Dr. Zachary Kingsberg is a dentist who, after graduating from the very expensive Nova Southeastern University, is now running his own dental practice startup in Dallas alongside his wife.
In this episode, see how Zach began his startup journey, how he handled his student loans and the advice he’d give for an up-and-coming dentists on starting your own practice.
In today’s episode, you’ll find out:
- Zach’s journey into dental school
- How his associateship period played out
- How he and his wife prepared themselves to become startup practice owners
- How Zach went about acquiring patients
- The process of getting funding from a bank for a dental startup
- Whether demographics played into how Zach started his practice
- The issues he ran into trying to secure a mortgage
- Zach’s advice for refinancing student loans and getting a mortgage
- What he learned about running a dental practice in the first year
- How he handled marketing for his practice
- How running a bread-and-butter clinic has kept costs low
- Why Zach’s practice focuses on simple dentistry over cosmetics
- How income-driven repayment could have helped Zach’s loan applications
- His long-term goals for his practice
- Zach’s experience with hiring (and firing) employees
- The advice he’d give to a dentist associate considering a startup
- The importance of being willing to work hard as a new dentist
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Episode 32 Transcript
Travis Hornsby [00:00:00]Welcome to another episode of the Student Loan Planner® Podcast. Today, I’ve got Dr. Zachary Kingsberg with me today, a startup empire-builder extraordinaire dentist in Dallas, Texas. Welcome to the show, Zach.
Zach Kingsberg [00:00:10]Hey, Travis, I’m excited to be here.
Travis [00:00:12] Yeah. So, a lot of the listeners don’t know that you and I have known each other for a few years actually. So you actually had me on your show back in the day — I think “The Disillusioned Dentist,” right?
Zach [00:00:22] “The Disillusioned Dentist,” yeah. That podcast has kind of been a little retired. I haven’t recorded an episode in a while. But I think you were my first episode on there to kind of kick me up and get that podcast started.
Travis [00:00:32] Yeah. It’s all good. You’re not disillusioned anymore you’re rocking it too much.
Zach [00:00:36] I’m trying. I’m trying.
Zach’s journey into dental school
Travis [00:00:38] So maybe you could just tell us a little bit about yourself, just about how, you know, your journey was going to dental school and coming out to where you are today.
Zach [00:00:46] Yes. So, I started dental school in 2011 at Nova Southeastern, which was a private dental school down in South Florida, right near Fort Lauderdale. As you’re very well aware, it’s very expensive university. But I thought like everybody else I’d be a rich dentist, and the debt didn’t matter. So if I was $400,000-plus in debt, you know, no big deal.
Zach [00:01:06] I met my wife in dental school. She was also in my class. So we both graduated in 2015 from Nova. My family is from Florida. Her family is from Cali.
Zach [00:01:15] You know, we always heard rumors in dental school that you come out to Texas, and you can kill it. So we kind of took a leap of faith. Moved out to Texas. Started our practice in 2017. And we’re actually opening up another practice in about two weeks, here in 2019. So, you know, things are going pretty well out here.
How his associateship period played out
Travis [00:01:33] So, when you came out of school, how long did you associate, and what was that period like?
Zach [00:01:38] I associated for — My first associateship was 16 months. During that associateship, I had started looking to buy a practice. My goal was to always buy a practice. That didn’t turn out too well because multiple reasons. Those acquisitions kept falling apart. So eventually, I got frustrated with that process. Decided I was going to do a startup. I think I decided in February of — what year is it? — 2017. That’s when I began looking for locations. And by Sept. 9 of 2017, we were open. So start to finish from, you know, looking at demographic reports to opening took about seven months.
Travis [00:02:13] Wow. Seven months from start to finish in the process. That’s crazy.
Zach [00:02:17] Yeah, I expedited it. I was, like, kind of pissed off I wasted a year trying to, you know, buy a practice. So at that point, it was kind of full throttle. You know, we’ve got to move forward and get something rolling here.
Zach [00:02:28] During that seven-month period, I was kind of associating around at multiple different practices — kind of picking up a couple of days a week here, a couple of days a week there. I kind of made my own temp sort of schedule, you know, through my network of dentists I knew in Dallas. So.
Zach [00:02:41] I didn’t want to sign another contract or anything. I kept my options open and remained flexible so that when I did start the practice, I didn’t have any other commitments or non-compete clauses to worry about. So that was another important factor during that process.
How he and his wife prepared themselves to become startup practice owners
Travis [00:02:58] So you had a lot of student loan debt, like anybody that comes out of Nova, and so did your wife. What did you do to prepare yourselves to become startup practice owners? Because that’s a very rare thing in today’s world.
