Starting your Dental Career

Financial Planning Dentist

How can you get to the point where you’re ready to own your own dentist practice and begin starting your dental career.

You’re a freshly minted DDS or DMD and you’re feeling great. Finally you can start making some money and living your best life. You have plenty of options from an employer standpoint but you also have a dream of owning your own dental practice. This crossroad is a pivotal one. One that can shape what the next handful of years look like. The idea of taking on more debt makes you sick but so does working for someone else that doesn’t share your vision. 

As a young dentist you’re just trying to pay their bills and be in a more stable environment so you can provide yourself a reasonable lifestyle. If you live in a place you anticipate being for more than 3-5 years then you may even be considering purchasing a home. But regardless of your short term desires for the type of lifestyle you want your next decision is crucial to starting your dental career.

Let’s consider the pros and cons of both working for a well established dental practice and owning your own. 

When you graduate the first thing you want to do is get an income, a place, and a car. You may want to go out to more dinners and drinks with friends because you’re finally free. You’ve worked incredibly hard and dedicated yourself to studying and working for a number of years and it’s time to enjoy some financial freedom. Joining a well established practice is a great decision for those that dont have the entrepreneurial mindset and want to be great dentists without the added responsibilities of owning something. You can collect a nice income almost immediately and start doing the things you’ve always wanted to do. With a great starting income and benefits this path is actually a great place to be.

For a lot of dentists, you can pick your own hours, not work 40 hours, and have no responsibilities outside of continuing education and being a great employee. In fact, for the majority of people, this is the path to choose. Starting salaries for an associate dentist is usually between $100,000-$150,000 which is a very comfortable lifestyle. If you’re a diligent saver and frugal spender, in the long run you may be financially better off as you know how to live within your means. 

For those that went through school and thought that working for someone else wasn’t for them and owning a practice was the way to go, the decision to start your own practice and starting your dental career is both easy and daunting. 

If your goal is to build a lot of wealth and be your own boss then you should consider owning your own practice. However, this decision should not be taken lightly. The biggest mistake I see small business owners make is the decision to branch off on your own because they’re simply good at what they do. Unfortunately, being good at something doesn’t make you a CEO. Every year, over 1 million individuals in the U.S. start a business and at the end of the year at least 40% of them have failed, and if that’s not already bad, 80% within 5 years fail. If you think the odds aren’t too bad, of that remaining bunch, over the next five years 80% of them fail. 

Running a business takes a lot of effort but when done correctly offer some of the greatest benefits the business world has to offer. There is a reason that the wealthiest people in the world are business owners that took a big risk but took the right steps along the way to be successful. So, if your mindset isn’t a growth mindset with a long term goal to become wealthy personally or financially or both then making this leap might not be for you. The average dentist start-up losses $5,000 in the first year. 

Graduating dentists are typically focused on getting rid of debt due to a lack of information and the group think mentality. This unfortunately leads a large number of people that are highly skilled and creative to not start their own business. Professors and parents throughout your life tell you to get a good education so you can get a good job. For leaders, this can be some of the best and worst advice you can get. Getting a job and making a career are different. My advice is to not let debt drive your decision. 

*Read our article or listen to our podcast on debt and the difference between accretive and erosive debt.

Graduating dentists have the option with how they pay their debt off when they graduate. Taking the time to run an analysis is imperative before making this decision and a financial planner can help with this decision. Just because you don’t have assets does not mean you should not hire a planner. In fact, it’s probably the best decision you can make as the long term effects it can have can define the type of life you live later in life. Although we understand that it’s extremely difficult to think about retirement when you’re 21 years old. 

Most graduates will choose an income based repayment plan. This means you will pay 10-15% of current income towards your debt. So for those entrepreneurs who chose starting your dental career and run their own business practice, you essentially have permission to pause those payments if you make little to no money.

Easiest way to deal with student loans is to make a lot of money. If a dentist is really driven, productive, patients say yes to them, they’re ready to take responsibility, then they can do just that. To start your own practice you’ll need roughly $500,000. This is the daunting part but if you don’t make a couple of bad decisions right out of school then you can set yourself up for success. 

Those “bad decisions” mean buying a new car or even a new house. In order to get qualified for a large loan, you need good income (more = better), good production at your current job (banks care), good credit, a manageable debt burden, and low monthly expenses. When you have good experience or are a specialized dentist then it becomes easier. So when you first graduate it’s important to not set yourself up for failure by taking on more debt. Find a roommate or inexpensive rental property, get a job, then apply for a loan shortly after to start your own practice. This doesn’t have to be a long term commitment but the best thing you can do for yourself is to not make it harder to get a loan when it’s already hard enough. Now buying a home is usually accretive debt and we are advocates of that type of debt but not until you get a loan to start your practice. Most banks have very little concern about offering a loan to a dentist as there is little risk in that type of career. 

Now some of you may be thinking that you can or would like to buy an existing practice. Just be aware of some potential red flags that may present themselves.

  • Bad marketing may be one but it can also be an opportunity if you have experience marketing 
  • Financial reports are a mess (after audit) there is no rhyme or reason as to what’s going on
  • High production and low patient flow, a young dentist cannot repeat, might be a dentist that’s been there for 30 years
  • Seller dentist that wants to stay on; however, the practice can’t support keeping them on financially. Don’t view keeping them on as a safety net. Realize the seller is eating up income and may be a barrier to change
  • A non-profitable dentist practice, doing $300,000 in collections, and you have to bank on the fact that you can turn things around
  • Don’t get into a fixer upper (* There aren’t a lot of great practices for sale). If it’s only $200,000 to buy it and you think since you’re already ready in an area you want to live it’s a great opportunity you may go from having a job and making a good paycheck, to going bankrupt trying to fix something that’s broken 

This all may sound scary, and you may be thinking that maybe you should just stay in your current job, but that’s not the goal of this article. The goal is for you to know what to expect before jumping into something and know the different paths you can take. Hiring a financial planner or professional that specializes in working with Dentists is a great starting point to help you know what you’re getting into so you can feel better about next steps.

Sounds like a congratulations on starting your dental career are in order.


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