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Three Factors Within Your Control That Can Hurt Your Dental Practice’s Value

Financial graph decreasing over time

By John Shirts, CVA, CPA, CFA, Vice President of Appraisals and Data Analytics

Many factors affect the value of your dental practice. Some things, such as current economic conditions, are outside of your sphere of influence. However, there are many factors that you can control. Here are three factors within your control that can hurt your dental practice’s value.

Your Personal Performance

Too many practice owners, especially those at the beginning of their careers, work long hours and burn themselves out. You need to prioritize taking care of yourself by eating right and getting adequate rest. Your health is one of your greatest assets.

You can also strive to improve your skill set and add to your procedure offering by taking additional courses. The more efficient you are, the more successful your practice will be. By expanding your clinical knowledge, you will eliminate the need to refer out high-revenue cases.

Your Finances

Overspending can negatively affect your valuation. You should watch the purse strings on essential spending. Areas to look out for include:

  • Payroll and benefits
  • Rent and occupancy costs
  • Marketing and promotions
  • Office expenses
  • IT and software
  • Dental supplies
  • Lab work

A practice appraisal is a great way to find out where you may be over- or underspending relative to practices similar to yours.

Your Building

If you lease your office space, be sure to hire an experienced commercial real estate broker to represent you. You will almost certainly be leaving money on the table if you try to negotiate a lease or renewal on your own. 

You should also strive to utilize your space efficiently to ensure you are producing at your full capacity. For example, a practice with seven operatories where only three are being well-utilized means that rent looks high relative to your revenue. You always want to maximize the resources you are paying for, as underproducing can hurt your dental practice’s value. 

Valuations are sensitive to your financial performance, and many factors have a direct impact on your practice’s production. Don’t wait too long to find out how much you’re worth.

Menlo Dental Transitions has three certified, dental-specialized valuation analysts. Contact us today to get started on your practice appraisal.