How Much Can a New Dental Practice Make?
The earning potential of a new dental practice can vary substantially depending on its location, patient volume, services, pricing, operating expenses, and how quickly the practice builds its patient base.
For dentists considering dental practice financing, understanding the factors that influence revenue and profitability can help when developing financial projections for a new practice.
Revenue Usually Builds Over Time
A new dental practice typically does not begin with the same patient volume as an established practice.
Revenue may start lower while the dentist builds awareness, attracts new patients, establishes referral relationships, and develops a recurring patient base.
The growth rate can vary significantly between practices.
Patient Volume Is a Major Factor
The number of patients seen each month has a direct impact on practice revenue.
Factors that can influence patient volume include:
- Location
- Marketing
- Online visibility
- Referrals
- Office hours
- Scheduling capacity
- Patient retention
A practice with strong demand and efficient scheduling may be able to increase revenue more quickly.
Services Can Affect Revenue
The types of services offered can influence the amount of revenue generated per patient.
General dentistry, cosmetic procedures, restorative services, oral surgery, implants, and other treatments can have different pricing and production characteristics.
Dentists should build projections based on the services they realistically expect to provide.
Location Matters
The market surrounding the practice can have a significant impact on its potential.
Population size, demographics, competition, household income, accessibility, visibility, and the availability of other dental providers can all influence patient acquisition.
Marketing Can Drive Growth
A new dental practice generally needs a strategy for attracting patients.
Potential marketing channels include:
- Search engine optimization
- Online advertising
- Social media
- Community marketing
- Patient referrals
- Online reviews
The effectiveness of these efforts can affect how quickly the practice develops a patient base.
Revenue Is Not the Same as Profit
A practice can generate substantial revenue while still having significant operating expenses.
Common expenses can include:
- Payroll
- Rent
- Dental supplies
- Laboratory costs
- Insurance
- Marketing
- Technology
- Utilities
- Loan payments
Dentists should therefore evaluate both projected production and expected expenses when estimating profitability.
Staffing Can Affect Profitability
Staffing levels should match the expected patient volume of the practice.
Hiring too early can increase expenses before sufficient revenue is generated, while inadequate staffing can limit the number of patients the practice can serve.
Capacity Can Create Growth Opportunities
As patient demand increases, a dentist may be able to grow revenue by improving scheduling, extending office hours, adding treatment rooms, hiring additional providers, or expanding services.
Growth investments should be evaluated against their expected costs and benefits.
Working Capital Can Support Early Growth
Because revenue can take time to develop, new practices may need sufficient working capital to cover operating expenses during the initial stages.
Maintaining adequate liquidity can give the dentist more flexibility while patient volume grows.
Build Conservative Financial Projections
Dentists should avoid assuming that a new practice will immediately reach the revenue levels of an established practice.
Financial projections should account for a gradual increase in patient volume and realistic operating expenses.
Final Thought
How much a new dental practice can make depends on numerous factors, including patient volume, services, location, pricing, marketing, staffing, and operating expenses.
Dentists should focus on building realistic revenue and cash-flow projections rather than relying on a single expected income figure. A well-planned budget and appropriate financing strategy can help provide the capital needed while the practice develops.
