Dentist to population ratio and real estate hunting…
If you’re thinking about a startup, dentist to population ratio and real estate hunting are 2 massively misunderstood topics.
It’s common…you’re considering a startup so you hop in the car. You see realtor signs in the windows of some corner-properties you think are “good spots”. Then you leave messages for the realtors.
Sounds like a typical first step in the process, right?
DON’T BE THAT DOCTOR!
I want to help you prevent these dangerous – and expensive – common mistakes.
After helping hundreds of docs with startups I can tell you “that” doctor who hopped in the car just made 3 mistakes that could likely have six-figure negative impacts on the startup.
Mark Costes and I recorded an episode about startups last week and we covered some of the biggest myths in startups, including “hopping in the car” and the dentist to population ratio. (Click here to listen to the episode)
I’ve been involved in over 100 million in real estate deals. The dentist to population ratio concepts I share with dentists are often surprising…but they work.
Unlike most of the advice you read online (that advice is usually coming from 1 guy’s opinion who hasn’t even opened more than 1 startup anytime in the last 5 years) the concepts I share are NOT based on theory. No. They’re based on hundreds of startups opening right now, across the country.
For the doctors who follow the entire process, here are a few recent results that Mark and I discuss on the Podcast…
Dr Bryan – near Nashville – just opened with 84 patients on his 2nd day.
Dr Danny – just finished 12 months with $1mill in *collections* (having zero business experience prior to opening)
Dr Gerry – in a metro area – had 300 patients in his first 6 weeks and a million of production in 12 months.
About “That” Doctor Who Hopped in The Car…
==> Mistake # 1
Don’t hop in the car.
If you’re opening a startup, you’ll invest hundreds of thousands of dollars. You’ll typically be locked in for a decade.
This practice will likely determine the rest of your career.
Your first step deserves better than a casual Sunday morning drive.
First – planning.
Build a legit business plan. Have a defined financial roadmap that can guide you. Plan out the intangible things that will help you enjoy practice ownership at the highest level like: a predetermined practice reputation, your legacy through practice ownership, your local social impact and your profit goals…before EVER looking at buildings. Confirm you’re free of legal restrictions. Study the population. Secure well-negotiated financing. Define your ideal patient profile.
Here’s the heavy reality:
*You will have few choices in life outside of your marriage that affect your future like the location of your practice. *
Do it right.
Plan it well.
Plan your startup like the crucial business decision it is.
**Real estate is simply a byproduct of all your planning. **
It is not a wise business decision to look at real estate as your first step in the process.
Don’t be “that” dentist who starts by hopping in the car.
==> Mistake # 2
Have you ever heard of a Siren?
She’s the beautiful Greek mythological mermaid creature who sits on the rocks near shore, calling out with her song to the passing sailers. They bring their boats close, magnetized by the beauty. The boats hit the rocky shore, they swim to her to be saved.
But the Siren has planned all this in advance.
When the sailor finally reaches her, they embrace.
But instead of a kiss, she pulls the exhausted sailor underwater and drowns him.
Corner real estate for Dental startups is like the Siren.
Many doctors are lured in by the bragging rights of the corner property. People who never opened startups tell these doctors they need corner real estate. The facade of prestige.
But startups do not need corner real estate!!
I can give you dozens of case studies of doctors I’ve helped open startups who have no visibility and nearly no signage…who have incredibly profitable practices just weeks or months after opening their doors…which they’re proud to own. And they do it without the corner real estate.
Corner real estate not needed.
Listen, if you’re opening a McDonalds or a Starbucks, you need corner real estate.
They need impulse buyers.
Their business model requires it.
But have you ever given a drive-thru-prophy?
Of course not!
The business model of a startup does not require corner real estate.
When you follow the advice proven for startups, the great bonus is that you’ll save 50% on real estate costs too.
Guess who cuts their income IN HALF when you take my advice and you DON’T buy the corner real estate?
That’s right. The realtors are paid on the total transaction value. If you save 50% on real estate, they get paid HALF.
How do you think that might affect the motivations of the realtor? What will that do to their advice for you? Even the most honest realtors still get paid only on commission and their advice is affected by their ability to put food on the table.
Vendors have a bias. It’s not bad, it’s just reality.
Ignore the advice of biased vendors in the process of your startup. Unless they have helped at least a hundred doctors open startups, ignore the biased advice.
==> Mistake # 3
“That” doctor called the number on the sign.
Guess who that phone number belongs to? The landlord’s realtor.
That’s right. The landlord’s.
In a real estate transaction you need your OWN representative. It’s incredibly poor negotiation-strategy to begin real estate discussions representing yourself.
I used to love mowing my own lawn. I’d get on the tractor in the back corner of the property and it would be my therapy hour.
I was obsessed with getting the first mowed-line perfect. The tractor had to follow that first line with an angle and direction that was perfect.
That first line affected the ENTIRE lawn. Even just a few degrees off to the left, and the line would angle me off into the next lot. Too far to the right on that first line and I would need to waste more time making an extra pass or two, just to make up for the miscalculation.
My lawn was a fun weekly challenge.
But it wasn’t a big deal.
Real estate, on the other hand IS a big deal.
And trying to negotiate your own real estate is a little like my lawn.
If you’re off even just a few “degrees” it could have you paying hundreds of thousands more than you set out for. Wasting years of profits.