Zach [00:03:10] You know, I guess I was fortunate enough, my first associateship was a pretty high-income associateship. I think my first 12 months or 16 months, I probably averaged around $25,000 a month in income, so that definitely helped, you know, paying down a little bit of debt, showing the banks we had some cash flow.
Zach [00:03:28] At the end of the day, I was a high producer. The banks want to, you know, see that you can produce. Whether it’s a loan for an acquisition or a startup, they want to see your production capabilities, a little bit of cash in the bank.
Zach [00:03:39] So the debt really wasn’t a big factor. It was more creating that offensive income and also learning how to produce, to show the banks that, you know, you’re qualified to take out a loan to start a practice.
Travis [00:03:50] So, how many months of expenses did you have stashed away when you did the startup and you took the plunge?
Zach [00:03:55] I would say we saved up around $100,000 in cash before we started the practice. That’s between the both of us. Six to seven months of spending. We had about $100,000 in the bank. That’s kind of what the bank wanted to see.
How Zach went about acquiring patients
Travis [00:04:10] Yeah. Were you at all worried that you’re starting the practice and you don’t have any patients? How did you go about acquiring patients in the first day?
Zach [00:04:19] I wasn’t too worried. You know, the first few months were a little slow. We advertised a lot online. A lot of Google pay-per-click ads, but that only gets you so much. We did some mailers. You know, we got some patients from that.
Zach [00:04:31] But we also have a, you know, community marketing team that goes to schools. Our assistants go to daycares. We do a lot of oral hygiene instruction. We go to a lot of events. We pretty much, you know, go out there as much as we can, show our face in the community.
Zach [00:04:44] And then we’re also open six days a week. So that was another distinguishing factor. We weren’t that startup that, you know, is open two to three days a week, or I had a part-time job on the side. We opened six days a week from the first day. We’re open until 7 (p.m.) during the week, and then we’re also open every Saturday a half day from about 10 (a.m.) to 2 (p.m.).
Zach [00:05:03] So I mean, with those hours and, you know, the high-volume market we’re targeting, didn’t really worry about the fact that we didn’t have patients. I just, you know, sat there waiting for people to come in, and once they come in, you’ve got to produce. You can’t refer anything out.
Travis [00:05:16] Was it just you working in the practice, or was your wife working in there, too? Because that’s a lot of days per week working.
Zach [00:05:22] I think we started our practice around the same time. We had our first kid. So I think she was still kind of at home with the kid.
Zach [00:05:28] So in the beginning, it was pretty much just me. Once we picked up a little bit, you know, she started coming in to help out as well, but she wasn’t working anywhere else, if that was your question. Neither of us were working anywhere else.
Travis [00:05:39] Just to be clear, you were working your tail off because you were coming in six days a week.
Zach [00:05:43] Oh, yeah. I mean, we had a lot of zero-dollar production days in the beginning, so it was a lot. You know, our overhead wasn’t too high at the time. I think we only had one front desk girl, maybe two assistants in the back. In our model, we don’t have hygienists. You know, all our doctors do our own hygiene.
Zach [00:05:57] So, our overhead wasn’t, you know, through the roof. It was pretty minimal at the time. We were still in our free-rent term, you know, from our free rent we negotiated during the lease process, so we had some wiggle room. So, you know, kind of played around for a few months before we really had to start worrying about expenses and overhead and stuff like that.
The process of getting funding from a bank for a dental startup
Travis [00:06:15] Sure. So when you were acquiring financing with the bank, what kind of banks did you look at, and what terms are most important to you? And what was your impression of that process?
Zach [00:06:25] Pretty much just went through Wells Fargo and Bank of America. You know, the two big ones in the dental startup space. They were both very similar at the time, you know, rate wise. I think they were, you know, within 0.1% apart.
Zach [00:06:36] So at the end of the day, I was just going with the bank with the lower interest rate because to me, there wasn’t really a difference between Wells and Bank of America. I think our interest rate was maybe 4.5% on a 10-year note. So there wasn’t really much to decide between the two. I just kind of went with Wells because they had a slightly-lower interest rate.
Travis [00:06:57] Why did you decide on the amount of money you asked for? What were the factors that made you decide, “Oh, I need this much”?
Zach [00:07:01] Seems like the standard in the industry is kind of $500k. That’s pretty much what we took out and that’s kind of just how much money we really needed in the end. Our buildout, we had 2,450 square feet. We built out seven ops (operatories).
Zach [00:07:15] So, our buildout was pretty substantial. I think it was $225,000 for the buildout. We equipped five of those ops. We added a Pan/Cef, you know, in order to do some ortho (orthodontics). So our hard equipment cost was probably $170,000 [to] $175,000. So we’re looking at $400,000 just for buildout and hard equipment cost. You know, by the time we add in our hand pieces and surgical instruments and LED sign and computers and IT, I mean, that creeps up to $500,000 pretty quickly, so.
