In this episode of Beyond Bitewings, Ash welcomes Bank of America's Adam Schenck to discuss the vital steps involved in acquiring or starting a dental practice.Ash and Adam cover a wide range of crucial topics, particularly focusing on the significance of building a knowledgeable team. This team should include industry-specific professionals like CPAs, lenders specializing in dental loans, and insurance advisors. Adam emphasizes that having this team not only makes the daunting process of starting a practice more manageable but also ensures that aspiring dental practice owners are well-prepared for their most significant investment yet.
Adam provides insight into the practicalities of obtaining a practice loan. He explains the importance of cash flow management and the role of working capital loans in covering initial operating expenses such as staff salaries and supplies. Further, the episode compares starting a new practice from scratch versus acquiring an existing one. Adam advises keeping all options open and stresses the importance of fact-checking and consulting with experts to make informed decisions.
To connect with Adam, you can email him at Adam.Schenck {at} bofa.com
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Ash [:Hello, and welcome to another episode of Beyond Bitewings. In today's episode, we have a very special message from Bank of America and in fact, we're reporting new wings. Well, hi. Here at the SWDC show and convention. Now Adam is with Bank of America and, you know, oftentimes we get asked a lot of, similar questions about applying for a practice counter or business performance. Right? What are the requirements? What should she be aware of? And we decided, you know what? Why not have an expert come here and talk a little bit about that so that the process gets easier and you know what to expect before you start applying. But without further ado, Adam, how are you?
Adam Schenck [:I'm doing well. Thank you so much, Ash. I appreciate you having me here today. It's a pleasure to be a part of this.
Ash [:Absolutely. I'm well, I'm honored to have you here. So, you know, tell tell our listeners a little bit about the whole process. Let's say, take me for instance. Let's say I just graduated dental school. It's been 2 years I've been doing an associate'ship. Now I'm thinking about opening up my own practice. Right? It's gonna be a startup.
Ash [:Where where should I start?
Adam Schenck [:Yeah. That's a that's a great question. You know, really, I think the best place to start is is with building a team. Okay. You know, the process of, you know, acquiring or starting a a practice, can seem daunting at first. Right. And, you know, most of the time, we're we're looking at a a client like that who has never done anything like this in their life. Maybe they haven't even been through the home loan process at this point in their life.
Adam Schenck [:So it's important to surround yourself with with industry specific, whether it's it's CPA, equipment companies, you know, people that exist in that world that are best equipped to educate and guide you through the process.
Ash [:Okay. So see, you're actually telling me something different than what I would have done. I probably would have gone on Google and start typing out loans for dental practice. But you're saying no focus on your team. Yeah. See? Right there. That's an expert tip right there. So you need to have a team of experts who is very knowledgeable about your industry.
Ash [:So your lenders that do dental specific loans, CPAs, financial advisors, insurance people, You need to be very confident before you take a step because as you said, this this might even happen before you apply for a home loan. Right? So in essence, this is going to be your first and biggest investment of your life.
Adam Schenck [:That's correct. That's correct. And so to surround yourself with people that that live and breathe that world every day, that build offices all day every day, you know, they're gonna have a deeper understanding than than you than you really honestly, a deeper understanding than you want. Mhmm. Right? You don't need to know all those nuances of how to build a practice. Right? You're gonna learn a lot through the process as you go, but, you know you're never gonna know the role of being a construction company. That's right. Right? So you need to find a company who knows what to do That's right.
Adam Schenck [:And surround yourself. So I think building your building a team is is critically important because you're never gonna be the expert in that field. You're you're an expert in dentistry. That's right. That's what you went to school for. Right? So so surrounding yourself with a team that's expert in their fields whether it's construction, banking, accounting. It's it's a critical first step.
Ash [:I agree. I agree. Now what are some of the things that they should be, you know, cognizant of before even applying for, let's say, a practice only?
Adam Schenck [:Yeah. I think the the the biggest thing people need to be thinking about is is what we call cash flow. Right? And, you know, a lot of people look at it from from a practice standpoint of, you know, practice cash flow, the profitability of a business, that sort of thing. But I think it's important for people to to take, an inward reflection and look at themselves. And what I would say is there's no amount of money that should ever stop you from having a conversation with a bank. Right? I've seen I've seen situations where people have had next to nothing and still been able to to get a loan. The best way to think of it is that we're, you know, we're a big picture lender. Right? It's it's not just can you check this box of of the money in your bank account, but if you if you're low on funds, what's your money been going to? Right? Did you recently buy a car? Did you recently pay for a wedding? Is a common one that we hear and depending on what that money's been spent on, you know, we can get comfortable when somebody has less than x percent.
Adam Schenck [:Right?
Ash [:Right. That's right. And then since we are on the subject matter of a business loan, can we also talk a little bit about the working capital portion of loan? Because I feel like sometimes with new starting, you know, someone who's about to apply for a practice startup loan, they worry, but I don't have enough cash flow for payroll or, you know, for the 1st 6 months. I don't know how many patients I'm gonna see. I don't know if I'll be able to cover my overhead. So what is this working capital loan that's part of the deal? What what does that do?
