There are dozens of very difficult decisions that dental school graduates have to make in their careers. Many students graduating from dental school start their careers as associates. The most common question they ask themselves is whether to remain an associate or open their own practice. Many new dentists have a hard time contemplating this life-altering decision, and there are compelling arguments for both ownership and associateship. Let’s review some reasons to remain as an associate or to take the plunge and purchase your own practice!
To help you answer your questions of associateship versus ownership, you should ask yourself the following:
– Would you love to work from essentially 9:00 a.m. to 5:00 p.m. and forget about work until the huddle prior to the following business day?
A practice owner ideally has to be immersed 24/7 to ensure clinical operating procedures are being followed, employees are happy and are showing up for work, cash flow is adequate, ample patients are in the chair, accounting and tax work is organized, payroll is complete, bills are paid, etc. If you purchase your own practice, you can count on being fully devoted to it for years. In the early years ownership, it may be difficult to find time to concentrate on anything other than your practice. As an associate, your job ends at being on time, being involved in team meetings and providing quality patient care. Once you walk out the door at the end of the day, you can leave everything behind until the next business day.
– Do you prefer a neat, laid-out schedule prepared for you, without the worry about how the schedule gets filled?
An amazing amount of work can go into ensuring a full schedule at all times. It takes an entire team approach, continuing education, internal referrals, marketing and sheer determination to make sure that everyone is busy … and stays busy. As an associate, your involvement in this entire process is minimal, and for the most part, it’s a simple matter of showing up and working on your scheduled patients.
– Would you prefer to be responsible for your work only or take on the responsibility of being liable for every person working in the practice?
This is a huge responsibility! As a practice owner, you are liable for the work and quality of every employee working in the practice. If there are board proceedings or litigation concerning any of the employees, you will definitely be neck-deep in it as well. Continuing education and constant quality assurance monitoring will help make sure that you have limited items to worry about within the office.
– Would you like to take occasional vacations for more than a few days at a time?
This is a big one. New practice owners seldom get to take more than a day or two here and there. You will need to be generating enough cashflow to pay your loans, new equipment upgrades, fund payroll, rent, etc. Additionally, your employees need to work enough hours in order to pay their own bills or support their family. If you don’t provide enough working hours for your employees, you may find your employees temping at other offices and subject to being recruited away from you if your office is closed for a significant amount of time. There will be several households and families dependent on the decisions you make as an owner.
– Are you skilled in reading profit and loss statements, tax returns, payroll reports, accounts receivable reports, etc.?
If you aren’t, you must educate yourself, because it will require paying close attention to these reports in order to grow your practice. Previous business or management experience will provide you with a big advantage when it comes time to running your own business.
– Do you want to devote time to marketing, bill paying, employee coaching, equipment repair and facility maintenance of your office?
Aside from the knowledge required to do this, there is a large investment in time necessary to accomplish these very important tasks. It’s definitely not for everyone. Regardless of whether or not there is an office manager in place for assistance, you will still need to know the procedures involved for each one of these items, in the event your office manager is ill or suddenly quits. You will need to hone in on becoming a marketing guru, personnel manager, handyman and janitor. And, oh yeah ….be an amazing dentist with high quality and an excellent bedside manner!
– Does the idea of not receiving a paycheck scare you?
Many times as the owner of a new practice, you will receive unexpected repair bills, equipment upgrades, new computer upgrades, patient refunds, and so on. Maybe the schedule is unexpectedly slow or maybe your staff has recently taken costly continuing education. Sometimes it results in the owner not taking any paycheck whatsoever for the month. If that happens to you, do you have the cash savings to pay your bills and maintain your lifestyle?
If you answered yes to a majority of these questions, then you might want to consider remaining an associate. For the most part, you will have a set schedule, you will only be responsible for yourself and not the employees around you, you can take vacations without having to stress about the practice, you do not need to be a skilled business person, nor do you need to become a payroll expert, motivational speaker, repairman, accountant and marketing expert.
While there may be many overwhelming reasons for remaining an associate, there are a tremendous amount of benefits to becoming an owner. In addition to the items discussed above, maybe you should ask yourself the following questions:
– Do you have management, leadership, accounting, or personnel experience from a previous job that would help you excel as a business person?
Some new dentists had previous careers before dental school as managers and business owners that might give them a significant advantage in owning their own dental practice. A previous owner or manager of any type of business with several employees will have a distinct advantage over the student who went straight from an undergraduate program to dental school.
– Would you enjoy the feeling of being in charge of the entire operation?
While this makes some people cringe, others are excited at the thought of being at the helm and steering their office towards excellence and profitability. You have the ability to take your office in any direction desirable. Perhaps you already have an idea on what types of dentistry you would like to perform, the types of decor, the uniform selection … things like that. Maybe you want to employ the use of specialists. Maybe you want to do cosmetics. You can do anything your heart desires as long as your financial resources can support your ideas. The sky’s the limit!
– Do you like the idea of having no limits on income?
This is one of the greatest reasons for owning your own practice. The average associate makes $144,000. While some practice owners don’t make significantly more than that, the top producers can easily take home $500,000 or more, which is nearly impossible to earn as an associate. Some even earn in excess of $1,000,000 per year! While most income as an associate will come from your own production and collections, as an owner, you will be earning money based on the collective work of the group.
If you feel like a leader, have the entrepreneurial spirit and answered yes to most of the above questions, you might want to consider pulling the trigger on the purchase of your own practice. While this decision may require a big investment and excessive involvement in the practice, it will usually pay off tremendously as your practice thrives and experiences success.
In theory, there is no limit on what your practice can earn and what your ultimate profitability will be. If you’re a real entrepreneur, or at least have the spirit of an entrepreneur, then maybe you should consider ownership. You don’t need to be the world’s best dentist, but you need to aspire to be the best. You will need to nurture relationships, be a great decision maker, be a CEO (Chief Everything Officer)—a.k.a. wear many hats—be a great planner, goal setter, money manager and customer service expert. You will need to build and lead an amazing team and become an expert among your peers. You need to invest in yourself and set yourself apart from the competition. You will need to build a rock-solid reputation!
Associateship versus owning your own business has clear pros and cons on both ends of the spectrum. Associateship clearly has the advantage of convenience and a stress-free environment. It takes away fear of the unknown and can even be parlayed into a part-time position. Ownership, on the other hand, is extremely involved and not for the faint of heart. There are limitless opportunities, but along with it comes a certain degree of risk. Whatever you decide, will require a certain degree of soul searching, but in the end, both choices can be incredibly rewarding. Make the call! What will it be?