So, you’ve decided to start your own practice—congratulations! But now comes the tough part: securing funding. I’m Derek Leonard, AKA “The Dental Startup Guy,” and in this blog, I’ll walk you through why having a solid business plan is essential to securing the funds you need to launch a successful dental or healthcare practice. This is Phase 1 of my SPEED formula: S—Secure the Funds.
Why Lenders Care About Your Dental Practice Business Plan
Your business plan is the foundation of your funding application. It’s the document that shows lenders you’ve thought through every aspect of your practice—from the services you’ll offer to how you’ll handle expenses. In short, your business plan proves that you’re not just a healthcare provider, but also a savvy business owner.
Lenders want to know how soon you’ll be profitable. To do that, you need to show them your revenue projections and your expense breakdown. Without a clear picture of when and how you’ll start making money, they won’t feel confident lending you the funds you need.
What to Include in a Comprehensive Dental Business Plan
A strong business plan is about more than just numbers. Here’s a detailed breakdown of what you need to include to make sure lenders take your application seriously:
- Executive Summary
This is the first thing lenders will read, so make it count. In the executive summary, briefly describe your practice, your goals, and the services you’ll offer. Highlight your unique selling points—why will your practice succeed where others have failed? You’ll also want to include a high-level summary of your financial projections and how much funding you’re seeking.
- Company Description
Go deeper into the specifics of your practice. Explain your mission, vision, and the type of practice you’re building. Are you starting a general dentistry practice, or will you offer specialized services like orthodontics, cosmetic dentistry, or oral surgery? This section should also cover the legal structure of your business—will it be a sole proprietorship, partnership, or limited liability company (LLC)?
- Market Analysis
Lenders want to know that you understand your market and have done your homework. Include a detailed analysis of your local market—who are your competitors, what are their strengths and weaknesses, and how do you plan to stand out? Discuss the demographics of your target audience and why your practice location is ideal for your services.
- Services and Pricing Strategy
Outline the services your practice will offer. Will you focus on preventive care, restorative work, or cosmetic procedures? Go into detail about how your services will meet the needs of your community and set you apart from the competition. Don’t forget to include your pricing strategy—how will you position your services compared to other practices, and what factors will affect your pricing decisions?
- Marketing and Patient Acquisition Strategy
Lenders are not just interested in the services you’ll provide; they want to know how you plan to attract and retain patients. Include details about your marketing strategy—will you rely on digital marketing, local advertising, or community outreach? Describe how you’ll build brand awareness and differentiate your practice in a crowded market.
- Operational Plan
This section should cover the day-to-day running of your practice. Describe the layout of your office, the number of treatment rooms, the type of equipment you’ll use, and how many staff members you’ll need to hire. Include information on your office hours, patient flow, and how you’ll manage appointments and billing. Lenders want to know you have a solid plan for delivering quality care efficiently.
- Financial Projections
This is the most critical part of your business plan, especially for securing funds. Your financial projections should include:
- Start-up Costs: A breakdown of everything you need to launch your practice, including construction, equipment, licensing, legal fees, and working capital.
- Revenue Projections: An estimate of how much revenue you expect to generate in the first three to five years of operation.
- Expense Forecast: A detailed look at your expected operating expenses, including salaries, rent, utilities, supplies, and marketing.
- Profit and Loss Forecast: Show when you expect to break even and turn a profit. Lenders will scrutinize these numbers closely to determine if your practice is a good investment.
- Funding Request
In this section, specify exactly how much funding you need to start your practice. Be clear about how the funds will be used—whether for construction, equipment, working capital, or other expenses. Make sure the amount aligns with your financial projections and is backed by realistic estimates.
- Risk Analysis
Lenders appreciate when business owners demonstrate an understanding of potential risks. Include a section that outlines the risks your practice may face, such as economic downturns, changes in healthcare regulations, or shifts in the competitive landscape. More importantly, explain how you plan to mitigate those risks.
Financial Projections: The Key to Convincing Lenders
When creating your business plan, one of the first things to include is financial projections. Lenders will look at these numbers closely to evaluate whether your practice will be a good investment. You need to outline exactly how much revenue you expect to bring in, what your expenses will be, and when you’ll turn a profit.
If you can’t confidently show these numbers, it’s going to be tough to secure the funding you need.
Dental Practice Budget: Breaking Down Your Costs
When you’re starting a practice, every dollar counts. Whether you’re self-funding, receiving family support, or seeking a loan, you need a clear budget. This includes everything from construction costs to equipment and working capital. Make sure your budget is detailed and realistic.
If you’re unsure how to create a comprehensive budget, seek professional help. It’s worth the investment to ensure your business plan is solid.
Final Thoughts: Be Thorough and Clear
A strong, thorough business plan is your key to securing the funding you need for your practice. By detailing everything from market analysis to financial projections, you’re showing lenders that you’ve thought through every aspect of your practice and that you’re ready to succeed. And remember, if your numbers are solid, lenders will feel more confident investing in you.
Ready to build a business plan that will get lenders’ attention? Download my free book Startup 101: Ignite Your Practice and get started on the right foot. I’m also available for one-on-one discovery calls, where we can discuss your practice’s unique needs and how to secure the funds you need to get started. Don’t hesitate—let’s set your practice up for success together.