Adam Schenck [:Yeah. So the working capital is designed to cover your operating expenses. You know? Day 1, when you open up, you're gonna have bills to pay. Right? You're gonna have to pay for staff, rent, you know, or supplies. So working capital is is included in the loan and it's it's funds that you're given with the day of closing that you get to use to operate the practice to help you get through to where the cash flow is picked up to sustain itself.
Ash [:So it it does make it a little bit easier. Right?
Adam Schenck [:Yeah. You know, a a lot of people kinda go into this, with a different lens thinking of, you know, well, what's my down payment gonna be or how much am I gonna have to put in for this this deal? Right. But at the end of the day, you shouldn't be putting money in. Right? The lender's gonna be, covering the cost of of building the practice, buying the practice, and giving working capital. Right. So you have funds to operate it. Right. So so there shouldn't be, you know, inherent out of pocket plus.
Ash [:Right. Right. And essentially, you know, with with somebody who's about to do this for the first time, really, we see 2 of the more popular options, which is starting from scratch. Like, they find a shell and they're going to build it out. And then, you know, they're going to run a practice or they're going to look for an existing practice and then apply for a loan and, you know, take over a lease. So in your opinion, who do you think which of these options is is probably a better route for someone who probably just graduated out of dental school for 2 years? Like, has been out just for 2 years?
Adam Schenck [:Well, I I tell my clients this all the time. So I specialize in the transition side of things. So so folks buying practices. So, you know, I am a little biased there. But what I can say with with a straight face is that they're both fantastic options, you know. I mean, we could talk default rates, success rates, whatever you wanna call it. They are successful both ways. What I would say is keep your options open.
Adam Schenck [:Right? I've seen people that they're determined to buy a practice and they spend 3, 4, 5, 6 years looking for the perfect practice that never existed. And in that time, they could have started before. So I I think a lot of it comes down to, you know, what you're looking for, what's available in the market. If you have to be in a certain location that's very saturated, maybe building a new office there isn't a smart idea and you're better off buying 1. Right? So it could go a a few different ways. I I think it's best to just keep your options open and Okay.
Ash [:That's a
Adam Schenck [:great tip. Yeah.
Ash [:Yeah. That's good. That's good. And and that's also another thing that I personally get into a conversation with clients is that they oftentimes look for a practice that is very close to where they're currently living because they've gotten comfortable there.
Adam Schenck [:Exactly. Kids are in school and, you know, jobs are close by for the spouse and you don't wanna relocate, So you're you're you can be sort of stuck in a geographic area. Right. And as you mentioned, what if it's already saturated, right? Yep. And if it's already saturated, you know, an acquisition is a great way to to take on a a book of patients. And depending on the practice, maybe it's a a simple, ramp up marketing or bring some more procedures in, stop referring them out. You know, I've seen some some people have tremendous success
Ash [:I've seen
Adam Schenck [:in those situations.
Ash [:Okay. That's good. That's great. And I was just curious from your perspective if you had a few tips for the clients when they're starting out looking for practices, thinking about applying for a loan, what are some of the things aside from creating a strong network of team members, what are some of the things they should also maybe pay attention to? Like, don't forget to do this. Don't forget to do that.
Adam Schenck [:It's a great question. I'd say the most important thing is is don't believe everything you read online. You know, fact check, you know, I've seen different things on on different websites where people have claimed maybe it's an interest rate they got and I did their loan and I know that that was not the interest rate they got, you know. So I I've seen people go on social media and you're getting half truths. You're getting distorted versions of things. Now there's probably, you know, a lot that is truthful out there, but it's it can be very difficult to fact check. So just be conscious of it. You know, don't believe everything you hear or read.
Adam Schenck [:I know myself, I welcome any one of my clients to to fact check me. You know, when we talk through things, if I'm, you know, answering something, I say, hey. Go go ask your attorney. You know? Like, let's make sure I'm I'm I'm understanding this right. I'm conveying it right. So, yeah, don't believe everything you hear and and fact check.
Ash [:That's a great tip. No. I'm I'm glad you actually told them that. This is true. There's just too much information out there, and it's very hard to tell which one should I lean more towards and which one should I admit. So fact fact checking, vetting your information, and definitely talking to your team of experts to actually get the information that applies to it. Right? So that's a great tip. Well, thank you so much, Adam, for being on our episode.
Ash [:It was such a pleasure. I'm sure our listeners have gotten a lot of valuable information. And hopefully, for the ones that are out there that are probably in the market applying for a new loan, you know, this would be a good point to maybe share your information if they're interested in contacting Bank of America and more specifically you, Adam. How should they get in touch with you?
Adam Schenck [:Yeah. I'd say the best way is to to send me an email, adam, a d a m, dot schenc@bofadot com. You know, I'm happy to be a resource, answer any questions. Feel free to send me an email. Happy to happy to connect.
Ash [:Right. And I'm sure there's some special rates that's going on. And, you know, of course, I'm not at liberty to share them. But if you guys are curious and interested, yeah, shoot him an email and I'm sure he'll be more than happy to, you know, talk those numbers there.
Adam Schenck [:Specific quote or get you, an exact number. You know, more than happy to work with any client.
Ash [:Alright. Awesome. Thank you so much again, Adam.
Adam Schenck [:Thank you, Ash. Appreciate you having me. Alright. Of course. Thanks.
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