Zach [00:07:45] We actually didn’t even do the math. We kind of just took out the $500,000 and then kind of allocated the funds accordingly to see what we could handle there.
How demographics played into how Zach started his practice
Travis [00:07:53] Wow, that’s really interesting. When you were looking at demographic data — people say demographic matter, one of the most important things — what did you do to get the demographic data? And how did you use that to make a decision on where you would set up your practice?
Zach [00:08:05] Yes, so about the demographics, we worked with a local realtor company here in Dallas called Real Estate Advisors. They basically just sent me a bunch of different reports, I think 10 different ones.
Zach [00:08:16] I told them we were looking for, you know, low-to-middle income area. We prefer a Hispanic population, if possible. So based on what I was looking for, he sent me 10 different spaces.
Zach [00:08:26] Without even looking at the demographics first, I kind of just drove around to all 10, just to see if they pass the eye test. You know, how does it feel? How does the street look? How is the visibility? Can I see myself driving to this practice every day? Or does this strip center give me the heebie jeebies?
Zach [00:08:40] So out of those 10, I kind of narrowed down to two. So at the end of the day, I mean, the demographics kind of didn’t really matter. I kind of just narrowed it down to the strip center that felt good. That looked good. That kind of fit the vision, you know, that I was looking for.
Zach [00:08:56] Since we are in Dallas, it’s a very saturated area. This one particular strip center actually had no dentist within one mile, which was pretty rare, and it had that community feel. We’re surrounded by a ton of houses and apartments. There’s a big community pool and park across the street.
Zach [00:09:10] So, kind of just clicked. Maybe the demographics did check out pretty well, but honestly, I didn’t even really focus too much on the demographics.
Travis [00:09:19] That’s interesting. Usually I hear people do focus on it a lot. But it seems like you did a little bit of different research angle for it.
Zach [00:09:24] Yeah, a little bit. I kind just went with the feel and the look and kind of took a leap of faith. You know, we’re going to market a lot, be open six days a week.
Zach [00:09:32] So, from my perspective, the type of clinic that we run, demographics don’t really matter as much as some other type of niche markets someone might be trying to go into.
Travis [00:09:41] Now, is there a particular reason you decided to open a practice in Dallas instead of more of, like, a rural Texas location, where success would be a lot — probably be a lot easier?
Zach [00:09:53] My wife and I, we’re more big-city people. We like to travel. So my family [is] back in Florida; her family [is] in California. So we like Dallas for the convenience of the airport and traveling. Since we don’t have any family here, we don’t want to bury ourselves deeper. Kind of, Dallas seemed like a rural place to us, you know, since we’re from Florida and California, so we don’t really want to go more rural than a big city like Dallas.
The issues he ran into trying to secure a mortgage
Travis [00:10:16] That makes sense. You basically kind of did everything at once. You had a kid. You bought a practice, and I think that you were looking at getting a mortgage at some point. What issues did you run into when you were trying to get a mortgage after purchasing a practice?
Zach [00:10:30] We ran into a lot of issues trying to get the mortgage after the practice. So we started the practice in September of 2017. And by maybe January of 2018 — so not too long after — we were trying to qualify for a mortgage.
Zach [00:10:46] I think I spoke to about 10 or 15 different banks. Kept getting rejected. A lot of banks want to see two years of self-employment history, I guess — is that the standard? — before they want to give you a loan for a mortgage.
Travis [00:10:58] Yeah.
Zach [00:10:59] But I just kept on calling. You know, I don’t like to hear “no.” I just keep on calling. I’m sure there’s some bank out there that’s dumb enough to give me a loan, even though I’m newly self-employed.
Zach [00:11:08] So I kept calling and calling. I finally found that Bank SNB — I think a branch out of Austin that works with a lot of doctors. So, they had some kind of doctor mortgage loan program where, you know, they would fund a mortgage if a doctor had been only self-employed for at least six months.
Zach [00:11:25] So we kind of barely qualified for that and kind of made it work. But it was definitely a struggle, mainly because the banks wanted to see a two-year history of income.
Zach [00:11:33] So even though I was a 1099 prior to starting my own business, which is kind of self-employed independent contractor status, we were still facing a lot of resistance as far as securing a mortgage.
Zach’s advice for refinancing student loans and getting a mortgage
Travis [00:11:45] Now, when you refinance your loans, you make a guaranteed payment that you have to make to a private lender, right? So that can cause some issues sometimes with getting a mortgage. What advice would you give somebody who’s refinancing and trying to pick between a five- and seven- and a 10- and a 15-year term early on.
Zach [00:12:02] If you’re early on, I would say, you know, go for the cheapest interest rate, but, I mean, you could always refinance anytime to kind of fill your needs at the time. So I refinanced my loans. I think, the day I signed — The day I closed on my loan for the startup, I refinanced on a 10-year note for 4.5% fixed, which was a pretty decent rate at the time for 10 years.
