Dental Business Plan Template
Written by Dave Lavinsky
Over the past 20+ years, we have helped over 2,000 dentists create business plans to start and grow their dental practices. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through a dental business plan template step-by-step so you can create your plan today.
Download our Ultimate Business Plan Template here
What Is a Business Plan?
A business plan provides a snapshot of your dental business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.
Why Dentists Need a Business Plan
If you’re looking to start a dental practice or grow your existing dental business you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your dental business in order to improve your chances of success. Your dental business plan is a living document that should be updated annually as your company grows and changes.
Sources of Funding for Dental Practices
With regards to funding, the main sources of funding for a dental practice are credit cards, personal savings, bank loans and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable. But they will want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business.
Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding, or, like a bank, they will give you a loan.
Your business plan should include 10 sections as follows:
Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.
The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of dental practice you are operating and the status; for example, are you a startup, do you have a dental practice that you would like to grow, or are you operating a chain of dental offices.
Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the dental industry. Discuss the type of dental business you are operating. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.
In your company analysis, you will detail the type of dental business you are operating.
For example, you might operate one of the following types:
- General Dentist : this type of dentist will stick mostly to restorative dentistry and hygiene care in their office. This includes, but is not limited to, initial and emergency exams, including oral cancer screenings, cleanings and periodic hygiene exams, gum treatments for gum disease, white fillings to repair decayed or broken teeth, porcelain crowns, bridges and veneers, implant porcelain crowns and teeth whitening.
- Periodontist : this type of dentist focuses on problems that patients have with their gums, bone and tissues which support the teeth.
- Endodontist : this type of dentist is also known as a root canal specialist.
- Orthodontist : this type of dentist does braces on kids and adults to straighten their teeth, as well as dentofacial orthopedics.
- Pedodontist or Pediatric Dentist : this type of dentist specializes in treating children.
In addition to explaining the type of dental business you operate, the Company Analysis section of your business plan needs to provide background on the business.
Include answers to question such as:
- When and why did you start the business?
- What milestones have you achieved to date? Milestones could include sales goals you’ve reached, new clinic openings, etc.
- Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.
In your industry analysis, you need to provide an overview of the dental industry.
While this may seem unnecessary, it serves multiple purposes.
First, researching the dental industry educates you. It helps you understand the market in which you are operating.
Secondly, market research can improve your strategy particularly if your research identifies market trends. For example, if there was a trend towards cosmetic dentistry, it would be helpful to ensure your plan calls for plenty of cosmetic procedure options.
The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.
The following questions should be answered in the industry analysis section of your dental business plan:
- How big is the dental industry (in dollars)?
- Is the market declining or increasing?
- Who are the key competitors in the market?
- Who are the key suppliers in the market?
- What trends are affecting the industry?
- What is the industry’s growth forecast over the next 5 – 10 years?
- What is the relevant market size? That is, how big is the potential market for your dental practice. You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.
The customer analysis section of your dental business plan must detail the customers you serve and/or expect to serve.
The following are examples of customer segments: adults, children, teens, elderly, etc.
As you can imagine, the customer segment(s) you choose will have a great impact on the type of dental business you operate. Clearly adults would want a different atmosphere and product options, and would respond to different marketing promotions than teens.
Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve. Because most dental practices primarily serve customers living in their same city or town, such demographic information is easy to find on government websites.
Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.
Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.
Direct competitors are other dental businesses.
Indirect competitors are other options that customers have to purchase from that aren’t direct competitors. This includes federal agencies who provide direct services to military personnel or disadvantaged populations, and nonprofit providers . You need to mention such competition to show you understand that not everyone who seeks dental services will choose a private dental practice.
With regards to direct competition, you want to detail the other dentists with which you compete. Most likely, your direct competitors will be dental practices located very close to your location.
For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:
- What types of patients do they serve?
- What products do they offer?
- What is their pricing (premium, low, etc.)?
- What are they good at?
- What are their weaknesses?
With regards to the last two questions, think about your answers from the customers’ perspective.
The final part of your competitive analysis section is to document your areas of competitive advantage. For example:
- Will you provide superior dental services?
- Will you provide dental services that your competitors don’t offer?
- Will you make it easier or faster for customers to make an appointment?
- Will you provide better customer service?
- Will you offer better pricing?
Think about ways you will outperform your competition and document them in this section of your plan.
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a dental practice plan, your marketing plan should include the following:
Product : in the product section you should reiterate the type of dental practice that you documented in your Company Analysis. Then, detail the specific products you will be offering. For example, in addition to general dentistry, will you offer cosmetic procedures?
Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the services you offer and their prices.
Place : Place refers to the location of your dental practice. Document your location and mention how the location will impact your success. For example, is your practice located in a medical office building, in a commercial area, etc. Discuss how your location might provide a steady stream of customers.
Promotions : the final part of your dental business marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:
- Advertising in local papers and magazines
- Reaching out to local bloggers and websites
- Social media advertising
- Local radio advertising
- Banner ads at local venues
While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your dental business such as serving patients, procuring supplies, keeping the office clean, etc.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to serve your 1,000th patient, or when you hope to reach $X in sales. It could also be when you expect to hire your Xth employee or launch a new location.
To demonstrate your dental practice’s ability to succeed as a business, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally you and/or your team members have direct experience in the dental business. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in dental practices and/or successfully running small businesses.
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.
Income Statement : an income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.
In developing your income statement, you need to devise assumptions. For example, will you serve 20 patients per day or 50? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
Balance Sheets : While balance sheets include much information, to simplify them to the key items you need to know about, balance sheets show your assets and liabilities. For instance, if you spend $100,000 on building out your dental office, that will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $100.000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.
Cash Flow Statement : Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.
In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a dental business:
- Location build-out including design fees, construction, etc.
- Cost of equipment like radiographs, dental chairs, dental instruments, computers, software, etc.
- Cost of maintaining an adequate amount of supplies
- Payroll or salaries paid to staff
- Business insurance
- Taxes and permits
- Legal expenses
Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your office design blueprint or location lease.
Dental Business Plan Summary
Putting together a business plan for your dental practice is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the dental business, your competition and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful dental practice.
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How to Write a Dental Practice Business Plan: Complete Guide
- January 22, 2023
👇 Check all our resources on dental practices 👇
Whether you’re looking to raise funding from private investors or to get a loan from a bank (like a SBA loan) for your dental practice, first you will need to prepare a solid business plan.
In this article we go through, step-by-step, all the different sections you need in the business plan of your dental practice. Use this template to create a complete, clear and solid business plan that get you funded.
1. Dental Practice Executive Summary
The executive summary of a business plan gives a sneak peek of the information about your business plan to lenders and/or investors.
If the information you provide here is not concise, informative, and scannable, potential lenders and investors will lose interest.
Though the executive summary is the first and the most important section, it should normally be the last section you write because it will have the summary of different sections included in the entire plan.
Why do you need a business plan for a dental practice?
The purpose of a business plan is to secure funding through one of the following channels:
- Obtain bank financing or secure a loan from other lenders (such as a SBA loan )
- Obtain private investments from investment funds, angel investors, etc.
- Obtain a public or a private grant
How to write your dental practice’s executive summary?
Provide a precise and high-level summary of every section that you have included in the business plan of your dental practice. The information and the data you include in this segment should grab the attention of potential investors and lenders immediately.
Also make sure that the executive summary doesn’t exceed 2 pages in total: it’s supposed to be a summary for investors and lenders who don’t have time to scroll through 40-50 pages, so keep it short and brief.
The executive summary usually consists of 5 major sub-sections:
- Business overview : start by introducing your dental practice, where it is located, how big it is (space and number of dentists). Also mention the services and treatments you offer (if you have any specialty e.g. orthodontics for example), the average prices of treatments, whether they are typically reimbursed or not and to which extent. Finally, add the capacity of your clinic so investors and lenders get an idea of the size of your business before jumping in your financials later (the maximum number of clients you can receive in a day or a week).
- Market analysis : summarise the market where you will operate and provide a brief about the target audience (age, demographics), market size, competitors, etc. No need to provide granular data here, save it for the Market Overview section later on (or the appendix).
- People : hiring goes beyond the medical staff for a dental practice. Indeed, if you open a private practice, you may also need a receptionist, a cleaner, and other support staff members. And if you are partnering with other medical professionals, mention every individual’s role in the setup as well as their experience.
- Financial plan : how much profit and revenue do you expect in the next 5 years? When will you reach the break-even point and start making profits? You can include here a chart depicting your key financials such as revenue, gross profits, and net profit
- Funding ask : what loan/investment/grant are you seeking? How much do you need? How long will this last?
Dental Practice Financial Model
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2. Dental Practice Business Overview
The business overview section is where you go into details about your dental practice. A few examples of questions you should answer here include:
- Why are you starting a dental practice in your area now?
- What’s the location, and why did you choose it?
- What dental services (or products) will you offer? Do you have any specialty (e.g. orthodontics)?
