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Dentistry business plan for your own dental practice
Do you want to start a dental office business? If you are a dentist and want to earn lots of money while also serving the society, you should definitely start this business. But before you consider how to start a dentistry business, you must prepare a comprehensive business plan for it. The business plan will help you in acquiring the license for your business from the state and will also help you take important decisions for the startup. In case you don’t know how to write a dentistry business plan, you can take help from this sample business plan of a dentistry business startup named ‘Spear’s Dental Clinic’.
Executive Summary
2.1 The Dental Business
Spear’s Dental Clinic will be a licensed, registered and insured dental consultancy clinic which will provide all sorts of dental consultancy and treatment services to its customers. The business will be located at a 10 minutes’ drive from the center of Boston and the location is ideal to open dental office.
2.2 Management of Dental Office
Spear’s Dental Clinic is a sole proprietorship owned by Dr. John Spear, an experienced dentist from Boston. The company’s main management framework comprises of sales executives, dentists, and nurses.
2.3 Customers of Dental Office
Our customers include people from all age groups such as children, teens, adults and senior citizens but children and teens will form the bulk of our customers since they are most likely to have dental problems.
2.4 Target of the Dental Business
Our business targets to be achieved within next three years are as follows:
Dental Office Summary
3.1 Company Owner
Spear’s Dental Clinic is a sole proprietorship owned by Dr. John Spear. Dr. Spear is a famous dentist who has been practicing in Boston for more than 6 years.
3.2 Why the Dental Business is being started
Dr. Spear decided for dentistry start up to make profits in this industry while also serving the community.
3.3 How the Dental Business will be started
Spear’s Dental Clinic will be started in a leased location in Boston which was previously used as a small restaurant. The facility requires a lot of work so that it can be converted into a dental office and the company has already hired William Sons Contractors for this job. In addition to the usual inventory, the procured equipment will include high- and low- speed drills, an ultrasonic scaler (for removing prophylaxis), curing and placing instrument, dental seats and lights, x-ray film, filling material and the front desk equipment. The financial experts have forecasted following costs for the startup:
The detailed startup requirements are given below:
| Start-up Expenses | ||
| Legal | $55,300 | |
| Consultants | $0 | |
| Insurance | $32,750 | |
| Rent | $32,500 | |
| Research and Development | $32,750 | |
| Expensed Equipment | $32,750 | |
| Signs | $1,250 | |
| TOTAL START-UP EXPENSES | $187,300 | |
| Start-up Assets | $220,875 | |
| Cash Required | $332,500 | |
| Start-up Inventory | $32,625 | |
| Other Current Assets | $232,500 | |
| Long-term Assets | $235,000 | |
| TOTAL ASSETS | $121,875 | |
| Total Requirements | $245,000 | |
| START-UP FUNDING | ||
| START-UP FUNDING | $273,125 | |
| Start-up Expenses to Fund | $151,875 | |
| Start-up Assets to Fund | $123,000 | |
| TOTAL FUNDING REQUIRED | $0 | |
| Assets | $23,125 | |
| Non-cash Assets from Start-up | $18,750 | |
| Cash Requirements from Start-up | $0 | |
| Additional Cash Raised | $18,750 | |
| Cash Balance on Starting Date | $21,875 | |
| TOTAL ASSETS | $373,125 | |
| Liabilities and Capital | $0 | |
| Liabilities | $0 | |
| Current Borrowing | $0 | |
| Long-term Liabilities | $0 | |
| Accounts Payable (Outstanding Bills) | $0 | |
| Other Current Liabilities (interest-free) | $0 | |
| TOTAL LIABILITIES | $0 | |
| Capital | $620,125 | |
| Planned Investment | $620,125 | |
| Investor 1 | $0 | |
| Investor 2 | $0 | |
| Other | $0 | |
| Additional Investment Requirement | $0 | |
| TOTAL PLANNED INVESTMENT | $620,125 | |
| Loss at Start-up (Start-up Expenses) | $313,125 | |
| TOTAL CAPITAL | $251,875 | |
| TOTAL CAPITAL AND LIABILITIES | $251,875 | |
| Total Funding | $255,000 | |
Services for customers
An important part of any start up dentistry business plan is the services it will provide to its customers because the planning of nearly all subsequent things depend on the provided services. Spear’s Dental Clinic will be a licensed, registered and insured dental consultancy clinic which will provide following services to its customers:
- Dental diagnostics services
- Dental examinations & consultations services
- Dental restorative & preventive services
- Dental treatments including gap removal, tooth whitening, tooth removal and implants
Patients can make a reservation with us by either visiting our clinic or through our official website.