Zach [00:12:26] However, we were kind of working through the process of the mortgage. Our debt-to-income ratio was obviously very high. One of the easiest ways to get that down was to refinance the loans again, you know, to decrease our monthly payment for that.
Zach [00:12:39] So at that point, I had to refinance on a 20-year variable note to get our payment down as much as possible. I think it started at 4.5%, but it was variable, which has crept up to 5.5% now.
Zach [00:12:51] You kind of got to play, you know, the game. It’s okay to refinance aggressively early on. But anytime you’re trying to get financing, you obviously want as long a term as possible and a lowest payment as possible because the banks are pretty strict these days. Even though people keep saying and hearing, you might read about “any bank will give any dentist any amount of money for anything,” I don’t think that’s necessarily true.
Zach [00:13:14] I mean, it’s, I guess, a lot of effort to try and get that mortgage, and my wife is a dentist also. So we’re two dentists, and, I mean, it’s like, a lot of work and hustling just to get that mortgage.
What he learned about running a dental practice in the first year
Travis [00:13:24] What did you learn about running a dental practice in your first year on the job?
Zach [00:13:27] I guess not too much on the business side, but, you know, really on the clinical side, as much as I talked about kind of becoming a hyper producer. And I think that’s the most important thing any new grad should focus on when they come out, is just, you know, producing as much as possible. Doing all your root canals. Doing all your extractions. You know, not referring anything out.
Zach [00:13:47] You know, when you’re coming out with $400,000 in debt, you’ve got to do every procedure, every patient that walks through the door. You’ve got to be able to complete all those procedures if you want, you know, any chance of starting your own practice or any chance of paying down that debt.
Zach [00:14:02] But on the business side, just how to be efficient, how to multitask, how to treat a lot of patients. You know, I could work five different rooms at once — I guess that goes more into the clinical side. But just how to be efficient, quick. You know, patients don’t want to wait a long time. So you’ve got to get them in and out. Obviously, you know, minimize the pain and get on to the next patient. You’ve got to be able to help everybody.
How he handled marketing for his practice
Travis [00:14:24] So, what would you say, like, in terms of attracting the patients? Your group that you talked to — I’m assuming you worked with, like, an external partner because a lot of the stuff you talked about were pretty kind of sophisticated strategies. So, you know, how did you decide on who to work with there? And how did you figure out what to pay them? And, you know, did you pay that out of the $500k you borrowed or was that at a savings? Like, walk us through that.
Zach [00:14:45] How did I pay our assistants and our staff?
Travis [00:14:48] Well, the marketing people — like, the people doing the direct mailings and things like that.
Zach [00:14:51] That kind of came out of our working capital from the loan. You know, mailers weren’t too much. That was about $3,000 or $4,000.
Zach [00:14:59] We did invest heavily in a dental marketing company called Firegang, when we started up. They were pretty expensive at the time, but they had a good reputation with some of my friends who had worked with them. So we kind of splurged on that a little bit.
Zach [00:15:11] Any time, you know, we invested in, you know, advertising or marketing, I didn’t really view that as an expense. I more viewed that as a, you know, investment, you know, as long as it yielded us a positive return. There’s pretty much no limitation on marketing from my perspective. So, we spent a ton of money each month on marketing, probably higher than, you know, your typical office.
Zach [00:15:31] But as long as it yields us a positive return, you know, it’s not really an expense, it’s more of an investment.
Travis [00:15:38] Sure. What would you say was the most effective so far? Like, what channel, out of all the ones you mentioned?
Zach [00:15:44] The most-effective channel marketing is probably just getting out in your community. Going to events. Going to schools. Going to daycares. You know, passing out flyers. Passing out toothbrushes. Just kind of your old-school guerrilla marketing, and just getting out in front of people and talking to people and trying to get them to come in, book appointments. That’s probably the main stream, I guess.
Travis [00:16:07] Yeah, so you’re saying basically — like, Dr. Howard Frank calls it “running for mayor.”
Zach [00:16:10] Yeah, pretty much. Just go out there. Knock on doors, if you have to. Shake some hands. I mean, anytime I’m in line at Walmart or a grocery store or dollar store, wherever I am, you know, I’m telling people who I am. Bring them into the clinic, if they need something. You know, I’ve brought patients in like that all the time. You’ve just got to get out there, throw yourself out there and hopefully people come in, you know?
How running a bread-and-butter clinic has kept costs low
Travis [00:16:31] So, are there any big expenses in the first year that you’re like, “Wow, that worked out insanely well. I’m so glad we spent that money”? And are there any ones, conversely, that you spent money on that you’re like, “Oh wow. Like, that was kind of unnecessary to drop that $20 grand on, you know, whatever”?
