Where should I open my new practice?

By Angus Pryor, MBA (Marketing)

Recently, I took part in a speaking tour around Australia that allowed me to meet up with literally hundreds of dentists. Among the various audiences were multiple dentists wanting to open up a new practice.

Yet, what concerned me was how many dentists had already committed to opening a practice in a particular location, apparently without considering the pros and cons of doing so. In this article, we’re going to look at key considerations for opening a new practice. But first, a story...

The practice that struggled

As a long-time consultant to the dental industry (more than 10,000 hours so far), I’m not easily surprised - but with one client, I definitely was.

This was a multi-chair practice in a busy capital city, but not in the CBD.

As we began to work together, I implemented the first steps of our proprietary 20-point Practice Maximus system. From experience, I’ve learned what works best so that consulting clients get a good return at the start of our time together.

However, with this client, I couldn’t understand why all my best “tricks” weren’t working. These are road-tested, practice-building techniques that I’d seen work effectively in lots of other practices.

Finally, in desperation, I asked the practice owner to complete an audit of other dental practices in the area. I gave them a sheet of paper which had columns for the names of their competitors, the distance from the practice, the number of Google reviews their competitors had and so on.

The competitor audit form had rows to list up to 16 competitors within 1500 metres of the practice. Imagine my surprise when the audit sheet came

back filled in on both sides of the page for a total of 25 dentists in a 1500 metre area! And remember, this was a practice NOT in a CBD.

No wonder we were having to work so hard to get traction! There was so much choice for consumers, so many alternatives, that boosting this practice was going to be an uphill task, requiring sustained effort over an extended period. That was what it looked like for a practice located among lots of competitors.

The practice that coasted

Contrast the hyper-competitive scenario above with other new practices we’ve worked with, where they’ve been far less influenced by competing practices. Rather than the uphill slog caused by all that competition, these practices have experienced a smooth, downhill run that felt almost effortless.

One of our clients went from zero patients to almost 1,000 patients within 12 months of opening! And, in case you’re wondering, none of the dentists at the new practice had worked in the area or were able to bring any significant number of new patients with them. What they did have going for them was a relative lack of competition in the area.

The contrast between these two could not have been more stark and this is my point... choose where your practice is going to be located (particularly in relation to other practices) very, very carefully.

Fortunately, there’s software available that will allow you to check the number of dentists per head of population in different areas. In this regard, the Australian Dental Industry Association (ADIA) has developed a geospatial dental market analysis tool and if you know a member (you’re in luck – see below), they’ll let you go in eyes wide open.

Or, simply visit www.dentist.com.au – or www.dentist.co.nz if you’re in New Zealand – and type in your suburb name and search. This site lists every practice in the country – private, corporate, health fund and government. When you search, it will show you all the practices located in the suburb you searched on and, if there are less than 20 found in that suburb, it will search out to a radius of 50 km until 20 practices are found and show you the distances in kilometres to the nearest ones. It’s gold.

Physical location

Apart from your new practice’s proximity to other practices in the area, it’s also worth looking at which types of locations are best. All locations have pros and cons but there are two main parameters for setting up a practice (in an area that allows dental practices): • The proximity to other places where potential patients might go (e.g. other businesses); and • The price.

The first decision about physical location relates to whether the practice will be relatively stand alone, or co-located with other businesses. To be clear, dentistry is not an “impulse buy” kind of business. It’s not like potential patients drop into the shops to pick up a hamburger or buy a bottle of wine and then get an implant on impulse.

However, there is a clear benefit in having people be aware of you - and regular visitors to somewhere nearby allows you to “capture those eyeballs” so that when they think of a dentist, you’ll be top of mind.

On the flip side, since dental practices are a “destination”, you could set up anywhere you can be approved to run a practice and know that if you’re well marketed, you could do well.

From a price point-of-view, typically practices that are co-located with other business or in high foot traffic areas tend to be more expensive to buy or rent. In fact, in many shopping centres, only renting is possible and that means you can be susceptible to sharp price increases.

In a perfect world, I would aim for somewhere nearby a high traffic site (e.g. A supermarket), which has moderate rental (or even better, the capacity to buy in).

I’m not fond of setting up a practice in a busy shopping centre (e.g. Westfield etc) simply because the rents are crippling (often uncapped) and there’s no chance of buying in. Put another way, the upside benefit of all that extra foot traffic, usually doesn’t offset the downside of the much higher rent.

Existing or new practice?

Recently on my podcast (to listen, visit www.dentalpracticehq.com.au), I interviewed fellow Australasian Dental Practice columnist, Graham Middleton, who has worked with lots of dentists in his capacity running an accounting firm, among other things.

There were two things I took from the interview that are relevant to this article. The first was his comment that typically buying an existing practice is a better financial decision than opening up a new practice.

This mainly relates to having a patient base from day one and the many hidden costs in building which in Graham’s experience, dentists usually way underestimate. But I appreciate this is not always possible.

The second point from the interview was Graham’s comment about the importance of making good decisions in your practice - decisions that can literally lead to $2-$3 million dollars of difference in net worth at the end of a career. Ouch!

This is why I’m so surprised when I hear from dentists who have, from what I can tell, done so little checking before deciding to open up (or buy) a new practice. Don’t let that be you!

Summary

Icannot overstate how important it is to choose wisely when deciding where to open your new practice. It’s a bit like wading waist deep into a fastmoving river.

Get this right and the tide will move in the same direction as you and everything will feel relatively easy. Get this wrong and you’ll feel like the tide is constantly moving against you and that makes for hard work and a poorer business overall.

About the author

Winner of the 2022 Australian Business Awards for Marketing Excellence and Australia’s number one Google-ranked dental marketer, Angus Pryor is a #1 Amazon bestselling author, marketer and international speaker. If you’re thinking of opening a new practice, book a free consult with Angus to look at the geospatial dental market analysis tool from the ADIA. In a few minutes, you’ll have a very clear map (literally) of areas to avoid and areas that are ripe for a new dental practice in your local area. Visit www.AngusPryor.com today and book a free call.