From Associate to Owner

There is a certain price tag that comes with what we want to be, to have and to accomplish in life. Sometimes it is more than we are willing to pay in terms of financial obligation, cash flow, or the effort required to accomplish our goal. The quest to become a practice owner begins with certain observations, assumptions and expectations – good and bad – that lead most professionals to make their decisions long before they analyze a specific opportunity. Here are some myths and realities that you may want to consider as part of your move from associate to ownership.

Myth:

Owners are compensated in the same way as contractors.

Reality:

There are advantages and disadvantages to every career management option. Being an associate (contractor) offers a relatively higher percentage of production as compensation with the risk that there is little to no control over practice management decisions, patient scheduling, and no equity is built in your own business. Most owners earn a smaller percentage of their production as compensation, but have opportunity to enjoy long-term equity and an escalating personal income as debts are retired and infrastructure is built. Your accountant wil also tell you that practice owners benefit from more tax deductions than their contractor counterparts. It is true that in the first 1-3 years as an owner, personal income and retained earnings are lower than what properly this is a short-term. Depending on the community that the practitioner decides to buy or set up, capital investment and operating costs vary considerably. The prospective buyer needs to decide what best fits their business and lifestyle goals before focusing on any one community or specific practice.

For more myths and realities explained, visit our website www.dentalbusiness.ca and sign up as a member to view full versions of our written articles. Nadean Burkett’s articles appear in various trusted dental professional magazines including Spectrum Dialogue, the Journal for the Canadian Academy of General Dentistry, and the Journal for the Canadian Academy of Cosmetic Dentistry.