Four financial milestones that help dental group owners scale with clarity, discipline and long-term vision
Key Takeaways
- Understand the financial health of each location before you scale.
- Keep the organization’s long-term vision and goals in focus to guide growth decisions.
- Build an advisory team, including a CPA, lending partner, attorney and transition consultant.
Growing from a successful dental practice into a multi-location organization is about more than just adding offices. Sustainable growth requires a clear vision for the future, well-defined goals and the discipline to make decisions that support long-term success.
Every growing dental group will walk through four critical financial milestones that shape its future. At each stage, owners face new opportunities, challenges and decisions that can impact long-term success.
CPA and Partner David Forbess has walked alongside multiple clients as they have built their groups, and has seen firsthand that keeping the organization’s long-term vision and goals in focus can help guide decision-making and provide clarity as complexity increases. He shares his insights on what practice owners should be thinking about at each stage of growth.
MILESTONE 1: BUILDING THE FOUNDATION
Do we know how each location is performing?
Before adding another office, practice owners should have clear visibility into their organization’s financial health. That means reviewing profit and loss statements, balance sheets, and key performance indicators (KPI) by location to identify where to focus your time, resources and operational improvements.
Owners also should track new patient volume and treatment acceptance and conversion rates to understand what is driving income into the business.
“If you’re not tracking these things, they can’t be measured. And you can’t make decisions without measurable goals or measurable outcomes,” says David.
Common Challenges at This Stage
Cash flow is often the biggest hurdle. Demographics, competition and patient demand can all influence how quickly a location gains traction.
Another common mistake is being undercapitalized. Many owners attempt to open new locations with minimal resources and then struggle to catch up later. Having the right CPA and lending partner can help ensure growth plans are properly funded from the beginning.
MILESTONE 2: SCALING THE ORGANIZATION
Can our infrastructure support the pace of growth?
As groups add locations, operational consistency becomes increasingly important.
The systems, processes and best practices that made earlier locations successful should be documented, refined and replicated across the organization. Every new office creates another opportunity to reinforce what works and eliminate what doesn’t.
“I think consistency and repeatable processes are the most important things that practice owners need to think about as they begin to scale,” says David.
Continuing to build the right advisory team also becomes critical at this stage. In addition to having a financial advisor and lending partner, growing organizations often need legal counsel to address operating agreements, leases and employee agreements.
The team within the walls of your practices also is also a priority. As organizations expand, the departure of a key provider can impact performance. Creating a culture where doctors and team members want to stay is essential to protecting enterprise value.
Acquisition or De Novo?
How to scale is another decision: growth through acquisition or growth through de novo expansion.
Acquisitions can provide immediate revenue, an established patient base and existing cash flow. However, success depends on evaluating whether the practice’s culture, profitability ratio and operations fit within the broader organization.
De novo, or new start-up locations, typically require less upfront capital but often take longer to reach profitability.
The right answer depends on factors such as market opportunity, specialty, available capital and the organization’s growth objectives.
When Should Growth Pause?
Healthy growth requires profitability, systems and operational discipline, not just additional locations.
If new locations generate diminishing returns, struggle to cover overhead or fail to service their debt obligations, it may be time to pause and strengthen infrastructure before expanding further.
Again, a relationship with a financial partner is key because sometimes your CPA may recommend improvements needed before growth continues.
MILESTONE 3: MANAGING AN ENTERPRISE
Are we building value or just getting bigger?
At a certain point, dental groups must transition from thinking like practice owners to thinking like enterprise leaders.
Revenue growth alone does not create enterprise value. Sustainable value comes from consistently profitable locations, strong leadership, operational efficiency and a culture that can scale.
This stage requires continued focus on location-level performance. If an office is underperforming, owners need to understand why. The cause may be overhead, operational inefficiencies or cultural challenges within the team.
Culture becomes increasingly important as organizations expand.
“Some larger groups intentionally bring employees from all locations together to reinforce a shared vision and strengthen team alignment. While every office has its own personality, patients and employees should experience a consistent culture across the organization,” says David.
MILESTONE 4: PREPARING FOR A FUTURE LIQUIDITY EVENT
If an opportunity arose tomorrow, would we be ready?
Every dental group will eventually face a transition event. That’s why preparation should begin long before a transaction is considered.
Owners should evaluate:
- Profitability
- Overhead
- Referral relationships
- Operational risks
- Growth opportunities
- Organizational strengths and weaknesses
Rather than viewing a liquidity event as a financial transaction, 7 Pillars Advisory’s Chief Development Officer Brian Christensen reminds that owners should first identify what problem they’re trying to solve.
“Extra money alone doesn’t necessarily eliminate stress, improve operations or create greater fulfillment,” says Brian. “The right capital or equity partner should provide strategic value that aligns with the owner’s goals and vision.”
Equally important is ensuring alignment among ownership partners. Differing timelines, priorities and expectations can create significant friction during a transaction process and potentially reduce value.
Owners should also remain focused on running the business while exploring potential deals. Financial performance often declines when leadership becomes distracted by the transaction itself.
Brian also encourages owners to prepare well before they think they need to. As he discusses on episode 277 of the Group Dentistry Now podcast, the best time to evaluate readiness for a liquidity event is before a deal is on the table—when ownership can still improve profitability, strengthen operations and align around what they want the next chapter to look like.
Growth Starts with a Clear Vision
Many growing dental groups dream about the eventual enterprise they want to build, but the most successful organizations never lose sight of the fundamentals.
They understand their numbers. They create repeatable systems. They build cultures that attract and retain talent. And they stay focused on a clear long-term vision.
For emerging DSOs, sustainable growth is not about collecting locations. It’s about creating a scalable organization that delivers quality patient care, generates consistent profitability and builds lasting enterprise value. The groups that get the foundation right are ultimately the ones best positioned to capitalize on the opportunities that come next.
If you are building or scaling a dental group, do not wait until the next milestone is already in motion to assemble the right advisory team. CWA and 7 Pillars help owners evaluate the financial, operational and transaction considerations that shape sustainable growth, so you can move forward with a clearer view of what comes next.
