Financing For Startups - Part 1
In this episode, Jayme will welcome back Stephen Trutter, the President of Ideal Practices and an experienced startup dentistry expert who has been a part of 650+ startups. Stephen has helped raise half a billion dollars in dental funding, and together they will dive into stage 2 of the 13 stages startup journey which covers financing for startups for associate dentists. Their discussion will be based on the structure and strategy of dental financing. Under structure, there will be three parts including rate-and-term, the approval myths, and the silver platter method. In the strategy part of the discussion, they will talk about ranking banks, personal strategy to attain the needed funding, and whether one should focus on home or practice.
While rate-and-term is important in choosing the right funding for any startup dental practice, one cannot really look at it from an interest rate and loan term point of view because they can both fluctuate any time based on the market conditions. For example, one might get a great rate on a short term loan, but they then force themselves into a higher monthly payment. The best way to go about it is to focus on the cash flow aspect of it because cash flow is everything. It determines whether a dental practice grows or fails, and Stephen will share tons of actionable advice on what to look at before taking a loan.
Jayme will talk about a great numbers strategy in his financing for startups arsenal that demonstrates that an associate dentist can afford a startup practice by just doing six crowns a month. From the math, it’s very clear that an associate dentist can comfortably service a $500,000 loan if they did just six crowns a month, which proves that starting and growing a startup practice is not as challenging as it seems. Stay tuned as Jayme and Stephen cover the rest of the topics in the structure side of financing and banking negotiations (including business planning) so you can have the tools you need to approach startup practice ownership wisely. Enjoy!
Key Points Discussed:
- Sharing dental financing wisdom and insider banking information to the tune of half a billion dollars of funding in dentistry (01:36)
- The best rate-and-term for a startup dental practice (04:48)
- Having a repayment structure that mirrors what your growth pattern is going to be (10:02)
- The company that has more cash on hand than most countries (14:46)
- How to afford a start up practice as long as you can produce six crowns per month (17:04)
- The things that need to be inside your financial budget planning (22:27)
- Loan approval doesn't mean the idea for your startup is a good one (28:21)
- Being prepared to underwriters by understanding what's in your own financial statement (40:04)
- No debt is not the path or the solution to getting funding (47:02)
- Reverse engineering the strategy or pre-planning it and building it for your custom situation (51:04)
- The five factors that need to be in every business plan (53:07)