It was April 2012 when Dr. Maryam Brazdo walked into a bank and asked for a $1.2 million business loan for the acquisition of a dental practice and its associated building. Just four years out of dental school, Brazdo had worked as an employee at a dentist's office, always dreaming of owning her own practice. She enlisted the help of a practice brokerage firm and pretty soon found a dentist who was planning to retire after 25 years. Acquiring that person's practice presented the perfect opportunity, and she jumped at it.
“Signing that loan, I felt terrified," says Brazdo, owner of Artistic Touch Dentistry in Melbourne, Florida. “I remember feeling like I was jumping off a 20-story building. My hands were shaking."
Fast-forward to April 2017—almost five years to the day she signed the business loan—and Brazdo walked into the same bank to make her last loan payment. Today she feels a massive weight lifted—“Financial freedom," she says.
Up in Winnipeg, Manitoba, Alex Zlatin is very familiar with the challenges faced by dentists in paying off practice loans. He is the author of Responsible Dental Ownership, and notes that unlike business owners in non-medical industries who can delegate a good deal of their tasks, dentists are stretched thin when owning and operating their practices.
“A dentist who own his or her own practice is wearing the hat of a clinician, the hat of an administrator, and the hat of an owner," Zlatin says. “Each of those hats is a full-time job, which can make things really stressful, especially when dentists want to only focus on doing the work of a clinician."
Further compounding the stress of paying off loans is the fact that many dentists come into their practices with existing student loan debt. Dr. Michael Wierenga is a dentist at 44 West Dental Professionals in Grandville, Michigan, and says grads are often strapped with loan after loan when launching practices.
“Almost everyone comes out of dental school with loans; some people have up to $400,000 in loans," he says. “It can feel crushing."
Are you a dentist familiar with loan repayment headaches? Here are a few tips on paying off your dental practice loans to help you experience Brazdo's version of “financial freedom."
Invest in Marketing
Dentists need a steady stream of patients to pay off loans on schedule (or, even better, faster than expected). There are many ways to attract patients, including in-person networking and investing in digital marketing.
“It's important to have an effective website and to drive traffic to your website," says Wierenga. “Being on Facebook and Instagram is helpful. We try to do monthly giveaways like free bleaching or free electric toothbrushes. We also post patient case studies. It helps build trust before a new patient even walks through our doors."
Brazdo agrees. She's invested heavily into things like search engine advertisements to help her practice rank high on searches.
“It helped a ton," she says.
Make (Small) Physical Tweaks
While it can be tempting to initiate a full practice renovation, Zlatin guards against pricey construction projects when paying off a practice loan. Instead, make small changes that will still make a difference, like replacing waiting room chairs and freshening up paint in public spaces.
“Do things that will immediately improve the patient experience," he recommends. “If your patient base has kids, designate a small kids area in the waiting room. It doesn't need to be fancy, but if you have nothing to do in the waiting room but read outdated magazines, the kids won't be happy. And if the kids aren't happy, the parents won't be happy, either."
Re-evaluate Expenses and Vendor Relationships
It is common for a new dentist to take over the long-held contracts with vendors from retiring/leaving dentists. These contracts can be cash traps if not careful. Zlatin suggests re-evaluating all contracts, commitments and recurring expenses set by previous dentists.
“If you feel really strapped, especially in the beginning, you may be able to negotiate not paying a vendor for a few months with the promise of paying them when you have more cash," he says. “Tell them that, 'Instead of charging me now, you will have a customer for life.' Depending on the vendor, that break in payments could really help your cash flow."
Expenses can also be traps for new dentists. Wierenga explains that new dentists are often inundated with catalogues of the latest technology, and that it can be tempting to spruce up a dated office with shiny new equipment.
“Patients don't choose dentists based on the beauty of their x-ray machines," he says. “They select based on referrals, online reviews and websites. If you really need a different piece of equipment, try buying something used from another practice for a fraction of the price."
Know Your Numbers
The business of practice management isn't something Wierenga learned in dental school. In fact, he doesn't remember taking a single business class. This can spell major problems for dentists launching their own practices.
"A dentist who own his or her own practice is wearing the hat of a clinician, the hat of an administrator, and the hat of an owner.
—Alex Zlatin, author, Responsible Dental Ownership
“I know a lot of dentists who don't know how to read their numbers," says Brazdo. “One of the best things I did is hire a financial planner that deals only with dentists and doctors. Early on, I worked with that person to come up with a repayment plan and it helped a ton."
Brazdo's success in paying off her practice and building loan wasn't only thanks to watching her numbers at work. It also involved curbing her spending at home.
“We didn't take a vacation for five years," she says. “If we didn't need it, we didn't buy it. We lived below our means, used my car from dental school and were really careful. Now, being debt-free, I feel happy, like a huge weight has been lifted."
Photo: Getty Images