- What will be your operating hours? days?
- How many dentists will operate in your clinic? Any specialist(s)?
- What is your target market (youngsters, young professionals, retirees, etc.)?
- How many patients can you take care of at the same time (how many rooms are there)?
- What will be the legal structure of your dental practice?
Let’s look at different subsections that you must include:
a) History of the Project
Any business overview must start with explaining the history of the project. There are 2 components here:
- Passion & experience of the business owner
- Rationale behind starting a dental practice today
Passion & experience
You may or may not have prior experience working in the dental industry. So, make it clear in this section to help clients understand what to expect from your practice. Of course, prior experience gives you an edge over your competitors, showing the clients why they should choose your practice over the rest.
Most often, dentists working in clinics decide to start their own dental practices. Yet it isn’t always the case: if you have entrepreneurial experience and a background in the dental industry (but not necessarily a dentist), you may want to start a dental practice. If the latter though, you will likely start either a franchise or a large clinic (as you may struggle to cover you own salary with a small independent clinic instead).
What justifies your decision to open a dental practice in that location today? For example, if there’s a scarcity of dental practices offering cosmetic fillings in the area, you could jump into the opportunity to fill the gap.
b) Business Model
This section outlines the model you intend to adopt when running the business. It should answer the following questions;
- Will you start an independent dental practice or partner with an existing facility?
- Will you target the general population or a specific age group (children vs. adults)?
- Will you offer specialty treatments (e.g. orthodontics, surgery) or general dentistry consultations and treatments instead?
What are the different types of business models for dental practices?
Some of the most common dental practices include:
- Sole Proprietorship-Single Ownership
This is the simplest model of starting and operating a dental practice. In this form of ownership, you only need a single personal tax return, making it easy to operate and maintain your clinic. Dental practices established under sole proprietorship are typically independent and small clinics.
- Single Owner-Professional Corporation (PC)
Alternatively, you can incorporate your dental practice and enjoy the potential benefits like low tax rates and faster debt clearance. Remember, this model also suits associates willing to incorporate their businesses with other dentists acting as partners.
- Joint Ownership
In this practice model, two or more dentists collaborate to form a practice. Usually, this type of arrangement works between a small number of individuals working towards the same goal. This is the most common form of dental practice.
Joint ownership has a few advantages, like low startup costs and reduced administrative burden. Also, patients visiting the practice can be shared amongst the practicing dentists, with revenue divided proportionally amongst the partners.
With joint ownership becoming less common, many dentists opt for cost-sharing models. Here, the partnering dentists maintain their independence while sharing some expenses. The nature and type of shared expenses vary but may include equipment purchases, administrative expenses, and rent.
c) Products & Services
The dental services you offer will depend on the size of your practice and the business model. You should highlight this clearly to give the investors a sneak peek of your establishment. Here are a few examples of the treatments you can offer to your patients:
- Cosmetic fillings
- Dental cleanings
- Root canal therapy
- Dental sealants
- Teeth extractions
- Teeth whitening
- Dental veneers
- Dental crowns
- Dental bonding
- Preventive care
d) Pricing Strategy
This section explains the pricing structure you will use in your dental practice. Indeed, the prices of dental services vary by type and complexity. Of course, your rates should reflect what other dental offices in the area offer.
For example, a fully-fledged dental practice charges anywhere between $600 and $4,500 on dental services in the US. So, you may want to use that as your benchmark.
We strongly recommend you use here (or in your appendix) a pricing table of all your services and treatments along with the prices.
Along with the prices, make it clear whether the treatments are reimbursed by Medicare/Medicaid, the largest health insurance providers and to what extent. This will give investors and lenders (who aren’t necessarily experts in dental treatments) a good idea whether these treatments are affordable (or not) for your patients.
Also, it will allow them to tie your prices into the financial projections later on (see more on that later).
e) Legal Structure
Finally, your business overview section should specify what type of business structure you want. Is this a corporation or a partnership (LLC)? Who are the investors? How much equity percentage do they own? Is there a Board of Directors? If so, whom? Do they have experience in the industry?
3. Dental Practice Market Overview
A thorough understanding of the market is just as important as the location. By understanding the target audience, you will know which services to offer, depending on the demands of the population.
At the very least, the market overview section of your dental practice business plan should address the following;
- Dental practice status quo : how big is the dental industry in your region? What is the growth rate? And what are the factors influencing its growth or decline in the region?
- Competition overview: how many dental practices are in the region? How do they compare to your setup? How can you outshine them?