Zach [00:16:46] Not really. Nothing that I could pinpoint either way.
Zach [00:16:50] For the most part, we run a pretty simple bread-and-butter type clinic, so we don’t do any high-end implants or cosmetics or veneers. So we keep it pretty simple and straightforward, so our supply costs are pretty low. Our lab costs aren’t too high. So nothing really that we spend too much or too little.
Zach [00:17:10] We did add a Pan/Cef, so that was pretty expensive in order to do ortho at our office. Ortho has been kind of a slower build than we initially thought.
Zach [00:17:18] So, you know, we did spend probably an extra, maybe $20,000 to get that Cef in order to do ortho. So I would say that’s a pretty high expense, you know, for a startup, but, you know, we’re looking at it for the long term. So that $20,000, five [or] 10 years down the road, it’s not going to really matter once, you know, we build our ortho department.
Zach [00:17:36] But nothing else really comes at the top of my head. Glad we spent that money. Or, damn, I wish we didn’t spend that.
Travis [00:17:42] For the ortho, like, walk me through why you decided to do that in-house versus kind of work with an orthodontist practice.
Zach [00:17:51] You know, our whole model is built on a family practice. You know, we see adults, kids. We really want to see everyone in the family and basically just want to be that one-stop shop for everybody.
Zach [00:18:00] So, our practice is about two-thirds kids. So, it’s almost a no-brainer to try to incorporate ortho into our practice, you know, just to keep everybody in-house. Patients don’t like to go all over town, and at the end of day, you know, just to increase production, increase collection and hopefully increase our profits. So.
Zach [00:18:17] We also keep oral surgery in-house. We have a girl that comes in that pulls wisdom teeth. We do all our own endo (endodontics).
Zach [00:18:26] So the only thing we’re really referring out right now is, you know, those pediatric cases with little kids that are very uncooperative. We haven’t found a pediatric dentist that’s been able to come in-house yet. But everything else we keep in-house.
Travis [00:18:39] I mean, that’s amazing that it’s two-thirds kids. That’s a little bit more than I would have thought.
Zach [00:18:42] Well, yeah. Well, in Texas, we do see a lot of Medicaid as well, so that has been another integral part of our growth and our success. We see about 40% to 50% Medicaid — just kids, though. We don’t see adult Medicaid.
Travis [00:18:55] What does that distinction — Like, how does that reimbursement work for kids versus adults?
Zach [00:19:01] The fees are better for kids. Plus, you know, the treatments are easier. The Medicaid adults are, you know, a little more entitled. They need a lot more work. And the fees are actually worse. So the fees are actually pretty decent for the kids. They’re pretty comparable to some of the lower-end paying PPO (preferred provider organization) plans. So it’s a pretty good way to, you know, jump-start your practice for sure.
Why Zach’s practice focuses on simple dentistry over cosmetics
Travis [00:19:21] So your strategy has been to do bread and butter and to make up on volume for what other places try to make up on per treatment plan kind of revenue, right?
Zach [00:19:32] Correct. Yeah, we definitely make it up on volume. We do everything same day, all quadrants. You know, the patient comes in, they need twelve fillings — whether it’s an adult or a kid, as long as the patient agrees and consents and pays, we do all 12 fillings the same day. So we do all four-quad dentistry.
Zach [00:19:50] We try not to reschedule treatment, unless it’s like a, you know, six- or eight-hour treatment that needs to be broken up in stages.
Zach [00:19:56] But we do very extensive, long treatments, everything same day. We try not to reschedule anything.
Travis [00:20:02] What about, like, did you just see this big market opening in the kind of lower-middle-income bracket in this area? Or does everybody just want to do implants and veneers in cosmetic dentistry? Is that the problem where you’re at?
Zach [00:20:16] I think there’s opportunity for both. My first job was just more of what I’m doing now. So I got comfortable in that environment. And I just prefer to work on the lower-to-middle income-type patients. You know, they’re not as hard to work on. They’re a little more appreciative. If you do make a mistake, you know, you explain to them, no big deal.
Zach [00:20:34] But if you’re doing a big cosmetic case and that shades off by, you know, one little color, you know, the patient’s going to freak out after you just spent who knows how long. You got a $1,500 lab bill.
Zach [00:20:46] So I guess this type of demographic kind of just fits my personality better. And it’s kind of the first job I took out of dental school and just got accustomed to it. And kind of felt it made sense and didn’t really put much thought into it, I guess.
