patients are you looking to serve?
  • Will you take insurance or will you institute a fee-for-service type practice?
  • How will you advertise your services?
  • How will patients find you?
  • What do you want the patient experience to feel like?
  • How many days do you expect to work?
  • What is your financial goal?
  • How will you measure success?

To help organize your thoughts, invest time into writing a business plan. Even the simplest business plan can serve as a north star to guide you on the path to finding success as a new practice owner.

Financial Plan

How To Start a Dental Practice With Confidence | Pacific Health LawAfter you record your vision down, it’s time to figure out your budget. It’s not uncommon for a new dental practice startup to cost over $350,000, depending on the market. With such a large capital investment, most dentists aren’t able to finance a new practice on their own. Not to worry, there are plenty of healthcare lenders who will loan you 100% of your startup costs, including build-out costs, furniture costs, fixture and equipment, and operating capital. However, be wise about how much you borrow.

Speak to your colleagues, do some research, and create a budget and a pro forma financial plan (which should be included in your business plan) to understand how much money you will need for your new project.

The goal is to get to a point where you have more than enough money to cover the months where you might come up short or have unexpected expenses (and yes, they will come up!). Without a properly managed budget in this industry, you could end up spiraling into debt.

Calculate all your startup costs plus your ongoing monthly costs from payroll to rent. Factor how much you need to spend each month and how much money you will need to bring in to recoup your startup expenses and, of course, stay in business.

It can be immensely helpful to work with an accountant and/or financial advisor during this phase so you understand all the financial implications and responsibilities of starting your own practice.

Assemble Your Team

Various hands coming together in the middle of a circle

Starting a dental practice is a lot of work. When thinking about your team, you’ll have to build both your support network as well as your team of employees.

Getting expert help is a critical step to minimize the risks associated with a startup and ensure your success. Here’s a list of professionals you need to consider while assembling your team:

  • Real estate agent to help secure your perfect location
  • Dental attorney to review and negotiate the lease agreement and formation documents for your new entity
  • An accounting team to handle taxes and payroll
  • Financial advisors to plan your business expenditure
  • Designers and Contractors specializing in dental offices to help with your buildout
  • Marketing professionals with experience in growing a dental practice
  • Peers in dentistry who can promote your business and connect you with the right people
  • A practice management consultant to help you with business systems and manage your team

To find great employees, try the following avenues:

  • Posting on job websites (e.g. LinkedIn or Indeed)
  • Posting on dentist-focused job boards (e.g. Dental Town or
  • Reaching out to dental schools and attending job fairs
  • Connecting with your state’s dental associations
  • Asking around on dentist LinkedIn and Facebook Groups
  • Temp agency

As you assemble your team, make sure every new employee has been adequately vetted and has received proper training. Many times, applicants apply to registered dental associate positions, even when they don’t have the proper certification. It’s up to the hiring dentist to check for proper credentials.

With access to patients’ sensitive records including medical history, medications, and financial records, you’ll want to hire both trustworthy and competent individuals. Also, bring on radiant front office staff to have a welcoming environment for your patients.

Location, Location, Location

How To Start a Dental Practice With Confidence | Pacific Health LawYou can’t have a dental practice without a location (unless you’re starting a mobile practice). Where your practice will be located in one of the biggest initial decisions you will make on your new journey.

You should work with a real estate agent to secure a location. Ideally, you’ll work with a healthcare-specific real estate agent, or, even better, a dental-specific real estate agent, that can help you find the perfect location to make your vision come to life.

A qualified agent will know the market, how much rent should be for your space, and can negotiate effectively to get you preferred terms for your new lease, including the length of the lease, options to renew, potential improvement allowance, and rent abatement as you build out your space.

All of these economic terms will be wrapped into a letter of intent, a non-binding document that outlines the major deal terms of your lease. Once the letter of intent is negotiated, then the landlord will prepare a lease for your review.

Lease Review & Execution

How To Start a Dental Practice With Confidence | Pacific Health LawAfter you secure your letter of intent for your new location, the landlord will deliver a draft commercial lease for you to sign.

Understanding your lease is an integral part of being a “dentalpreneur.” After all, the lease is the anchor that provides the practice home. Unfortunately, many commercial leases include onerous legal provisions that can severely hamper your practice and future exit plans.

It’s critical to work with a dental practice attorney that knows what to look for in a dental practice lease. They’ll negotiate legal provisions to enable the practice to thrive without disruption.

After negotiating and finalizing the lease agreement, the parties will be ready for lease execution. Before you sign the lease, you should have the following items ready:

  • Your practice startup loan should be ready to fund
  • You should have your due upon signing ready (usually the first month’s rent and security deposit) to give to the landlord
  • Your insurance policies should be in place (see below)
  • Your contractor should be ready to pull permits and start the buildout process


Insurance protects you and your business from unexpected events. While you don’t want to end up on the bad end of a malpractice case, it can happen. Many practices have professional liability malpractice or entity malpractice insurance.

In addition, here are a few other plans that you may need and/or which will be required by your lender for your practice:

  • Business overhead expense insurance
  • Worker’s compensation
  • Business loan protection insurance
  • Life insurance

You may also want insurance to protect the expensive equipment in your clinic, so you can replace machines and other tools if they break down.

Buildout, Equipment & Furniture

How To Start a Dental Practice With Confidence | Pacific Health LawNow that you signed your lease, your contractor will begin the buildout phase. This will include pulling permits and constructing your tenant improvements. The buildout phase can take 3-6 months depending on the size, location, and market your office is located in.

During your building (or before) you should finalize plans to purchase equipment and furniture for the new office. Before you start buying equipment, determine your service offerings and staff requirements. This way, you can chart out what equipment you’ll need and, more importantly, be ready to invest in.

Finding and securing equipment can be a lengthy and costly process, so planning here is crucial. Many dentists like to work with equipment representatives from large dental equipment suppliers that can supply all of the equipment for the new office.

You’ll also have to consider furniture, software, and office supplies apart from the dental equipment. Think about how to keep your patients comfortable as they wait for service as well.

A lot of new dentists want to furnish and equip their new offices with the latest technology and high-quality products. This is fine if that is your vision and you ran the numbers properly. But consider what you need versus what you want and plan accordingly. You can always update and add to your office as you grow.

Putting It All Together

How To Start a Dental Practice With Confidence | Pacific Health LawCongratulations, you did it! Your office is built out, has furniture, and is now ready for patients. Time to open those doors and start your new journey as a practice owner.

Starting a dental practice takes a lot of work, but you can do it confidently with a proper plan and support. Take each challenge one at a time, and don’t rush. If you’re considering starting a dental practice, reach out to us at Pacific Health Law with your questions, we’d be happy to help.

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