Marketing Analysis of dental business
The most important component of an effective dentistry business plan is its accurate marketing analysis and a good dental practice business plan can only be developed after this stage. If you are starting on a smaller scale, you can do marketing analysis yourself by taking help from this dentistry business plan template or other dentistry business plan examples available online. If you are starting on a larger scale, it is always best to seek the counsel of marketing experts for developing a good dentistry business plan. The success or failure of a business totally depends upon its marketing strategy for business plan which can only be developed on the basis of accurate marketing analysis.Therefore, it must be considered before you develop your dentistry startup business plan.
Dr. Spear acquired the services of marketing experts to carry out the marketing analysis for his dentistry business plan. He also went through various dentistry business plans available online before developing his own dental clinic business plan.
5.1 Market Trends
For learning the market trends of the dental industry, you will have to carry out an in-depth research. You can also take help from this dentistry business plan sample. The dental industry is among those industries who have a high propensity for profit and a very low failure rate. According to the American Dental Association (ADA), dental clinics are the 3rd highest category of the startup businesses which are most likely to survive. Dentists are among the highest earning professionals in the United States and their average income lies in the United States’ highest 8 percent incomes.
According to IBISWorld, the dentist industry contributes more than $134 billion in the revenue of the United States every year. As of March 2018, there are 187,437 registered dentist clinics in the United States which are responsible for employing around 1,000,000 people. The industry’s growth rate is estimated to be 2.6 percent. This increase is contributed to many factors, of which one is the increase in education and prosperity of the population. The second factor is the increasing trend of dental insurances, due to which, many people became able to afford the dental services. According to a recent report, around 40 percent of the population has private dental insurance. In short, dental industry has a lot of potential and a dental clinic can be immensely profitable provided that you provide quality services and plan as well as market your business successfully.
5.2 Marketing Segmentation
Our target market is the residential community-based in Boston. As of 2016, there are more than 673,000 people in Boston which belong to varying backgrounds and most of them are financially stable. Out of the 252,700 households in the city, 20.4% contain children with age below 18 years, 25.5% contain married couples, 16.3% contain a female householder without a husband, and 54.0% are non-families. As per the population distribution, around 21.9% of the population is below 19 years of age, 14.3% are from 20-24, 33.2% are from 25-44, 20.4% are from 45-64, and 10.1% are more than 65 years of age. Analyzing the demographics is important since it gives you an idea of the market segmentation of your future customers. A successful and efficient marketing strategy can only be developed after we completely know our potential customers hence it must be duly incorporated in any dentistry business plan. Our business consultants have identified the following type of target audience which can become our future consumers:
The detailed marketing segmentation of our target audience is as follows:
5.2.1 Children & Teens:
Our first target group will be the children and teens aged below 19 years. This group is most likely to have dental problems like incorrect or misaligned jaw position, jaw joint disorder, under-bite, overbite, missing teeth, extra teeth, and crowded or crooked teeth. Moreover, due to their unhealthy habits like smoking, excessive intake of sweeteners, oral piercings for wearing jewelry, they are also frequently affected by other dental problems. That’s why this group will be the biggest contributor to our revenue.
Operational and Strategic Planning
5.2.2 Adults:
Our second target group comprises of adults aged above 19 years. This group contains people who are sensible and conscious of their dental health and, thus, seldom encounter a dental problem. That’s why they have the least contribution to our revenue.
5.2.3 Senior Citizens:
The third target group comprises of senior citizens. This group, due to its old age, is much likely to be affected by various dental problems like dental decay, gum disease, poor fitting dentures etc. and has, therefore, more contribution than the adults.
The detailed market analysis of our potential customers is given in the following table:
| Market Analysis | |||||||
| Potential Customers | Growth | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | CAGR |
| Adults | 20% | 11,433 | 13,344 | 16,553 | 18,745 | 20,545 | 13.43% |
| Children & Teens | 45% | 22,334 | 32,344 | 43,665 | 52,544 | 66,432 | 10.00% |
| Senior Citizens | 35% | 12,867 | 14,433 | 15,999 | 17,565 | 19,131 | 15.32% |
| Total | 100% | 46,634 | 60,121 | 76,217 | 88,854 | 106,108 | 9.54% |
5.3 Business Target
Our main business targets to be achieved as milestones over the course of next three years are as follows:
- To become the best dental service in Boston within next five years of launch by providing high-quality services
- To achieve the net profit margin of $10k per month by the end of the first year, $15k per month by the end of the second year, and $25k per month by the end of the third year
- To balance the initial cost of the startup with earned profits by the end of the second year
- To open another dental office in downtown by the end of the third year
5.4 Product Pricing
After considering the market demands and the competitive nature of this business, Dr. Spear has decided to price his services slightly less (10% less) as compared to that of his competitors. This pricing strategy has been carefully selected considering many factors, especially the competition provided by established dental clinics in the locality like Neo Dental Clinic. By setting our services in slightly lower range, we hope to target more customers during the initial period of our launch.
