Ok todays lesson is called "Where do I want to live?"
The first step in buying a practice is deciding where you want to live. There are practice opportunities every where so decide where you want to live and then look for opportunities in that area. For example I wanted to live in the eastern part of my home state Tennessee. So I looked for available offices in that third of the state. I didn't have a preference for which city to live in, I just wanted to live in that third of the state. Now you may have a more specific idea of where you would prefer to live (or if you are married your spouse may have a specific idea for you
) So lets look at the pros and cons of different places to live:
Big City (New York, Chicago, LA etc) - In times past I would tell you to avoid the really big cities because they are always over saturated with dentists. But as the population increases and the number of dentists decreases the opportunities are starting to get better in the big cities.
Pros: Its a really big city!!
Cons: Usually over saturated with dentists, lots of competition, higher cost of living equals a higher overhead, patient's trying to "keep up with the Jones" means less disposable income which means less dentistry.
Solution: Lots of dentists means lots of opportunities to associate/partner or simply buy out an older dentist and in the big cities there are plenty of them. In fact you might be able to get a pretty good deal simply because the glut of dentists from the 80's government's response to the perceived "dentist" shortage are getting close to retirement age. I think that in for the next 20 years you are going to see a slow but steady wave of dentists retiring and there will be more of them than there will be buyers. Take advantage of this.
One other alternative that you may want to consider is this. On the outskirts of the big cities developers are always building new communities. Find one of these pockets of growth and establish yourself in it. Directly market to the new home owners and get involved in the new community. The only downside to this is if the economy tanks before the community is really underway it will die on the vine and you will be up a creek so be careful.
Smaller cities: College towns, cities between two larger cities
Pros: Its like a big city, but smaller! Great tailgate parties
Cons: Basically the same as the big cities. Most of the dentists will tend to locate in the city itself and fewer will be in the outlying areas. The smaller cities are more prone to be effected by economic change as they typically have fewer industries than a big city. And always be careful locating in a city where the entire economy is based on one industry like the auto industry or the tourist industry (I call this the "Detroit Effect")
Solution: Same as above, either buy an existing practice in the city or find the "bedroom" communities and seek opportunities there.
Rural areas: These are areas that are say more than 50 miles from a large metropolitan area
Pro: Little to no competition, your involvement in the community will have a larger impact for your practice, you really won't have to advertise that much. Word of mouth will generate lots of patients. Lower cost of living.
Cons: How much do you enjoy watching the grass grow? Also your life will be under much more scrutiny in a smaller community. You also might have to accept more PPOs/HMOs and even some Medicaid. And you can definitely count on treating children.
Solution: If there is an available practice in one of these communities you should be able to pick it up on the cheap. Hanging out your shingle here will be easier as you may be the only game in town. Also lower cost of living means paying off your debt sooner, you will be able to save more money and you will be able to buy plenty of plane tickets to go to places where the most popular attraction isn't the local Wal-Mart .
There are plenty of opportunities no matter where you want to locate. Just be sure you understand what obstacles your practice will face going in. Have plans in place before you go into practice to either overcome or manage these obstacles so they don't blindside you.
Next Topic: Location, Location, Location