- Customer analysis: who exactly is your target audience? What type of dental services do they need? How often do they need dental services? How much are they willing to spend on dental services on average?
a) Dental Practice Industry Status Quo
How big is the dental practice industry in the us.
The dental practice industry in the US is estimated to be $162 billion in 2022.
Also, according to the latest reports, there are approximately 191,497 dental offices in the US: that’s an average annual turnover of approximately $850,000 per dental practice.
The major driving force behind the rapid growth is the increased consumer expenditure on healthcare services.
How big is the dental practice industry in your area?
After getting a clear picture of the dental industry in the US as a whole, narrow down to your location. It’s very likely that you won’t find the number anywhere (at least not for free). In that case, you can use our guide to estimate the TAM, SAM, and SOM for your business. Here is an example of how to do it below:
For instance, let’s assume there are 50 dental practices in the city where you want to operate. Because each has an average annual revenue of $850,000, it’s safe to assume that the dental practice industry is worth $42,500,000 in your city.
How fast is the dental practice industry growing in your city?
As part of the market overview, you should also estimate the growth rate of the dental industry in your region. Here, you can rely on the number of practices if you can’t find this information online (which you likely won’t).
For example, if the area had 45 dental offices in 2020 and 50 in 2022, the average annual growth rate would be 5.4%.
b) Competition Overview
Understanding who are your competitors and their strengths and weaknesses is very important for you to succeed in this industry. For example, patients might be looking for treatments and services existing dental practices cannot offer: this is where you could have an edge.
Start by understanding the services offered by your competitors, their marketing strategies, and their pricing structure. If all dental practices offer the same services, then what are their marketing strategies and revenue potential?
Here, you should add a comparative table after doing your research to give the lenders and investors the best possible overview of your main competitors.
c) Customer Analysis
This is where you should describe your target audience. A few factors to consider when breaking down this section include:
- Demographic data (age and gender distribution)
- Frequency of visits to dental practices
- Average monthly income
- Average expenses on dental services per visit (or per year)
- Most common types of treatments
4. Sales & Marketing Strategy
Discuss your marketing strategy at this point. You will be good to go if you can answer the following questions:
- Which marketing strategies will you use to acquire new customers?
- How will you track the success of the chosen marketing strategies?
- What will be your marketing budget?
- What are your unique selling points (USPs)?
- Will you include any offers or promotions to attract new clients?
What marketing channels do dental practices use?
Like any new business, you will need to invest significantly in marketing in the first few months / years to attract new customers, including from your competitors.
A few typical marketing channels for dental practice are:
- Word of mouth, recommendations
- Online local listing (Google Reviews)
- Social media content & ads
- Search ads (Google Ads)
Note: Be careful when choosing a marketing channel for your dental practice. Besides being appropriate, the chosen strategy must be ethical: unlike other businesses, medical services have very stringent limitations when it comes to marketing, which can change state by state. Make sure you check with a lawyer before you go ahead.
What are Your Unique Selling Points (USPs)?
In other words, how do you differentiate yourself vs. competitors?
This is very important to point out to investors and/or lenders your USPs as you will very likely need to win customers from competitors. A few examples of USPs for dental practices are:
- Quality of services
- Affordable treatments
- Promotions and discounts (for example, discount on the first(s) consultation(s) when there are a series of checkups and treatments later on)
- Location: your dental practice may be located closer to your patients vs. competitors
5. Management & People
You must address 2 things here:
- The management team and their experience/track record
- The organizational structure : different team members and who reports to whom?
Small businesses often fail because of managerial weaknesses. Thus, having a strong management team is vital. Highlight the experience and education of the other dentists that you intend to hire to oversee your dental practice.
For the dentists and general partners, describe their duties, responsibilities, and roles. Also, highlight their previous experience and track record.
For the receptionists, personal assistants, office managers, dental assistants, etc. no need to go into a lot of detail, especially as it’s likely you won’t have hired them yet before you get the funding you need, which is the objective of this business plan.
b) Organization Structure
Even if you haven’t already hired anyone yet, you must provide here a chart of the organizational structure defining the hierarchy of reporting.
6. Financial Plan
The financial plan is perhaps, with the executive summary, the most important section of any business plan for a dental practice.
Indeed, a solid financial plan tells lenders that your business is viable and can repay the loan you need from them. If you’re looking to raise equity from private investors, a solid financial plan will prove them your dental practice is an attractive investment.
