The UK ‘high street’ dentistry market was valued at a whopping £7.1 billion in 2018, and since then, it has only flourished further.
Indeed, analysys are now saying the market is ‘ripe for further consolidation’ owing to several favourable conditions. These include the UK’s ageing population and corresponding rise in the necessity for dental work, as well as an increased interest in cosmetic dentistry, with this segment predicted to grow to £3.3 billion by the end of this year.
Indeed, the dental services industry is highly fragmented, with very few multinational operators and investors. Instead, it follows a localised model ripe for new investors entering the market.
So, if you’re looking to expand your investment portfolio, then are’s why dental practices are worth investing in.
BUYING OR SETTING UP A DENTAL PRACTICE
An investment in dentistry could be a surprisingly lucrative one. If you compare the average annual return from a dental practice to the average annual return of traditional Investments, a dental practice may give you a higher rate of return on your capital.
Let’s look at a quick example:
An established dental practice brings in £400,000 annually. Most dentists can pay off their initial business loans and equipment leases within the first 8 years.
Let’s assume that you invest in a dental practice and own it for 28 years. If your operating expenses are 60% of your gross income from the dental practice, and you take 30% of the annual income as part of your salary, then every year you walk away with about £120,000. Once the debt is paid off for the initial startup costs over the first eight years, then you get 10% annual profit that goes toward gross income which adds another £40,000 for the remaining 20 years that you own the dental practice.
If you compare this to traditional investments, it would cost you upwards of £800,000 invested directly in cash assets in order to make £40,000 per year at a 5% rate of return, before taxes.
Read: 6 different types of cosmetic dentistry explained
POTENTIAL INCOME STREAM
Now let’s take it one step further. If you have an income stream of £40,000 per year for the 20 remaining years you own the dental practice with a 5% return, then you might make upwards of £500,000.
All of this is of course contingent upon the actual amount of profits your dental practice can generate, how well it is marketed, how long you owned the dental practice, what types of start-up costs you had to get a loan for, and how long it took you to pay that off. But no matter how you cut it, investing in a dental practice is well worth it even if you are starting something from scratch.
A dental marketing agency could significantly boost your income potential by employing diverse strategies to enhance your practice’s visibility, attract new patients, and retain existing ones. A marketing expert can tailor a content strategy to your target audience. They can create valuable content, such as blog posts or videos, to position you as an expert and aid in patient attraction and retention.
Ensuring accurate practice listings in local directories and encouraging positive reviews boosts visibility within your community, tasks efficiently managed by the dental marketing agency, covering online reputation and local SEO efforts.
Marketing agencies utilise analytics tools to track website traffic, patient demographics, and the success of various campaigns. This data-driven approach refines strategies for optimal results. So, don’t hesitate to hire their services if you want to focus on your practice.
PURCHASING A PRE-EXISTING PRACTICE WITH THE MECHANISMS IN PLACE
Now let’s consider the fact that many people investing in a dental practice choose to invest in one that is already established. If you invest in a dental practice that is already established, you don’t have the same investment costs early on.
You can also choose to purchase an existing practice when prices are low, waiting for the market to drop. If you pick an area where, for example, there are very few dentists currently practicing and the most popular dentist in the region is looking to retire, you can easily pick up the existing patient base of regulars to the dentist without having to invest too much in additional marketing.
Plan for a seamless transition, leveraging insights from current staff, especially those continuing with the practice. Secure a non-compete agreement from the previous owner to prevent competition. Assess the practice’s technology and equipment, prioritising updates to minimise immediate capital expenses. Verify adherence to industry standards and guidelines, addressing any potential liabilities. Implement a robust marketing strategy, utilising modern techniques to boost visibility, attract new patients, and retain the current ones, even with an existing patient base.
REINVIGORATING A FAILING PRACTICE
In other situations you might invest in a dental practice that isn’t doing well simply because that practice isn’t marketing itself or investing in newer, virtual services.
By taking advantage of the cheaper price you might get for a failing dental practice, you don’t have to start from the ground up. Instead, you can make simple, streamlining changes that incorporate things like a better website and an appointment setting service online that automatically sends text message reminders to the patients.
On top of that, your new website can host client portals that offer secured access to information like x-rays, a recent history of appointments, what products were used or suggested, all the way down to the toothbrush and toothpaste you gave away at the end of the dental cleaning. This information will help your clients better understand what their oral health looks like and how it has looked progressively.
You can form relationships with wholesalers to get equipment for dentists easily, who can enlighten you on the key considerations and comparisons, such as dental elevator vs luxator, satin floss or floss stick, and sickle probe, scaler or both.
With good wholesale suppliers you can find material to bolster your dental practice. In some cases if you invest in an existing dental practice they might already have a relationship with a wholesale provider but that doesn’t mean you can’t upgrade to another company that offers a wider range or better customer service.
THE BOTTOM LINE
Whilst it might seem like a step into the unknown, investing in dentistry might be just the type of venture that you can really get your teeth into. Good luck!
*Anything written by IDEAL Magazine is not intended to constitute financial advice. Always consult with an independent financial advisor or expert before making an investment or any personal finance decisions.*