Note
After you have identified the market demand, market trends, and the potential customers of the startup, you must now define an effective strategy for attracting those customers toward you.
Strategy
Like marketing analysis, sales strategy is also an important component of a good dentistry business plan and it must be properly developed before thinking about how to open dental office.
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6.1 Competitive Analysis
The dental industry is one of the most competitive industries since there are more than 187,000 registered dental clinics in the United States. Boston also houses hundreds of established dental clinics who are providing quality services, especially the Neo Dental Clinic which will be our main competitor in the locality. However, our economical services will be our biggest competitive advantage since our services will cost about 15% less than that of our competitors. Although the residential community in our vicinity is well-established, still, this factor will cause an increase in our revenue by specifically targeting those people who are not covered by any dental insurance. Our second competitive advantage will be our exceptional customer service which, we guarantee, will be the best in town.
6.2 Sales Strategy
After carrying out a detailed analysis, our experts came up with the following brilliant ideas to advertise and sell ourselves.
- We will ensure a strong web presence by using SEO/SEM tactics.
- We will advertise our dental clinic in health magazines, newspapers, TV stations, and social media.
- We will arrange seminars and informational sessions in all local schools and other institutions to increase dental awareness among students and other people. These efforts will also result in the promotion of our business.
6.3 Sales Monthly
6.4 Sales Yearly
6.5 Sales Forecast
| Sales Forecast | |||
| Unit Sales | Year 1 | Year 2 | Year 3 |
| Dental treatments | 1,887,030 | 2,680,320 | 2,588,240 |
| Dental restorative & preventive services | 802,370 | 815,430 | 823,540 |
| Dental examinations & consultations services | 539,320 | 770230 | 1,002,310 |
| Dental diagnostics services | 265,450 | 322,390 | 393,320 |
| TOTAL UNIT SALES | 3,494,170 | 4,588,370 | 4,807,410 |
| Unit Prices | Year 1 | Year 2 | Year 3 |
| Dental treatments | $140.00 | $150.00 | $160.00 |
| Dental restorative & preventive services | $600.00 | $800.00 | $1,000.00 |
| Dental examinations & consultations services | $700.00 | $800.00 | $900.00 |
| Dental diagnostics services | $650.00 | $750.00 | $850.00 |
| Sales | |||
| Dental treatments | $2,149,800 | $2,784,000 | $3,383,200 |
| Dental restorative & preventive services | $120,050 | $194,500 | $268,500 |
| Dental examinations & consultations services | $50,110 | $71,600 | $93,000 |
| Dental diagnostics services | $139,350 | $194,600 | $249,850 |
| TOTAL SALES | |||
| Direct Unit Costs | Year 1 | Year 2 | Year 3 |
| Dental treatments | $0.70 | $0.80 | $0.90 |
| Dental restorative & preventive services | $0.40 | $0.45 | $0.50 |
| Dental examinations & consultations services | $0.30 | $0.35 | $0.40 |
| Dental diagnostics services | $3.00 | $3.50 | $4.00 |
| Direct Cost of Sales | |||
| Dental treatments | $989,300 | $1,839,000 | $2,679,700 |
| Dental restorative & preventive services | $66,600 | $119,900 | $173,200 |
| Dental examinations & consultations services | $17,900 | $35,000 | $52,100 |
| Dental diagnostics services | $19,400 | $67,600 | $115,800 |
| Subtotal Direct Cost of Sales | $1,294,100 | $1,699,400 | $2,104,700 |
Personnel plan
Personnel plan is also an important component of a good dentistry business plan template so make sure to duly consider it before thinking about how to open a dental office. The personnel plan of our company is as follows.