There should be 2 sections to your financial plan section:
- The startup costs of your dental practice
- The 5-year financial projections
a) Startup Costs
Before we expand on 5-year financial projections in the following section, it’s always best practice to start with listing the startup costs of your project. For a dental practice, startup costs are all the expenses you incur before you open your clinic and start treating patients. These expenses typically are: the lease for the space, the renovation costs, the equipment and furniture.
Logically, the startup costs vary depending on the size of your clinic, the treatments you will offer (and therefore the equipment you need), the quality of the equipment and furniture, whether you buy the real estate or rent a commercial space, etc.
On average, it costs $170,000 to $550,000 to open a general dental practice with 2 dentists in the US.
Note that these costs are for illustrative purposes and may not be fully relevant for your business. For more information on how much it costs to open and run a dental practice, read our article here .
b) Financial Projections
In addition to startup costs, you will now need to build a solid 5-year financial model for your dental practice business plan.
Your financial projections should be built using a spreadsheet (e.g. Excel or Google Sheets) and presented in the form of tables and charts.
As usual, keep it concise here and save details (for example detailed financial statements, financial metrics, key assumptions used for the projections) for the appendix instead.
Your financial projections should answer at least the following questions:
- How much revenue do you expect to generate over the next 5 years?
- When do you expect to break even?
- How much cash will you burn until you get there?
- What’s the impact of a change in pricing (say 15%) on your margins?
- What is your average customer acquisition cost?
You should include here your 3 financial statements (income statement, balance sheet and cash flow statement). This means you must forecast:
- The number of patients over time ;
- Your expected revenue ;
- Operating costs to run the business ;
- Any other cash flow items (e.g. capex, debt repayment, etc.).
When projecting your revenue, make sure to sensitize pricing, cost of raw materials (medical supplies) and the number of patients you will care for. Indeed, a small change in these assumptions may have a significant impact on your revenues and profits.
7. Funding Ask
This is the last section of the business plan of your dental practice. Now that we have explained what your dental practice’s business model is, the treatments you offer, your marketing strategy, etc., this section must now answer the following questions:
- How much funding do you need?
- What financial instrument(s) do you need: is this equity or debt, or even a free-money public grant?
- How long will this funding last?
- Where else does the money come from? If you apply for a SBA loan for example, where does the other part of the investment come from (your own capital, private investors?)
If you raise debt:
- What percentage of the total funding the loan represents?
- What is the corresponding Debt Service Coverage Ratio ?
If you raise equity
- What percentage ownership are you selling as part of this funding round?
- What is the corresponding valuation of your business?
Use of Funds
Any dental practice business plan should include a clear use of funds section. This is where you explain how the money will be spent.
Will you spend most of the loan / investment in paying your employees’ salaries? Or will it cover mostly the cost for the lease deposit and the renovation of the building?
Those are very important questions you should be able to answer in the blink of an eye. Don’t worry, this should come straight from your financial projections. If you’ve built solid projections like in our dental practice financial model template , you won’t have any issues answering these questions.
For the use of funds, we also recommend using a pie chart like the one we have in our financial model template where we outline the main expenses categories as shown below.
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Dental Business Plans 101
Ready to create a business plan for your dental practice? The good news is that you can follow the same general guidelines as other small businesses.
Before you begin, ask yourself these key questions:
- Can you describe your potential dental practice in detail?
- Do you have an actionable marketing plan?
- Who is in the market? What are they doing right - or wrong?
- What pricing and payment policies are you considering?
- What’s your growth strategy?
Download Supporting Materials (Free for ADA members) Components of a Business Plan
Existing dental practices may also need to update their business plans, especially if they want to expand.
An updated plan needs:
- Your dental practice’s financial position
- Your current debt, if any
- Updated lender information and terms
- A recent financial comparison with similar businesses
- An analysis of your current costs and your “break-even” point
How to Create a Business Plan for Your Dental Practice
Creating an effective business plan is essential for any business’s success—including dental practices. Business plans provide detailed information that helps businesses forge a path towards long-term growth and success. Such information may regard market analysis, marketing, cash flow projection, competitive analysis, and other relevant business information. By determining such information and crafting a plan, businesses can focus on the actionable steps necessary to turn their goals into a reality and achieve their short- and long-term objectives. As such, business plans are an invaluable strategic tool that all businesses should take the time to carefully craft. To learn how to create a business plan for your dental practice, continue reading.
The executive summary is an essential aspect of any business plan. It is a short section that summarizes the entirety of your business plan in a way that allows readers to quickly become acquainted with the key points and its main purpose. Typically, your executive summary should not exceed two pages.
