It Takes Two to Make a Thing Go Right
When it comes to buying a practice there are a few ways you can go about structuring the transaction. Depending on your situation, you can buy as a sole owner or you can buy as a partnership. These buying structures will suit different people for various reasons but they both have advantages and disadvantages. If you’re considering a partnership it’s important to take into account the pros and cons you might experience – ensure it’s the option for you!
The highs and lows of buying a practice as a partnership can sometimes be dependant on variables that you can take control of. Follow these top tips to ensure you start off smoothly:
- Do you share the same goals as your partner? It’s important to consider the suitability of the partnership you’re thinking about – having the same, or similar, goals underpinned by a shared ethos for business will make your journey a whole lot easier.
- Ensure you’re on the same page from day one – carrying out your due diligence with a meticulous level of precision will allow you both to share, discuss, and compromise where necessary when it comes to short and long-term business decisions. Deciding these things early on will help to deter any challenging surprises for the future.
- If you’re sure the business partner is suitable, it’s essential to draw up a partnership agreement as soon as possible. Understanding and delegating liabilities and expectations within the partnership should make working together a breeze.
The Benefits of a Partnership
The Financial Gain
When it comes to applying for a loan, two people are going to make you more desirable to banks. Buying as a partnership could also mean the banks are more inclined to lend a larger sum of money and you could end up buying a larger practice than you may otherwise have been able to. Two people working together increases the chance of success for the business and this puts banks at ease, especially if both parties are in a good financial position from the outset.
Financial costs will be split too. This includes the deposit, legal fees, valuation costs, and any other monetary responsibilities you may incur. You may also have more cashflow compared to if you weren’t buying as a partnership because more major earners in the business means more revenue.
It’s Not all on You!
Buying in a partnership will take some of the pressure off of the individuals involved. Most people are aware than running any kind of business can be incredibly stressful; managing work load and staff can feel overwhelming even when things are going well. However, when you work with a business partner you can share these responsibilities and make decisions together – working as a team will bring to light decisions and ideas that you may not have considered alone.
Expand Your Business
Another great benefit that could come from buying in a partnership is that you can enhance your dental practice to offer a great variety of treatments. You and your partner may want to take your career in different directions – one could want to pursue implants while another could be more interested in orthodontics, for example, and offering such a range of treatments would increase your appeal to a wider range of patients.
Sometimes splitting the cost of a deposit won’t make a deal work. One partner may have to consider putting down more of a deposit than the other, or the bank could ask for personal assets – such as property – to be pledged as security. If only one partner can offer this it can cause complications. In these instances, it’s important to consider how this changes the amount of responsibility and authority each partner has. It’s important for partners to have clear boundaries that are maintained as part of a contract. All of these things can be worked out but reaching a conclusion could take some time depending on everyone’s views.
Sometimes even the best of partners disagree on a business decision. When a resolution can’t be reached quickly it can cause friction between partners and this can be especially difficult if the partner is a family member or friend. You should anticipate these things happening in this kind of venture and be prepared to handle them professionally.
Word of Mouth
As everything in this buying structure is shared it means that mistakes will be shared too. If your partner makes a mistake, business or clinical, it could affect the reputation of the practice, income, and business value for the future. Consider how powerful word of mouth is and whether your partner upholds the reputation you want too. Dental Elite can help you make this kind of decision, especially are they are the experts. They will work with you from beginning to end of your buying journey to ensure that you receive the best deal in a way that is as efficient and stress free as possible.
There’s all this and more to consider when making this kind of decision. Get in touch today and find out more about how a partnership model can suit you!