7.1 Dental Office Staff
Dr. Spear will act as the General Manager of the company and will initially hire following people:
- 1 Accountant for maintaining financial and other records
- 2 Sales Executives responsible for marketing and discovering new ventures
- 3 Dentists for dental treatments and checkups
- 5 Nurses for assisting the Dentists and undertaking day-to-day tasks
- 1 Technical Assistant for managing the company’s official website and social media pages
- 2 Customer Representatives for interacting with customers
- 6 Cleaners for maintaining a clean and hygienic environment in the clinic
All the employees will be hired by following strict testing procedures and will also be trained before onboarding.
7.2 Average Salary of Employees
The following table shows the forecasted data about the salaries of the employees for the next three years:
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| Accountant | $85,000 | $95,000 | $105,000 |
| Sales Executives | $45,000 | $50,000 | $55,000 |
| Dentists | $410,000 | $440,000 | $480,000 |
| Nurses | $173,000 | $180,000 | $187,000 |
| Technical Assistant | $87,000 | $94,000 | $101,000 |
| Customer Representatives | $80,000 | $85,000 | $90,000 |
| Cleaners | $220,000 | $250,000 | $280,000 |
| Total Salaries | $583,000 | $620,000 | $667,000 |
Financial Plan
After you have prepared the dental office marketing plan and the personnel plan, it is time for you to prepare a detailed financial plan. The financial plan should craft a detailed map of all the expenses needed for the startup and how these expenses will be met by the earned profits. It is recommended that you hire a financial expert for guiding you through all financial aspects needed to open a dental office.
8.1 Important Assumptions
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 10.00% | 11.00% | 12.00% |
| Long-term Interest Rate | 10.00% | 10.00% | 10.00% |
| Tax Rate | 26.42% | 27.76% | 28.12% |
| Other | 0 | 0 | 0 |
8.2 Brake-even Analysis
| Brake-Even Analysis | |
| Monthly Units Break-even | 5530 |
| Monthly Revenue Break-even | $159,740 |
| Assumptions: | |
| Average Per-Unit Revenue | $260.87 |
| Average Per-Unit Variable Cost | $0.89 |
| Estimated Monthly Fixed Cost | $196,410 |
8.3 Projected Profit and Loss
| Pro Forma Profit And Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $309,069 | $385,934 | $462,799 |
| Direct Cost of Sales | $15,100 | $19,153 | $23,206 |
| Other | $0 | $0 | $0 |
| TOTAL COST OF SALES | $15,100 | $19,153 | $23,206 |
| Gross Margin | $293,969 | $366,781 | $439,593 |
| Gross Margin % | 94.98% | 94.72% | 94.46% |
| Expenses | |||
| Payroll | $138,036 | $162,898 | $187,760 |
| Sales and Marketing and Other Expenses | $1,850 | $2,000 | $2,150 |
| Depreciation | $2,070 | $2,070 | $2,070 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $4,000 | $4,250 | $4,500 |
| Insurance | $1,800 | $1,800 | $1,800 |
| Rent | $6,500 | $7,000 | $7,500 |
| Payroll Taxes | $34,510 | $40,726 | $46,942 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $188,766 | $220,744 | $252,722 |
| Profit Before Interest and Taxes | $105,205 | $146,040 | $186,875 |
| EBITDA | $107,275 | $148,110 | $188,945 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $26,838 | $37,315 | $47,792 |
| Net Profit | $78,367 | $108,725 | $139,083 |
| Net Profit/Sales | 30.00% | 39.32% | 48.64% |
8.3.1 Profit Monthly
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
| Pro Forma Cash Flow | |||
| Cash Received | Year 1 | Year 2 | Year 3 |
| Cash from Operations | |||
| Cash Sales | $40,124 | $45,046 | $50,068 |
| Cash from Receivables | $7,023 | $8,610 | $9,297 |
| SUBTOTAL CASH FROM OPERATIONS | $47,143 | $53,651 | $59,359 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 |
| SUBTOTAL CASH RECEIVED | $47,143 | $53,651 | $55,359 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $21,647 | $24,204 | $26,951 |
