Interview with Dr. Steven Beuligmann from The New Dentist
We recently spoke with Dr. Steven Beuligmann of Carlsbad, California about his practice expansion project. Here is his personal story.
You had a successful practice for over 20 years but wanted to change your location to a larger facility. Why?
My practice was originally located in an old office complex; it was small and antiquated with no room to expand. There was no space for new equipment, parking was inadequate, and there were too few operatories to meet our patients’ needs. We found we were occasionally turning away emergency calls because we had no place to treat the patients. So overall, I found my practice potential was limited unless I could find a way to upgrade my systems and increase traffic flow. But because I live in a small beach community, ideal locations were typically taken by residential zones or smaller office complexes with similar limitations.
About 2-1/2 years ago, a new complex in downtown Carlsbad became available but sat vacant because of the recession. It was exactly what I was looking for; it offered large office spaces, abundant parking, and was close to the freeway and downtown area. However, the cost was quite high and I was unsure I could get financing.
What was the biggest obstacle in obtaining financing?
I already had existing practice debt for various equipment and practice purchases, so I was only able to contribute a small down payment. I worked with a professional mortgage broker to find a local bank that might be able to help me. However no matter how they ran the numbers, the interest rates offered made my payments unaffordable, and the amount of down payment required was out of reach.
In addition, it was difficult to find an appraiser who understood the true cost per square foot of building out a modern, attractive dental office. Appraisers are often looking at shopping mall build-outs and typically appraise the cost at $100 per square foot. But this is completely inadequate if you want to create a modern, attractive environment for your patients with contemporary wallpaper, flooring, and design features. Costs can be closer to $150 to $175 per square foot, and some banks are uncomfortable with this level of investment.
How did you solve your financing challenge?
I was directed to Live Oak Bank, which not only provided financing but made the loan process a pleasurable experience. They understood the marketing benefit of developing an attractive practice, and saw that my record of consistent growth was collateral they could rely on. So, rather than creating hurdles for me to overcome, they worked with me on finding solutions. They were genuine partners and shared my goal of building a successful dream practice.
What did you find most daunting about building out the space for your new office?
Surprisingly, the build-out itself was mostly fun because of the great team I had. The SBA loan paperwork was the most daunting aspect of the project as I had to gather volumes of documentation for SBA approval. But the team at Live Oak always had a positive, helpful attitude and made the whole process manageable. They consistently helped move the process forward.
How is your new practice working out for you?
It’s a dream come true! The new office is modern and gorgeous and provides a pleasurable working environment for both my staff and patients. Our equipment and systems are more efficient so we’re able to process more patient visits and offer more comprehensive services. With our increased efficiencies, we have been able to keep our fees consistent without impacting cash flow, which was much appreciated by our patients. We are able to take in emergency clients at any time because of our additional space. And we’re able to do all this with the same size staff.
What do you recommend to New Dentists thinking about starting their own practice?
Your collateral and income may be limited when you’re first starting out, but be careful to not lock yourself into a practice setting that will not allow you to grow. Even if you can only equip half of your operatories at first, consider opting for a larger space that you can grow into. Continued growth is what helps you stay competitive and successful.
Also, work with a practice lender who understands the dental business and is flexible in helping you meet your needs. The best bank for you may not be your local bank. Live Oak Bank is based across the country from me in North Carolina, but the distance has never been an obstacle for our working partnership.
To download a copy of this article, click here: Interview with Dr. Beuligmann