How income-driven repayment could have helped Zach’s loan applications
Travis [00:20:59] The only thing I would have told you differently to do now is probably I would have had you maybe do REPAYE a little bit longer. You know, the Revised Pay As You Earn. So when you refinanced, you know, that was a good deal, but I think that what I know now is you can actually get your income updated when you do a startup because you’re not making an income again. So you can get that income updated to a pretty low number and get subsidies while you’re building up that income with a startup, you know, for cash flow reasons. And also qualifying for a mortgage, that probably would’ve helped a little bit.
Zach [00:21:30] But once you go private, you can’t go back to REPAYE, can you?
Travis [00:21:34] No, you can’t. Yeah. So, you know, that’s kind of the only thing that I think, you know, kind of figure this out couple of years ago, I think. You know, now I’ve kind of realized, like, some of the underwriters, like Freddie Mac guidelines and some other big kind of rules, they’ll go off of your REPAYE payment if you’re trying to do a mortgage.
Travis [00:21:51] So if your required payment is, like, $500 a month, that’s what they’re going to use as the payment. But if you’re — If you do, like, a seven-year refinancing term, they’re going to go off of that, you know, $6,000-a-month required payment instead. And your percent of your income that they can justify going to debt has got be under 45%, I think, for a lot of them.
Travis [00:22:10] Yeah, so that’s kind of, like, a tough situation, where, you know qualifying for a practice loan can be pretty tough if you’re doing a refinancing in the middle of being a practice owner.
Travis [00:22:19] So, I think that for most people nowadays, like, I actually don’t suggest they refinance until after they’ve got at least one good year of tax returns with a practice owner status. Just because, you know, it’s kind of like, yeah, you can get a lower interest rate.
Travis [00:22:33] But, you know, if you have great success in this practice right and you start seeing, like, double the number of patients, that’s so much more impactful than 1% interest savings, even on a $400k-type dental school debt. You know what I mean?
Zach [00:22:46] Yeah, no, that makes perfect sense, for sure.
His long-term goals for his practice
Travis [00:22:48] What is the endgame? Like, what is your — What is your goal long term because you’ve opened up the second practice location? Do you want to be a 10-practice, kind of DSO (dental service organization) empire builder? Or, you know, is there a reason why you went for two practices? Or, you know, what’s that long-term goal?
Zach [00:23:05] It’s interesting, that long-term goal seems to change all the time. I used to think I wanted to be, you know, the five- to 10-plus practice owner. But after running and owning one practice, it’s a lot of work. It’s a lot of stress. A lot of — A lot of H.R. A lot of hiring. A lot of firing. I never thought that dentistry would be the easiest part of my day. But, you know, when I’m in the treat room doing some fillings or a root canal or extraction, that’s probably the easiest part of my day.
Zach [00:23:32] But our new plan is to probably open — You know, we’ll just start with the second one. We’re kind of going to take it practice by practice. You know, we’re not going to all of a sudden start two or three or four or five at the same time. You know, I think you’ve got to start one or acquire one, Kind of get it up and running, make sure your systems are in place before you can even think about, you know, an additional one.
Zach [00:23:52] So as of now, we’re thinking of maybe two or three. You know, hiring associates. We want them to be mostly associate-driven. And then my wife and I will kind of take over as needed on a more laid-back basis.
Zach’s experience with hiring (and firing) employees
Zach [00:24:04] But ideally, we would want most of our work to be done by associates and kind of fill in and supervise and work on the business side of things to make sure everything is flowing and operating as it should be.
Travis [00:24:15] What’s your experience hiring and firing people? How do you — How do you do that well? What have you learned so far?
Zach [00:24:21] I just learned to hire quick and fire quick. You know, especially in our type of market, you know, we’re acquiring the same type of people as our patients — you know, lower-in-income type of quality girls. So, a lot of times they don’t show up to work. They call in sick. They’re very unreliable.
Zach [00:24:37] So we’ve learned to kind of overstaff because a lot of our girls are unreliable, and it’s been hard to hire. You know, we put ads out on Indeed. We’ll get 10, 50, 100 responses. We’ll set up working interviews. They don’t show to that. If they do show to the working interview, sometimes they leave during lunch. So it’s just a very unreliable, interesting workforce out there.
Zach [00:24:59] So it’s definitely, probably the hardest part of running a practice is, you know, finding that good staff that’s going to stay. That’s going to learn. That’s going to grow. It just seems to be hard to find out there.
Travis [00:25:12] Yeah. So I think that’s one benefit of locating in a place that’s a little off the beaten path, is the labor force that’s available in a small town that had the primary employer leave ten years ago. Like, that labor force is probably going to be a lot more grateful and a lot more affordable probably as well.
Travis [00:25:28] But we’re also — Like, the economy right now is just the best it’s been in a very long time. Unemployment is at a 50-year low. So when you’re trying to acquire — especially lower-skilled labor right now — you have to pay a premium. And it’s just a very, very tight labor market. I imagine I’ll probably get a little easier when you have the economy go south to retain and hire really great people at a good rate. So that’s interesting.