| Bill Payments | $13,539 | $15,385 | $170,631 |
| SUBTOTAL SPENT ON OPERATIONS | $35,296 | $39,549 | $43,582 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| SUBTOTAL CASH SPENT | $35,296 | $35,489 | $43,882 |
| Net Cash Flow | $11,551 | $13,167 | $15,683 |
| Cash Balance | $21,823 | $22,381 | $28,239 |
8.5 Projected Balance Sheet
| Pro Forma Balance Sheet | |||
| Assets | Year 1 | Year 2 | Year 3 |
| Current Assets | |||
| Cash | $184,666 | $218,525 | $252,384 |
| Accounts Receivable | $12,613 | $14,493 | $16,373 |
| Inventory | $2,980 | $3,450 | $3,920 |
| Other Current Assets | $1,000 | $1,000 | $1,000 |
| TOTAL CURRENT ASSETS | $201,259 | $237,468 | $273,677 |
| Long-term Assets | |||
| Long-term Assets | $10,000 | $10,000 | $10,000 |
| Accumulated Depreciation | $12,420 | $14,490 | $16,560 |
| TOTAL LONG-TERM ASSETS | $980 | $610 | $240 |
| TOTAL ASSETS | $198,839 | $232,978 | $267,117 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $9,482 | $10,792 | $12,102 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| SUBTOTAL CURRENT LIABILITIES | $9,482 | $10,792 | $12,102 |
| Long-term Liabilities | $0 | $0 | $0 |
| TOTAL LIABILITIES | $9,482 | $10,792 | $12,102 |
| Paid-in Capital | $30,000 | $30,000 | $30,000 |
| Retained Earnings | $48,651 | $72,636 | $96,621 |
| Earnings | $100,709 | $119,555 | $138,401 |
| TOTAL CAPITAL | $189,360 | $222,190 | $255,020 |
| TOTAL LIABILITIES AND CAPITAL | $198,839 | $232,978 | $267,117 |
| Net Worth | $182,060 | $226,240 | $270,420 |
8.6 Business Ratios
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 4.35% | 30.82% | 63.29% | 4.00% |
| Percent of Total Assets | ||||
| Accounts Receivable | 5.61% | 4.71% | 3.81% | 9.70% |
| Inventory | 1.85% | 1.82% | 1.79% | 9.80% |
| Other Current Assets | 1.75% | 2.02% | 2.29% | 27.40% |
| Total Current Assets | 138.53% | 150.99% | 163.45% | 54.60% |
| Long-term Assets | -9.47% | -21.01% | -32.55% | 58.40% |
| TOTAL ASSETS | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 4.68% | 3.04% | 2.76% | 27.30% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 25.80% |
| Total Liabilities | 4.68% | 3.04% | 2.76% | 54.10% |
| NET WORTH | 99.32% | 101.04% | 102.76% | 44.90% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 94.18% | 93.85% | 93.52% | 0.00% |
| Selling, General & Administrative Expenses | 74.29% | 71.83% | 69.37% | 65.20% |
| Advertising Expenses | 2.06% | 1.11% | 0.28% | 1.40% |
| Profit Before Interest and Taxes | 26.47% | 29.30% | 32.13% | 2.86% |
| Main Ratios | ||||
| Current | 25.86 | 29.39 | 32.92 | 1.63 |
| Quick | 25.4 | 28.88 | 32.36 | 0.84 |
| Total Debt to Total Assets | 2.68% | 1.04% | 0.76% | 67.10% |
| Pre-tax Return on Net Worth | 66.83% | 71.26% | 75.69% | 4.40% |
| Pre-tax Return on Assets | 64.88% | 69.75% | 74.62% | 9.00% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 19.20% | 21.16% | 23.12% | N.A. |
| Return on Equity | 47.79% | 50.53% | 53.27% | N.A. |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 4.56 | 4.56 | 4.56 | N.A. |
| Collection Days | 92 | 99 | 106 | N.A. |
| Inventory Turnover | 19.7 | 22.55 | 25.4 | N.A. |
| Accounts Payable Turnover | 14.17 | 14.67 | 15.17 | N.A. |
| Payment Days | 27 | 27 | 27 | N.A. |
| Total Asset Turnover | 1.84 | 1.55 | 1.26 | N.A. |
| Debt Ratios | ||||
| Debt to Net Worth | 0 | -0.02 | -0.04 | N.A. |
| Current Liab. to Liab. | 1 | 1 | 1 | N.A. |
| Liquidity Ratios | ||||
| Net Working Capital | $120,943 | $140,664 | $160,385 | N.A. |
| Interest Coverage | 0 | 0 | 0 | N.A. |
| Additional Ratios | ||||
| Assets to Sales | 0.45 | 0.48 | 0.51 | N.A. |
| Current Debt/Total Assets | 4% | 3% | 2% | N.A. |
| Acid Test | 23.66 | 27.01 | 30.36 | N.A. |
| Sales/Net Worth | 1.68 | 1.29 | 0.9 | N.A. |
| Dividend Payout | 0 | 0 | 0 | N.A. |
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