Or it could be worse, putting the long term protection for your practice at risk. I have countless stories of doctors who get kicked out of their real estate – with just weeks of notice – in their 40s or 50s, setting them back in incalculable amount financially. And the stress is even worse.
This is what happens when you try to do this by “hopping in the car”… you’re going to be off by a few “degrees”. Those doctors don’t realize the degree of accuracy on your first “line” will affect your entire career.
Here’s the humble pill:
Real estate is a big game represented by big lawyers, big players, big money. While you may be great chairside, that doesn’t make you effective in your first commercial real estate transaction.
It’s the big leagues of negotiation.
This lease will cost you half a million dollars up to a few million dollars over the course of your career.
Those doctors who call the number on the sign try their best to sound educated but the Landord’s realtor knows they have an easy target on the phone. Those docs are an easy mark. Those doctors ask about things like cost per square foot. And if they really feel supremely well-educated they’ll use fancy terms like “T.I.” That Dentist somehow thinks using buzzwords will show the realtor mental strength.
Have you ever had a patient try to teach you about implants…from their WebMD education?
You can see it coming a mile away.
And it’s like that with realtors.
They can see “that dentist” coming a mile away.
The world of real estate is THEIR operatory. They’re in there everyday. They have a career of protecting the landlord. That’s why the smart landlords with 10s of millions of dollars invested in their real estate hire realtors: to represent THEM. Not you. They work FOR THE LANDLORD.
Worse, they’re financially rewarded when you pay HIGHER rent.
Do you see the problem?
Don’t be “that doctor” who calls the number on the sign.
==> Final Problem**
Many are told to chase the “dentist to population ratio” as a primary factor for their startup…DONT!
I write about this in my publications. And I was the first person in dentistry to publish the dentist to population ratio in a book, stating it had to be at least 2000:1
2000 people in a geographical area for every 1 dentist. Higher is better, implying easier growth.
This would mean the dentist to population 2000:1 is a smart location.
I was right.
But I was also wrong.
See, over the years we’ve built strategies that make the dentist to population ratio irrelevant.
Dr Bryan (from the example above) only had a dentist to population ratio of 1604:1.
That’s not good.
It’s much lower – most would say dangerously lower – than the dentist to population ratio 2000:1
Yet on DAY 2, he already had 84 patients.
(This was less than 2 months ago)
Why did we recommend that area?
My team of consultants knew this was the RIGHT area for Bryan.
The problem is that the cookie-cutter advice for the masses will tell you to avoid this ratio. “The numbers are bad. The spreadsheets show warning signs. “
But advice for the masses is not customized advice for YOUR LIFE.
**A “bad” dentist to population ratio with amazing results. **
The ratio was made irrelevant with the right strategies designed for his LIFE. His situation, his plan, his goals, his family, his reputation in the community.
I’m sure you know colleagues who have followed online advice and bought cheap online reports…who struggle in their startup.
They followed “the ratio” but they’re struggling.
The “ratio” does not bring them success.
Read that again.
DON’T chase the “ratio” as a primary factor for your startup.
Dr Gerry (again, from above) has a great dentist to population ratio of 3000:1
In his first month and a half Gerry already had 300 patients.
But 85% of my startup clients should NEVER consider Dr Gerry’s city.
The ratio is a FALSE POSITIVE for most dentists.
Here’s the reason: A high percentage of those patients are Medicaid recipients.
For Gerry, it’s perfect. Gerry LOVES serving that population. He loves that pace. That rhythm. That practice model.
It’s perfect for HIM.
But is it right for you?
If you opened a startup in that location – because “the ratio” looked good – you might have patients…but would you be happy?
Would it be the kind of practice that’s right FOR YOU.
Or would it just fit the checklist someone told you about online?
See, this isn’t about following spreadsheet-advice.
This isn’t about buying some cheap report from a guy online so you can stare at piles of data.
This isn’t about calculations.
This is about your LIFE.
Your startup will define your life. For your family. And your legacy.
Not data. You are not a calculator. You are not a spreadsheet.
You’re a human.
If he had followed the cookie-cutter online advice about dentist to population ratio he would have missed the richness of his 1604:1 dream.
But now he’s in a location that he and his wife are over-the-top proud to be in.
He told me he can’t stop smiling. He said it’s better than he imagined it would be owning his practice.
But he would have missed out on 84 patients in the first 2 days if he did what people online tell you to do.
And like Gerry, if YOU opened in his city, you might be frustrated for decades, stuck with a false positive. A patient population you don’t love serving. Because of trying to follow the ratio advice for the masses.
Build a custom plan – not a plan built on advice from people’s online opinions who have never opened more than 1 practice.
Don’t be like the dentist who’s first step is to hop in the car. This is a decision that will set the “tractor line” for your whole career. Let’s treat it like the real business decision it is…and get it right the first time.
Beware of the Siren. People will try to tell you what works for startups…even when they have nothing more than an opinion based on their google searches.
Those doctors may be happy being sucked in by the Siren…but you deserve better than risking your future based on the seductive dangers singing to you from shore.
Startups – when done the right way – can be the best part of your career.
They can be profitable in the first weeks.
They can match your clinical philosophy on day 1.
They can represent you authentically, making your community and family proud of your accomplishment.
It’s worth getting right. So invest the time and energy to get it right the first time so you can step confidently into practice ownership.
Today, enjoy the podcast episode with me and Dr Mark Costes.
Here’s to your future success in private practice ownership with a startup!