The advice he’d give to a dentist associate considering a startup
Travis [00:25:52] The advice that you would give to somebody who’s an associate right now, one or two years after graduation, maybe producing $150k to $200k — earning that, I mean. That person is thinking about doing an acquisition. That’s what they’d prefer to do. But the startup just feels terrifying to them. What piece of advice would you give that person? What do they need to know to become a startup practice owner and try to start their own practice from scratch?
Zach [00:26:18] Can’t have too much fear. You kind of just got to go all in. Kind of like I said in the beginning, we know a lot of people do a startup. They maybe open two or three days a week, kind of keep their part-time job on the side. I don’t really believe in that philosophy.
Zach [00:26:32] If you really do a startup, I mean, you got to be open seven days a week. If someone calls and has a toothache, I mean, you’ve got to be there to do their root canal and build a crown for, you know, $2,000. Whereas, if you’re an associate and you miss out on that opportunity, you’ve got to produce $8,000, you know, to have the same equivalence of, you know, your own patient walking through the door that needs $2,000 worth of work.
Zach [00:26:51] So you kind of got to go all in. Kind of just believe in the system. And you’ve got to market. You can’t be skimping in the marketing department. You’ve got to go all in on mailers, Facebook ads, Google pay-per-click ads. SEO, even though SEO seems like a myth and mystery — no one really knows if it works or not.
Zach [00:27:11] You kind of just got to take the leap of faith and spend the dollars in the marketing department. And if you’re not spending the dollars in the marketing department, then I don’t know what’s going to happen. You’re probably not going to get a lot of new patients.
Travis [00:27:22] Yeah. I think that there’s been a couple of things that you’ve said that stuck with me, for people that are listening out there. So one is, you had a lot of cash and savings when you did your startup. So, that was important. You had a lot of cash stashed away, so I think that’s really important. That’s one thing.
Travis [00:27:38] Another thing is, you didn’t really have some genius plan, like, you hadn’t sat behind a desk and built all these algorithms for, like, the exact right location with the exact right center for your office. You know? You just kind of did it. That was the difference between somebody who didn’t do a startup and somebody who did, is you just took the leap and did it. So that was really critical.
Travis [00:28:00] And then for, like, the marketing, trying to get patients in the chair, you know, you went out, and you spent money on it. You did kind of the traditional kind of fee approach. It sounds like you didn’t do that much door-to-door kind of stuff. Is that fair?
Zach [00:28:13] No, not so much. No, not really.
Travis [00:28:15] If you had done more of that, if you wanted to be more risk-averse and knock on doors, you know, you could have done that. Probably had some patients from that. But you didn’t have to. It wasn’t that difficult, it sounds like, to just make a pretty decent income and make more than you did as an associate, I’m assuming. Or are you at that point yet, where y’all are doing better than the associate years?
Zach [00:28:35] Yeah, yeah, we’re finally there. You know, it took about a year or so to really get the practice up to where we wanted to be before we started looking at the second one. But yeah, I mean, the practice is doing pretty well right now. You know, we’re growing month over month. Everything is going pretty well now.
Travis [00:28:49] So, you took that risk, and you took out way, way, way less debt on the practice to do it, which is also pretty cool. And I’ll say this: like, running Google ads and Facebook ads, like, that stuff has gotten a lot more expensive within the past couple of years than it used to be. If you’re going to run those kinds of ads, I would much rather run them in a random town in Texas or Iowa or Oklahoma, rather than run them, you know, for Beverly Hills. Right?
Zach [00:29:15] Yeah. Those ads are definitely expensive. I think they’re almost, you know, $5 to $10 per click for certain search terms, so they’re definitely getting up there in price.
Travis [00:29:23] Yeah. And that’s geographic-specific because they’ll show those ads in, like, a different location where the value of the customers might be lower for other marketing partners. So that’s one point is, if you want to increase the odds of your success, just move to a place that needs you even more badly.
Travis [00:29:40] So you kind of found a niche in Dallas that needs you really badly, which is, you know, this lower-to-middle income, heavily Medicaid population that needs help, needs health care and needs dental services. And you provided them convenience.
Travis [00:29:54] You know, you’re open a lot of hours that the traditional places are not. And you tried to make sure that the staff reflects the diversity of the patient pool. You’re doing a lot of things that make tons of sense from a business perspective.
Zach [00:30:07] I would say we probably do 80% of our production between, you know, 3:30 p.m. in the afternoon until close around 6:30 or 7 (p.m.). And then also our Saturday hours, I would say we probably do 80% of our production during those hours. So we [could be] open from 3 to 7 (p.m.) every day, and our bottom line would probably go up. But, you know, we’ve got to stay open to give our staff close to 35, 40 hours, or they probably wouldn’t stay, if we were only open 20 hours a week.
