Expanding or upgrading your dental office can be an expensive undertaking, but it might be exactly what you need to grow your practice to the next level. It might mean a new office, or expanding your existing one. And it might mean new equipment.
You've decided to purchase your equipment, and maybe you've even signed on the dotted line. Got sticker shock yet? It's great for your practice to have state-of-the-art equipment, but the price can leave some dentists wishing for Novocain to dull the sting of it. A single new chair could cost upwards of $9,000. An X-ray unit can set you back $5,000. Not to mention the individual TVs and other entertainment systems designed to calm nervous patients. How old is your computer system for patient appointments and billing? Could that use an upgrade, too?
Here are some things to consider when you've decided to upgrade your office or equipment.
Calculate ROI before signing on the dotted line. There are varying ways to do this, but one standard method is to divide the increase in profits you ultimately expect to get from your investment by the amount of the investment itself. Look at the result as a percentage. Is the percentage of increased profit higher than the interest you're paying on the loan? Then it makes sense. Talk to your Financial Advisor for terms specific to your situation.
Expect a lag time. Those new high-tech chairs aren't going to be generating profits from minute one. When you're negotiating with your lender about a payment schedule, you need to take that into account. Can you make interest-only payments for a while? Can you extend the length of the loan to accommodate for that lag time?
Think about costs you hadn't considered. Even if you're not expanding your office footprint, there might be hidden costs other than what you're paying for your brand-new equipment. You might have to re-wire the office to handle the new high-tech items. Additional plumbing might be needed. Will your electric bill go up? Do you need to upgrade your insurance when you upgrade your equipment?
The bottom line when deciding to make investments in your dental practice is: Will patient care improve? Do your patients expect the latest and greatest, or are they just fine with older equipment and practices?
Talking to a Financial Advisor is critical when you're making these types of decisions. At Harbor West, we specialize in helping dentists optimize their practices with wise investments. We're here to help.
This information is provided for general purposes and is subject to change without notice. Every effort has been made to compile this material from reliable sources; however, no warranty can be made as to its accuracy or completeness. Before acting on any of the information, please consult your Financial Advisor for individual financial advice based on your personal circumstances.