A dentist’s business plan is a critical tool for starting a practice. It provides the blueprint for how the dentist will establish a successful practice and it demonstrates to a lender how well they have researched and thought out the necessary elements of a practice.
The real value of creating a business plan for a dentist, however, lies in the simple process of researching and thinking about their business in a systematic way.
“The act of planning helps you to think things through thoroughly, study and research if you are not sure of the facts, and look at your ideas critically. It takes time now, but avoids costly, perhaps disastrous, mistakes later,” said Michael Perry, DDS, director of Practice Management for CDA.
A business plan should consist of a narrative and several financial worksheets. The narrative template is the body of the business plan and can contain more than 150 questions divided into several sections. Perry recommends that dentists seek professional assistance (from financial companies, dental supply companies, dental practice brokers and practice management consultants) in researching information to include in their business plan.
Aside from this assistance, CDA Practice Support has a business plan template available to member dentists at cda.org/practicesupport that is modifiable to fit their particular circumstance.
"It typically takes several weeks to complete a good plan. Most of that time is spent in research and rethinking your ideas and assumptions,” Perry said. “Be sure to keep detailed notes on your sources of information and on the assumptions underlying your financial data.”
CDA's business plan template was developed from information provided by SCORE “Counselors to America’s Small Business” and CDA member dentists.
The business plan template includes the following:
- Cash flow statement sheet;
- Profit and loss outline;
- Break-even analysis;
- Projected balance sheet;
- Four-year profit projection sheet;
- Opening day balance sheet; and
- A start-up expenses sheet.
"All of these resources will help dentists get their practice on a path toward success," Perry said.
Some dentists may want to use their business plan to present to lenders. If that is the case, CDA Practice Support recommends the dentist include the following:
- Amount of the loan;
- How the funds will be used;
- What this will accomplish and how it will make the business stronger;
- Requested repayment terms (number of years to repay);
- Collateral offered; and
- A list of all existing liens against collateral.
"You can use the business plan annually to check attainment of practice goals. It’s a good idea to update the plan every five to ten years to account for either changes in the market, changes in community demographics, or changes you want to make to your practice goals and objectives,” Perry said.
For more information, visit cda.org/practicesupport, or to connect with a CDA Practice Support content expert, call 866.232.6362.