This section is especially important when it comes to approaching lenders. It should entice the potential lender to help you receive the funding you need to get your practice up and running. Therefore, your executive summary should be written in a way that is persuasive and compelling. Let the lender know how you intend to make your business a success and express the vision of your practice.
While the executive summary will be included as the first section of your business plan, it should be the last area that you write. Because the executive summary is a compilation of all other areas of your business plan, you must have already flushed out such details before writing it.
Description of products and services
This section should provide information regarding the products and services that your dental practice offers. If you are acquiring an existing practice, make sure to detail any major changes that will be made to the products and services that were being offered by the previous practice owner. For example, if you are planning on offering additional services that the current owner is not offering, mention them here.
When creating a business plan for your dental practice, you should also include a section that details how it will be managed. In this section, detail information about the type of business structure your practice will have. For example, you should determine if your practice will be structured as a partnership, corporation, or sole proprietorship.
This section should also include a list of the management personnel and professional advisers that will comprise your team, such as financial partners, insurance agents, real estate advisors, attorneys, and business associates. In addition to compiling a list of key management professionals, you should provide further information on their job responsibilities. Such information will help prove to business lenders that you have a plan for how your office will function and that you have the necessary support system to be successful.
Competitive analysis and marketing strategy
In this section, you should include data on what your competition is doing regarding their online presence, digital content, SEO rankings, and other relevant data. Upon detailing the state of your competitor’s marketing efforts, you should then detail your own marketing plan.
Here, you should first provide an overview of your intended market and your target patient. Include information on their income level, age, and lifestyle. If you target patient is similar to that of a competing dental practice in the area, clearly state how you intend to set your practice apart from your competition and maintain a consistent customer base.
In addition, you should also detail a content map and provide information regarding your website design. If your practice will be taking a different approach from other competitors, note it in your strategy and clearly provide a rationale as to why.
One of the most important sections in your business plan is the financial plan. This section will be of chief interest to potential lenders, as it will help them make an informed business decision regarding whether they can approve your loan proposal. As such, it should be carefully planned and written in great detail. Here, you should list a variety of relevant financial information, such as the following:
- Projected income of your practice for the initial 12- through 24-month period
- Cash flow forecast
- Personal financial statement
- Information on how startup funds will be allocated
- Total funds required by your practice for the following two years
- Offered collateral
- Historical financial analysis
Supporting financial documents
In addition to the above information, you should also provide the necessary supporting documents that potential dental lenders can review when making their decision. If you are undergoing a dental practice acquisition , many of the necessary documents will be provided by the selling dentist. However, you will have to prepare some of them. Such financial documents to provide in this section may include:
- Present business financial statements
- Recent copy of your credit report
- Copy of current aging schedule
- Three years of historical financial statements, individual income tax returns, and business income tax returns
- Current personal financial statement
- Prospective financials for five years such as forecasts, cash flows, and projections
Such financial documents should be 90-days old or less to be considered current under lending guidelines.
In the financial section of your business plan, you should also provide information that displays you have accounted for the impact of financial influences. Such influences may include business cycles, competition, the economy, seasonal variations, and other events that may impact your practice’s finances. All other information included in your financial plan should account for such influences.
The operations section will likely be the last and longest section of your business plan. Here, you will get into the nitty-gritty details the day-to-day operations that occur at your practice. You should provide information regarding the following information to provide lenders with a clear picture of how your practice will function:
- Office hours
- Days of operation
- Necessary equipment and supplies
- Major suppliers you plan to source equipment from
- Equipment-maintenance schedules
- Ideal patient flow
- Dental insurances you do and do not accept
Henry Schein Professional Practice Transitions is the leader in dental practice sales and transitions. Whether you are purchasing or selling a practice, we can help you through every step of the process. Thanks to our extensive marketing resources, national network of dental transition consultants, and superior hands-on client services, your dental practice transition is sure to be as advantageous as possible. To get started on the transition process, schedule a free 30-minute phone consultation with Henry Schein Professional Practice Transitions today.
- Read Time: 7 mins
- May 5, 2021
How to write a business plan for your dental practice
- Read Time: 7 min
The Floss / For Dentists / How to write a business plan for your dental practice
A business plan. Your practice simply has to have one. It’s going to lay out all the detailed information that helps you set your practice on the road to success. It’ll include market analysis, a marketing plan, competitive analysis, cash flow projections, and more.
In essence, a business plan allows you to track, monitor, and evaluate the progress of your practice over a period of time. It allows you to gauge how your practice is progressing against your original projections for your business. This, in turn, will make it easier to make an objective evaluation of your practice’s progress.
