Biggest Legal Causes Of Dental Practice Failures

Just this week I attempted to schedule appointments for my kids with two different dental offices. I was surprised that they had both gone out of business. As an attorney focused on business law, I was curious about what could have led to the closure of a dental office. A few of these may not be a surprise, but you may be shocked at others.

Consider this list of top legal reasons why Dental practices fail.

Inadequate Initial Capital

Seasoned dental professionals would expect to see this. By most accounts, the single biggest reason that dental practices historically fail is the lack of enough money to get the business off the ground. Dental practice owners are entrepreneurs and often risk-takers. Those are needed components to starting a dental practice. However, that does not excuse poor planning on the front end or the need to realistically understand that it may be 6 to 18 months before a practice breaks even or makes a profit.

Poor Advice From Bad Advisers

Second, on our list of dental practice failure factors is taking advice from bad advisers. Bad tax advice, bad accounting advice, bad legal advice and many more can lead dental professionals owners down very bad paths. Before taking anyone’s advice, ensure that they have good experience in the dental industry. Just because an accountant does your personal taxes or a lawyer handled your divorce, does not mean that they know anything about the nuances of the dentistry industry.

Similarly, avoid being penny-wise and pound-foolish. A cheap adviser does not always provide real value. That said, it is likewise true that you do not always need the gold standard of advisers. Solid advice comes from solid people regardless of price.

Not Seeking Or Taking Advice From Good Advisers

Dovetailing from point three above, it can be business suicide to avoid asking for help when you need it. Being a great dental practice owner does not make you a good chef. The same is true for lawyers, accountants, real estate brokers, and all of the other great business advisers that dental professionals need in their business. Just because you can file your own taxes or write a contract, does not mean those are good ideas.

Poor Location

Not every dentistry practice needs a great location, but that is the exception, not the rule. Most denta offices need to be in a place that is convenient and with good visibility. Think hard before you cut corners on the location just because the price is good.

Inattention To Details

Most businesses need great innovators and great analysts. Right brain and left brain. The artist and the number cruncher. Dental offices are no different. However, details apply to both personality types, and all dental practice owners must pay attention to these little things.

For instance, the outcome could be great, but it might not be profitable per service. You might have great marketing, but you might lose customers because of the wait. The decor could be fantastic, but it may not fit the demographic of your patients.

All of these little details add up, and it has cost many dentistry office their business for not paying attention.

Lack Of Business Experience

Our final point here is the surprising fact that many people try to open a dentistry practice with little or no experience. As noted above, you need to take risks sometimes, but those risks need to be calculated. The dentistry industry is highly competitive, and it will greatly increase your chances of success by knowing something about it before starting.

Have you experienced issues like these? Have you gone down some bad paths and learned something? We want to hear about them, so please post your thoughts!

About the author: Matthew Sanderson is a restaurant lawyer in Texas. “Good service with a smile” is his motto.