Purchasing a Practice 101: Laws, Legislation, & Logistics
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Those considering purchasing a veterinary or orthodontic practice have many reasons for doing so. Whether you are purchasing an already established practice, you’re working toward establishing your own, or some mix of the two, there are some things that you should know about a practice. While the legalities of purchasing and starting your own practice can be vastly different from state-to-state, having a basic understanding of laws and logistics can be a great starting point.
Benefits of Purchasing a Practice
For most veterinarians and orthodontists, purchasing a practice comes down to having the freedom to expand their career without the constraints that come from being an employee or being a part of a practice that employs many different licensed professionals. Perhaps one of the biggest benefits to purchasing a practice is the ability to run the practice in the way they choose. You have the ability to choose your location, your clientele, financing capabilities, and more. If you’re purchasing a practice, you will need to make sure that you are not only aware of these benefits but also be prepared to build your business around these benefits.
Location and Reputation
One of the first things you’ll need to consider is the location and the reputation of the practice you’re going to purchase. If you are a veterinarian or an orthodontist and you’re hoping to purchase an already-established practice, you may have only a few options at your disposal.
- You may want to purchase a practice in the area that you already live in and continue building any patient relationships you’ve established.
- A practice in a nearby area with a larger population is another common choice for veterinarians and orthodontists who want to stay close to their home but also have a larger pool of potential patients.
- You could purchase a practice nowhere near your home, but in an area with a greater need, and move to that area.
With each of these options, you’ll need to consider the location of the business and how it will help you thrive in your practice as well as the reputation of the business in the community. If it already has a good reputation, it will likely be easier for you to find success.
Pre-Existing Business Structure
A major draw to purchasing a practice is already having an established business structure. Instead of having to create a detailed business plan and start from scratch with trials and errors in your processes, you will already have a business that is running. If you are starting from the ground up, you will likely spend more time trying to figure out what works best and how to properly run the business. If you purchase an already existing practice, you’ll already have staff who knows what to do, business practices in place, and procedures that your patients already know about.
Additionally, you’ll already have a patient/client base that you can pull from when you’re growing the business. You will likely find it much easier to have a “crop” that you can farm from instead of trying to hunt for new clients. The National Library of Medicine has several case studies with information about purchasing an already established practice versus starting one.
Finding bank financing is an important step when purchasing an orthodontic or veterinary practice. You will need to find financing to help you purchase the practice as well as financing for making any type of improvements you plan to make to the practice. The financing you acquire may be different from if you were purchasing a practice and building it from the ground up. You’ll need to consider things like proven business acuity, how the practice performed in the past, and expected revenue when finding a lender.
If you are obtaining a practice loan, you will need to meet the requirements the lender has in place. This can be anything from obtaining insurance coverage to creating a business plan. Make sure that you are prepared and know the lender’s requirements when applying.
Considerations for Purchasing a Practice
When you’re considering purchasing a practice, there is more to it than just finding the right practice and securing financing. You will also need to make sure that you are legally allowed to operate your business. This can include everything from securing a business license to ensuring you are within regulations from your licensing board. All of these requirements are complex and can vary from state to state and even municipality to municipality. You will need to work with an attorney to help you with your state-specific legislation, obtaining business licenses, premises leases/documents, and more. Be sure that your chosen attorney is familiar with the best practices of purchasing a veterinary or orthodontic practice and that they are familiar with local laws and regulations.
Insuring your business is essential. Not only is it a requirement in most states but it’s also a safeguard that you can put in place to help protect the investment you’ve made into your business. Work with an insurance professional from Loyall Group to learn more about business insurance and determine the right coverage for your veterinary or orthodontic practice.