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August 10, 2008

From the Broker: Launching Your Career

By Sarah K. Lynch

One of the most challenging times for a new dental graduate is selecting his or her first practice opportunity.

Occasionally, a new doctor will purchase a practice immediately upon graduation. Usually these doctors have a background in dentistry or other business career. In my firm, about 1% of the new dental graduates we meet will immediately purchase a practice upon graduation. For the remaining 99%, the challenge will be selecting a great associate position.

Identifying the best opportunity for oneself can be daunting. The best advice I can give any new dentist is to explore as many opportunities as you can. Start your search at least a few months prior to graduation. This will help you develop a great frame of reference. Once you have decided where and with whom you feel most comfortable, begin conversations about compensation, expectations, and restrictions. Then you can start the process of drafting employment contracts and having them signed by all parties. It is a good idea to have the employment agreement reviewed by a third party if you are not clear on every item within the document.

Outside of the compensation package and work schedule offer, there are several key things to zero in on when visiting and interviewing with a practice owner:

• Find out if the owner has ever had an associate before.

• How many treatment rooms are available for your use during the workday?

• What is the office's financial policy?

• What is the collections rate? Ask to see a copy of the latest accounts receivable summary. This will give you a good idea as to how effective the office is at collections. (This is critical information if you are being paid on collections.)

• If the office is computerized, ask to see a production report by provider and procedures for the last year.

• Ask what procedures the doctor(s) refer out of the practice.

Above all, take your time and don't feel pressured or rushed. You have a great career ahead of you, and there are many resources available to help you get launched.

Be well and prosper!

Sarah K. Lynch is a partner in Jim Kasper Associates, LLC, a regional practice brokerage and transition firm serving dentists in New England and New York State since 1981, specializing in appraisals and sales of dental practices. She has 13 years of practice brokerage and appraisal experience completing over 900 practice transitions and 750 appraisals of both general and specialty practices. She also lectures nationally on practice transitions and is a frequent guest speaker for several state and local dental associations, societies, and dental practice-related industries. She currently serves as president of ADS Inc., www.ADStransitions.com, and can be reached at (603) 355-2260 or sarah@jimkasper.com.

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From the Financial Planner: Critical Financial Decisions for the Dental Student

By Connie M. Tyson, CFP, CLU, LUTCF, RHU

When you're in dental school and have enough money for the bus to school and back, and maybe some Top Ramen for dinner that night, you aren't thinking about financial wealth. You haven't seen that as yet.

However, you do need to start planning in some regards even at this stage of your career. So what's to plan?

Well, first of all, you are going to be doing one of several options once you graduate and complete your Boards. You will be (1) buying a practice of your own or in a partnership capacity, (2) becoming an associate in a practice with a possible idea of taking over when the senior dentist retires, (3) going into the military in a dental unit, or (4) going to work in a group/franchise clinic situation as a paid employee dentist.

You want to present yourself in any of these capacities with what is termed "attractability." In other words, you are going to have to be selling yourself to someone or to new patients to build your practice.

To start with, if you are going to purchase a practice, you will need to be "attractive" to a financial loan institution which will be placing a lot of money at risk for you in your practice loan package. What will they be looking for in you? It's not your hair and eyes; it is your credit scoring. It is your trustworthiness to pay back loans on a timely basis. It is your history so far on how you have expressed these responsibilities. So number one is that you want to establish a good, solid credit rating. Go to the credit rating Web sites and check out where you stand now:

www.equifax.com
www.experian.com
www.CreditReport.com

See what you can do to improve that number. What can affect it the most quickly is to show that you can pay your bills and your credit cards, car loans, etc., on time. Start to make this improvement, if you are not punctual now.

You can make a credit card reflect good payments if you were to take out a short-term small loan and then pay it back ON THE DIME right away. For instance, take out a loan for $1,000 at your bank or $3,000 for something like furniture. Do a short three-to-six-month loan and be totally punctual. This will reflect at the end of the period in a positive way on your credit scoring.

Gather information on various types of insurance, and take out those necessary policies. You are old enough to likely be holding debt. You need life insurance to pay off these debts were you to die. Cover those who have trusted you — parents, other relatives — by owning life insurance and placing them as your beneficiaries. This will reflect well to a financial loan institution, which will be asking you to do the same. When you do take out a practice loan, you will be buying life insurance as well as disability insurance on yourself with the financial loan institution as the beneficiary, in what is called a collateral assignment. This is because they know that there is risk inherent in lending you money; something could happen to you, and the statistics prove that out. Accidents, for instance, are age irrespective. Obviously, if you are married or married with children while in dental school, the need for life insurance speaks for itself. You have people for whom you are responsible, and you are an adult. Do what's right by them.

Try to save some money and open up a mutual fund account. Don't squander every penny you earn in your part-time job, but "pay yourself first." A rule of thumb in the financial world is to pay yourself, as if you were a bill, 10% of your gross earnings, and put it into a solid investment. Try to create your Emergency Fund with the goal to build from three to six months of reserves. Whatever you spend per month on ALL bills/items, multiply that by three for a three-month reserve or six for a six-month reserve, and don't stray from it. Again, this will put you in good light with the financial loan institutions you will be asking to front your practice loan money.

You'll be watched once out of school by how you handle your school loan repayment schedules. This will become critical in your financial "picture" and credit rating score. Be aware this will be an important bill to be repaid in a timely fashion.

Depending on which of the above career paths you take from dental school into the dental community, your responsible actions will follow you and help you create opportunities, while financial irresponsibility will deny you. Good luck. You can do it!

To summarize:

• Establish a solid credit rating.

• Take out an insurance policy.

• Repay student loans.

• Open a mutual fund account.

Connie M. Tyson is a Certified Financial Planner with Principal Financial Group and the former executive director of the Oregon Dental Association. She has been in practice for 28 years helping clients achieve their financial goals through investment planning, retirement plans, college savings plans, and insurance products. Connie works nationally with more than 2,800 clients and specializes in dental practices. She is a frequent speaker at component dental association meetings as well as state dental association conventions. "Financial Fitness for Women" is a specialized course she teaches. Perhaps you read her article in the January 2007 issue of Woman Dentist Journal on "Developing Financial Muscle." She can be reached at (800) 345-7789, Ext. 6281, or tyson.connie@principal.com.

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