And it functions as an essential marketing document. It helps show stakeholders in your business that your practice is sustainable and worth investing in, whether that investment is monetary or time-based.
Your business plan should be a living document. As you gain experience and achieve goals, the plan should be modified to reflect changing goals and knowledge you have gained during the time the practice has been in operation.
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Business plans provide you with a detailed guideline on what steps you need to follow in order to ensure your practice is a success and that it achieves both your short-term and long-term goals. They are an invaluable strategic tool that every dental plan should carefully consider and craft before opening their business.
Each individual business plan will be unique to you and your business. However, here are some guidelines you can follow to make the process of creating your business plan easier. Some basic elements any business plan should incorporate include:
The executive summary is perhaps one of the most essential parts of the plan. It’s a short section at the start of the plan that summarizes the plan as a whole. Typically, this section is one to two pages in length.
Some elements that should be summarized as part of the executive summary are:
- Legal structure : Key to establishing your practice, determine what type of business it will be. If you’re setting up a partnership, this section should also include percentage ownership of each partner. Other elements that you should mention include resources like attorneys and accountants who will be part of your support team.
- Services provided : Explain which dental services you will be providing in your practice. This section will also clarify what your practice’s unique value proposition will be — what sets it apart from those of your competitors and other dentists near you .
- Goals : List the overall goals of your practice by priority. You should start with the mission statement and then list out the specific goals.
- Market analysis : An analysis of the dental landscape in your area and your practice’s ability to meet your identified needs.
- Marketing strategy : A quick summary of which strategies you will be employing. This section should be a response to the market analysis, and you should go into more detail in the marketing plan part of the business plan.
- Break-even point : This will also be part of the financial plan and analyses how viable your practice is at the current time.
- Operations plan summary : Summarize what systems you have in place in order to increase the growth of your practice. You will need to go into more detail in the operations plan section.
- Organizational / staffing structure : A summary of how many staff you have, their responsibilities and roles, and a forecast of personnel needs.
This section is key when you approach lenders for loans. It should be enticing to potential lenders and explain how you plan to make your practice a success. Therefore, it should be persuasive and compelling.
While this section goes at the start of your plan, you should write it last. This is because it is a summary of the rest of the plan, and you will need to have a detailed plan completed before you can write it.
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Description of products and services
In this section, you should elaborate on the types of services your practice will provide patients. Explain whether specialty services will be performed in-house or will be referred to outside practices and doctors.
If you’re acquiring an existing practice as opposed to opening a new one, clarify any changes you’ll be implementing to the products and services the practice is already offering.
This is where you detail the operational systems that will help you run your practice, meet your goals, and measure how effective you are at achieving your aims.
It will describe how you will procure the products needed to keep the business running, what personnel will be part of your business, and how you will manage your inventory. You’ll also detail factors like hours of operation, any licenses and permits you’ll require before opening, dental insurances that your practice will and will not accept, schedule for equipment maintenance, and so on.
One of the most important parts of your operations plan is detailing a one-year action plan. This will serve as a template for you to follow and help you detail what steps you need to take to ensure your plan is a success.
This section is the ‘nuts-and-bolts’ part of your plan and is likely to be the longest section of your business plan. Managing operations efficiently helps increase profitability and decrease stress. Without an efficient operations plan, you will find meeting objectives and goals a challenging task.
Market analysis and marketing plan
This is where you’ll document data on how your competitors operate. Some parts of your competitors’ practices you may want to look at include their online presence, SEO rankings, how they manage their digital content, and any other marketing efforts you think is relevant.
Once you have conducted a market analysis of your competitors, you’ll also need to document your own marketing plan. Elements you should include as part of your plan include an overview of your intended market and the type of patients you plan to target, their income level, age, and lifestyle.
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You should also clearly set out how you plan to set your business apart from competitors and maintain your own customer base. For example, if you operate in close proximity to another dental practice, how will you ensure patients looking to find a dentist visit your practice over that of your competitor?
Make sure to conduct a SWOT analysis. This is an analysis of your practice’s strengths and weaknesses, as well as the market opportunities you can take advantage of and the threats that your practice faces. This will help you better personalize your marketing plan to your goals while also considering outside factors that could hinder those goals and detailing how you will overcome those issues.
Your marketing strategy should focus on developing awareness of your practice amongst prospective patients. This will include the use of internal marketing (brochures, posters, newsletters, etc.), external marketing (direct mail, email, advertising, online marketing through websites and social media, etc.), and customer service to ensure your patients have a good experience and keep on returning to your practice.
