How to build a squat practice – a financial perspective
Squat practices are growing in popularity as associates look to take control of their futures. In the second of two articles, we hear from Andy Acton about the financial hurdles dentists need to overcome to build a squat practice.
Why should a dentist start a squat practice now?
The last 12 months were really hard. The government support was lacking, dentists have needed to dip into their savings.
At the moment and the back-end of last year, there wasn’t the scale of work out there for associates as there has been in the past.
For a long while, the way to fix that has been to buy a dental practice, and that is still the right thing.
The fresh way of thinking is people setting up squats.
There are two reasons for it really. The demand for practices outstrips the supply. There’s a growing number of people who want to get into ownership but just find the access point difficult.
You need an entrepreneurial flair to make a squat practice work. Whilst being a dentist is awesome, you need to be more than a dentist to make a squat fly.
If you buy an existing practice and proceed to do the same as the person before you, you’ll get similar results. If you are entrepreneurial and have an understanding of the elements of business that work, then I think a squat is a very viable option.
It might sound like a stupid time to get a squat practice, because everyone’s clamouring for patients and work and business, but it’s probably a six to nine-month project – maybe longer if you need to find a very specific space.
Therefore, by the time you’re going to be in a position where you’re looking to engage with patients is towards the end of this year. By which time I’m expecting the world to look a bit like it did.
Patient demand being relative, there will also be some pent-up demand for people who aren’t going to the dentist.
I think that this will lead to a tsunami of patients into practices later on this year.
It all sounds quite straight forward, but what are the difficulties when opening a squat practice?
I think the first one is finding the right location.
When we sell dental practices, the thing I say to people time and time again is: ‘The one thing you cannot change is where it is.’ So, you have to choose your location supremely well.
Then, you need to think about what’s your proposition – is it going to be a local community, is it going to be near a train station?
There’s a change in the behaviour of the population buying their services much more locally due to the pandemic. So, when you look for your space, you have to think if you want to be in a town centre, or whether a more rural practice would suit you.
I think the location is absolutely at the top of the list.
The next one is finance. There’s no doubt that finance with a squat is more challenging than an existing practice.
When you arrange finance to buy an existing practice, the bank has two elements.
It can consider you as an individual and then look at the business you are buying. It questions on the balance of probability; can you step in and continue to run this business in a similar way? If the answer to that is yes, then you get your money.
When you’re looking to finance a squat, you’ve got your skills as an individual and a business plan. Are your skills as an individual sufficiently competent and does it give them the confidence that not only can you deliver the clinical work but also the business side of things as well? That makes it a slightly riskier venture for the bank, which in turn means that it’s more difficult to raise your finance.
Beyond that, once you’re in a position where your finance is sorted, and how you are going to go about it; from an operational view, that’s why we are working with Zuber.
Zuber’s got an offering that he’s already proven through his Synergy model. This enables people to focus on the delivery of dentistry and get engaged in the parts of business that they want to.
The Synergy team can manage all the other parts for you.
With the current pandemic, how has that impacted the financial implications, and the path to borrowing money to start a squat practice?
It has made the process very much harder.
The banks want to lend money into markets where they won’t lose anything. Healthcare has always been a safe place to lend money.
The challenge at the moment is limited to the pandemic. The banks have been inundated with requests for business interruption and bounce back loans.
They’ve got new instructions coming in from their existing clients and they’re trying to reconfigure facilities for the existing clients as well.
But those four groups are overwhelming the banks. So looking at new applications isn’t at the top of their lists.
Looking at applications of people who are buying an existing business is an easier proposition to look at than an application for a squat practice.
So, from that point of view, it’s more challenging.
That’s partly going to suit somebody who has personal resources that they use to mostly fund the project themselves. Somebody that has already done some work and thinking around what is available.
You need to make it easy for the banks to lend money to you.
What kind of profile of person do you think starting a squat practice would suit?
I think it’s really the sort of person who has more than just clinical experience. That is going to look good on their CV for the bank.
But also someone who has been working as a clinical dentist for a few years.
But most importantly they must have the ability and business skills. They understand what’s involved in managing people – the difference between sales and marketing, understanding the difference between leadership and management. They have a basic understanding of the core components of business.
I think clinically, a new graduate would be great, because they’ve learnt all of the new techniques. But there is a possibility they have not yet matured into their understanding of the business side of things.
I encourage people to spend time in practice as an associate. When there’s an opportunity to step up into a management role, step up. That experience will serve you so well when setting up a squat.
How can dentists prepare? What can they do to start preparing themselves so that they’re ready for an application?
I think what they need to do is, download a business plan and start scribbling down all of the things they have been thinking about.
What they also need to do is start to build a financial forecast, to see what it looks like.
Most squat practices don’t just start as they want to succeed. Many squat practices start as the associate still working two/three/four times a week as an associate and working one day in their practice – and it builds from there.
As their practice gets busier, they reduce their associate days.
So, they need to start laying down their business plan ideas, but also give their CV a good look at. If it’s all dental, postgraduate, clinical training, that’s great – but turn the page over and where is the business experience?
If you’re at the stage where you’re thinking about it, jump online, find a masterclass and start to get a basic understanding of what the business of dentistry means.
You’re partnering up with Zuber. What exactly are you doing with Zuber and Synergy Dental?
We’ve had a lot of people come to us with the idea of starting a squat.
One of the things that we can do is talk them through the mechanics of a squat practice, and how it works.
What we don’t do is, we don’t find the location for them. Whilst that is part of Zuber’s service, I believe that the person who is going to set up the squat needs to take ownership of that.
So, you find the location – we can guide you in terms of building the plan with calls – but then when it moves forward, if you need help on an ongoing basis, that’s where Zuber and Synergy come in. They are going to provide all of the back-end support needed so that you can have a really credible supporting partner that gives you the freedom to run that business.
For lots of people, it’s daunting. To have the support of someone that’s done it time and time again is great.
Zuber’s style is so warm, he wants to help people to succeed. For us, it felt like a natural fit.
Also, I think we jointly want to see dentistry as a profession progress and succeed. Between us we can encourage people to create squat practices.
There’s a wider common goal here. We’re trying to create more opportunity in dentistry. As well as bring more dental practices about because there is a shortage of access to dentistry in some areas.
If we can bring some new practices to the market that will be good for the whole country.