By Ross Martin, Accountancy Director at Hive Business

There was a stampede to buy houses before stamp duty rose in April and the endless price rises eased a smidgen in the following weeks. Enough, at least, for Halifax to say that confidence in the market is at its lowest level in over a year.

Big deal. Let’s be honest, if you’re buying a house you’ll do well out of it. Unless you’re playing stocks (access to which is getting a lot easier thanks to all the apps coming out), there’s nothing else delivering consistent growth for the unsophisticated investor. Saving money in ISAs and other products will give you pathetic returns, no matter how much the government tries to coax us into believing otherwise.

Everyone understands this which is why, if they can get enough credit, everyone buys a house. Sure, there is a bit of uncertainty around Brexit, but I suppose there will never be a perfect money printing machine will there?

Contrast buying a house with buying a dental practice, historically the mother of all money printing machines. Oh, for those halcyon days! Not any more. In fact, people all over the place are getting in over their heads very quickly and finding themselves stuck with horrible financial and professional obligations which they’d never have agreed to if only they’d known.

If you’re reading this and are thinking about buying a practice, the key thing to ask yourself right now is: why am I doing this? When you’re buying a house this question is very easy to answer: it’s will accrue value, it’s cheaper than renting, it’s domestic stability and control over your life. Buying a practice? Well, people who plan to keep things ticking over at the same turnover are in for bad times indeed. They will be financially worse off than they were as associates. How does life sound with large debts, more work and stress tightening like a ratchet? Oh, and throw in less and less family time, and perhaps even family breakdown…

When you buy a dental practice you are not getting a golden goose, you are arriving at the middle floor of a helter skelter and you can spiral down very quickly. Those who dedicate resources to growth and implement sustained marketing can just as quickly move up.

In residential property you won’t slide down the helter skelter unless you’re very unlucky indeed. At the very least you’ll maintain altitude, even if you buy an overpriced house. But it’s only worth buying a practice if you have the will to invest afterwards. Financially, it’s going to be the most vulnerable period of your life and so investing will feel counterintuitive. Doesn’t matter. This is no time to buy cheap services and cut costs. You need business growth.

So if you’re still going to take the plunge, please don’t get on the wrong side of that monster helter skelter – watch out for these warning signs:

• As the principal you believe you have to micro-manage every aspect of the business yourself, including marketing, HR, finance, CQC regulations
• The business doesn’t have a finance function that monitors the financial performance at least quarterly
• You think that keeping track of the cash in the bank is tracking your financial performance
• The business doesn’t have a website driving new customers to the business
• You think that because the practice built a website a couple years ago for £2,000 that task is done
• The practice has no call tracking to determine whether valuable call enquiries to the practice are being answered swiftly (or missed completely!)
• Expensive glossy adverts are taken out in County Living magazines
• Marketing decisions are made based on assumptions without empirical evidence
• You’re still using the old 2′ x  2′ sign with five fonts from six years ago with no phone number or clear message on it
• More than 40% of your personal gross is taken as drawings from the business
• You didn’t realise that profit (and therefore your tax bill) is measured before loan repayments are deducted
• You try to work out your tax strategy three months after the year-end rather than three months before the year starts
• You accept that when you go on holiday the practice won’t generate any profit that month
• You pay associates 50% or more and hygienists 35% or more
• You sometimes close lunchtime/early morning/late sessions
• You only have two surgeries
• On some days some of your surgeries are not utilised
• You let surgeries sit empty for a whole week during holidays

So long as you’re not sliding down, you can start looking at how to produce reliable growth. Get in touch if you need advice on 01872 300232 or email us at hello@hivebusiness.co.uk.