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Matching Your Equipment Budget to Your Practice Phase

Oct 6, 2022  By: John W. McPeek, President, ASI Dental
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Business Sense And Pitfalls

Good business sense indicates that entrepreneurs shouldn’t over indebt themselves on nonproductive expenditures, as it simply takes away cash reserves from other uses and ties up borrowing capability that might be needed in the future. To a new business venture, cash is king. When opening a startup practice, you can never fully anticipate all of the unintended expenditures you will need to make or how long it will take to get your practice cash flow positive. You always want to ensure you have cash and/or borrowing ability if needed.

Having credit lines tied up in unused equipment in extra treatment rooms won’t do you any good in a crunch.

Dentists who purchase all their equipment at once often realize they spent everything in their loan for equipment but didn’t leave sufficient funds to hire marketing consultants or to invest in advertising to grow their practice. The higher monthly payments for excess equipment loans constrains them further, as these loans take more of their working cash created by practice revenue.

Not only that, additional borrowing can impact your personal credit rating and your ability to take out personal loans for cars or houses. It also might put you into a higher interest bracket than you deserve. So it’s very important to only borrow what you need to productively launch your dental practice.

How To Plan Your Equipment Build-Out And The Growth Phase Of Your Practice

The first step is to plan well and to only purchase the equipment and supplies you can put into production right away. This may mean avoiding supply stocking programs and fully equipped offices unless you really believe they will be used from the start.

Planning out your office and expenditures is more than just getting the right look. Use discernment when reviewing preformatted budget templates, and consider the importance of each area to generating initial practice revenue. Before you purchase equipment, ask yourself if it’s really necessary for you to open your practice. This will help you get down to a much more realistic overall budget that isn’t filled with excess equipment, supplies or post construction décor.

How To Select Equipment Types That Easily Adapt And Can Be Dropped In As Growth Requires

Think like a large manufacturer that is planning to grow. These companies need to be able to easily ramp up their production lines in the future, but don’t want to over spend until their sales numbers justify the expansion. So while they would consider finding a large enough facility that allowed for planned growth, pre-wiring it and completing some of the interior finish, they would not buy additional production line equipment until it was required.

The trick is to ensure construction is completed and readily allows for equipment to be moved in, set up and easily connected. There are now handy in-wall and floor junction boxes that facilitate running electrical wiring, IT cabling and plumbing. These built-in boxes come neatly enclosed and don’t detract from an empty treatment room’s appearance, yet they make it very easy to connect equipment as needed.

To maximize your office space cost, it is important to get the most from your space. Building leases are based on a price per square foot, which is the horizontal dimension. Keep in mind you pay nothing more for the vertical space. Large dental cabinets require a big horizontal footprint without adding to treatment capability. Modern dental equipment is more compact and can integrate instruments, computer systems and monitors into one console, reducing the footprint and taking advantage of the vertical space. You can design smaller treatment rooms yet achieve an open and spacious feeling for you and your patients.

Modern modular dental equipment is much easier to set into place and connect without a lot of installation difficulty. This equipment easily adapts to expansion and even different operators’ requirements, including ambidextrous or multi-specialty needs.

No matter what equipment you invest in as you start your practice, don’t feel like you have to buy it all at once. Take a phased approach instead.

John W. McPeek, President, ASI Dental

John W. McPeek is a former CPA turned entrepreneur. He has started a number of successful ventures and began ASI Dental, a division of ASI Medical Inc., 25 years ago. ASI Dental has helped numerous dentists by providing equipment solutions that enable them to begin their practice in a cost-effective manner.

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