Travis [00:30:34] Maybe. Although, I think that you might be on to something there. There might be something called efficiency wages, right? I think that there’s enough people out there that are looking for flexible hours that, if you paid, you know, 20% more than the typical hourly wage for a given position, then you’d have some male and female professionals, I’m assuming at some point, you know, that would basically say, “Hey, I’ve got a kid at home, and my spouse gets off at 3 [or] 4 p.m.” Or, “My partner gets off 3 [or] 4 p.m., and now I can come into the office and work from, you know, 3 to 10 (p.m.) or something.”
Zach [00:31:06] Right.
Travis [00:31:06] If you’re offering something that no one else is, you have a greater chance of unconventional success. Right?
Travis [00:31:12] So, that’s a really interesting insight. It’s kind of like when people are off work, people want to come in. That’s when the demand is, right?
Zach [00:31:18] Exactly. I mean, we’re open during all the holidays. We’re here during Christmas break. You know, when people are off from work, kids are out of school, we’re open. So, we’re always open. Got to be open, man.
Travis [00:31:30] So you’re working your tail off. I will say this, I think if you were in Iowa, you could probably make what you’re making with three days a week. But then you’d be in rural Iowa.
The importance of being willing to work hard as a new dentist
Zach [00:31:38] Just before we wrap up, I kind of want to touch upon a little bit — I kind of mentioned, you know, implants or veneers before, you know, what these new grads are talking about. In the last few months, I’ve been interviewing a lot of new grads because we’re looking to add an associate to our current practice as our current associate leaves. And then we’re also looking to eventually hire another associate for our new practice.
Zach [00:31:59] And the common trend seems to be, you know, all these kids ask about implants and veneers and digital dentistry and CAD/CAM. And they don’t want to work Saturdays. And these kids have, you know, anywhere from $300,000 [to] $400,000 [to] $500,000 in debt, and they still don’t seem to want to work Saturdays.
Zach [00:32:15] So, that seems to be the biggest problem with these new grads and kids coming out of dental school, is, you know, they don’t want to put in the hard work and work six days a week. They still seem like they’re looking for that four-day workweek to make $300,000 doing a couple implants.
Zach [00:32:28] And [I’m] not sure where they’re getting this information from or developing these ideal circumstances, but there seems to be a large disconnect between what these new grads think the real world of dentistry is and what it actually really is.
Travis [00:32:41] Well, I would push back a little bit and say it can be whatever you want it to be.
Zach [00:32:45] Yeah.
Travis [00:32:45] You know, if you’re okay making a lot less money, then it’s perfectly fine to do a shorter workweek, right? But I agree with you that there is a little bit of a sense of folks out there, you know, not willing to work as hard. The difference, in my view, is the rewards because I had a client once that was in the D.C. area making [$110,000] working — I think it was six days a week. Like, every other Saturday.
Travis [00:33:09] And so, you know, you talk about how bad that is, right? But that’s just because their area was ultra-saturated. They said there was six dental practices in one strip mall that they were in. So, that kind of, you know, ridiculousness — If you want to work like a dog, then live in a saturated city for dentistry.
Travis [00:33:27] And if you want to have that four-day-a-week lifestyle, then you’re not going to be able to have it making a really high income in a big city. You know, I would bet that you could probably have that lifestyle at some point, especially if you tried to, like, hire more associates and things.
Travis [00:33:42] But yeah, you know, initially, you got to put in the hard work first. That’s very true. So, I’m glad you shared that.
Travis [00:33:47] Well, Zach, where can people kind of connect with you to learn about, like, your practice? I guess, “The Disillusioned Dentist,” if there’s any one thing you want to share with our listeners, let us know.
Zach [00:33:56] I mean, if anyone wants to come out. And, you know, like I said, as we’re growing, we’re always probably looking to hire more associates in the future. So if anyone is in the Dallas area. They want to come check out the practice. Kind of come see what we’re doing out here. They could check out our website, which is LaPradaFamilyDentistry.com. Or they can also email me at [email protected] Yeah, if they ever want to come by, shadow, check it out, ask me questions. You know, I’m always interested in answering any questions or talking to anyone that’s interested.
Travis [00:34:25] Cool. Thank you so much.
Travis [00:34:26] And folks that are listening, if you are interested in doing a startup, I would strongly encourage you to go for it. The biggest risk is inertia. Most people are successful. There are some failures, but they’re few and far between compared to the successes.
Travis [00:34:41] Zach is doing it. He’s crushing it. I think that a lot of you out there could do this, too. So that’s why I wanted to have Zach on the show.
Travis [00:34:46] Zach, thanks so much for being on.
Zach [00:34:48] All right, Travis. Thanks.