One key element of the marketing plan for modern dental practices is to map out their website design. Having a well-designed website can help you stand out from competitors and can be hugely beneficial in attracting patients. For example, suppose patients are able to make a dentist appointment online quickly. In that case, they are more likely to choose your practice over a competitor that makes it difficult to schedule an appointment.
If your marketing strategy is going to be significantly different from that of your competitors, you should also explain the rationale behind your choice as part of your strategy.
A financial plan is a key component of the marketing plan and will be the section that’s of most interest to potential lenders. If you’re approaching banks or other individuals for a loan, this section will help them make an informed decision over whether or not to lend to you. Due to its importance, this section should be carefully planned out and meticulously written.
For new practices, the financial plan will be based on 12 and 24-month financial projections, as you won’t already have an existing performance to base it off. Some key elements that you should include in your financial plan include:
- Income projections over a 12 and 24-month period
- Your personal financial statement
- Collateral you’ll offer in exchange for a loan
- The total amount of funds that will be required by your practice for a 24-month period
- A plan for how the funds will be allocated
- Cash flow forecast
- Historical financial analysis looking into the viability of a dental practice
- Supporting documents that may be required by the lender, including a copy of your credit report, historical financial statements, five-year financial projections, and any other relevant document
Your financial plan should lay out a plan that accounts for the impact of outside financial influences that will affect your finances. These influences include competition, the economy, seasonal variations, and business cycles, as well as any other factors that will impact your practice’s financials.
Business plan checklist
If you’re just getting started on creating your business plan, there are a variety of templates and checklists that are easily available online. One free downloadable and printable checklist that you can use is this one .
Before you get started on making your business plan, the American Dental Association (ADA) you make sure to ask yourself some important questions, including:
- Can you describe your potential dental practice in detail?
- Do you have an actionable marketing plan?
- Who is in the market? What are they doing right — or wrong?
- What pricing and payment policies are you considering?
- What’s your growth strategy?
These will help provide you with a guideline you can refer back to when writing your detailed plan.
The ADA also provides a business plan checklist that is tailored to dental practices. You can download the checklist here .
FAQs about dental practice business plans
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How much does it cost to open a dental office?
While start-up costs will differ based on where your practice is located and the types of services you plan on offering, the estimated cost of starting a dental practice can be upwards of $450,000, with up to a third of that being equipment costs.
How profitable is a dental practice?
On average, dental practices can have about a 25% profit margin. This profit margin can be more, depending on your specialty, location, and overhead costs. It is also possible to increase the profit margin of a dental practice in a variety of ways. For new practices, it your business plan allow you a profit margin of at least 40%.
How much does a dental office make a year?
The amount you earn is dependent on the type of services your practice offers, including whether or not you offer specialty services. On average , general practices earn around $770,000 a year, while specialty practices can make around $1.1 million annually.
How do I write a business plan for a mobile dental clinic?
If you’re planning a mobile dental clinic, the process for writing a business plan is similar to that of writing a plan for a traditional practice. The steps you need to follow will be the same, and any lenders will expect you to present the same information as part of your business plan.
Remember, the executive summary and the financial plan are two key aspects of your business plan when approaching lenders. A well thought-out and well-written business plan does not only make your practice more appealing to lenders but it also provides you with a blueprint to follow in order to achieve personal and business-related goals. So when you’re writing out your business plan, regardless of whether it is for a traditional practice or a mobile clinic, make sure to include all the relevant details.
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The Tooth Fairy
Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">.
The Tooth Fairy is the dentistry practice of Steve Extractor. The Tooth Fairy will offer general and cosmetic dentistry to the citizens of Eugene, Oregon. Through a combination of industry benchmark customer service and flexibility, The Tooth Fairy will quickly gain market share.
Steve will leverage the years he spent in private practice to model his new business. His past experience in conjunction with his forward-looking customer-centric business model will allow him to rapidly grow a large and loyal patient base. Profitability will be reached by month 10, and sales will reach comfortable levels by the end of year two.
The objectives for the first years of operation include:
- To create a start-up organization from an already existing practice whose primary goal is to exceed customer’s expectations.
- To increase the number of clients by 20% per year through superior performance and word-of-mouth referrals.
- To form a dentistry practice that is able to eventually survive off its own cash flow.
The Tooth Fairy’s mission is to provide the finest dental care. We exist to attract and maintain customers. When we adhere to this maxim, everything else will fall into place. Our services will exceed the expectations of our customers.
1.3 Keys to Success
The key to success is to meet the market need and exceed customer’s expectations.
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