Dr James, 9s:

Welcome everybody to this live webinar with myself and good friend Mr Jawad Anjum. I actually almost defaulted to Dr Jawad Anjum just there because of out of force of habit, out of having so many dentists on the platform, but that is, of course, not your area of expertise, mr Jawad. It is practice finance and that's exactly what we're going to be getting into this evening, so looking forward to that. Anyway, how have you been my, my friend, since we last spoke? What's fresh?

Jawad, 33s:

Very well, very well, busy, busy, busy. You know how things are trying to keep things ticking, plate spinning. But yeah, very well, how have you been?

Dr James, 41s:

Lovely, lovely. I've been busy, mate. Actually, I've got some really cool stuff I'm going to announce very soon. I feel like I'm perpetually saying that. I feel like I was gonna say I was gonna say keep saying it, we're waiting, I gotta follow through. People are gonna stop believing me after a while, but it's fine because I will come through, so it's all good. But yes, anyway, joad, you've been on the dennis him best podcast before, but not on a webinar like what we're doing tonight. So do you know what would be lovely? A little bit of a re-intro for the podcast listeners and an intro for people who are just seeing you for the first time this evening. I think that'll be really nice. Then we can get into what this webinar is about, which is getting your dream dental practice and how you can get the right finance in order to achieve that yeah, absolutely so.

Jawad, 1m 23s:

I'm Jawad Anjum, so I am the founder and managing director of Stanford Finance. Stanford Finance is a specialist medical brokerage specializing in dental finance, which is to help people acquire dental practices, start squat dental practices and even refinance, as well as looking at sort of asset finance and other elements of finance in terms of requirements of loans and things like that. My background fundamentally, is 20 years in commercial corporate banking, moving over to consultancy within a large specialist dental broker. So that's me in a nutshell and, yeah, I'm running Stanford Finance. That's my full-time activity currently.

Dr James, 2m 13s:

My man and you know what. It's also worth mentioning that you do bring in an additional area of expertise or pair of eyes to this conversation, in that you do actually also own some dental practices. Part own some right.

Jawad, 2m 26s:

That's correct. Yeah, so Denton Leeds, the practicing Leeds City Centre, we started earlier on this year. Um opened the doors in January this year, so we're sort of nine months in um, but started the project summer of 2023. So yeah, I've got um. I was speaking to a client earlier on and he knows about that practice and he sort of said you've seen it from the inside now as well and it's really interesting insight because it does. You think you know dental practices as a finance consultant and you do, but you don't know everything. So it starts to teach you more and you look at the insights and aspects that you didn't quite understand, but it opens up a conversation with potential clients. So it's good stuff.

Dr James, 3m 11s:

Well, do you know what? How many people who are in the realm of finance can actually say that they've owned a practice? And do you know what? That's actually probably quite a fun place to start right there, where it's freshener memory. What did you learn through running a dental practice about your area of expertise, which was finance?

Jawad, 3m 27s:

seeing it from the other side of what the dentist goes through, Well, it's interesting because when you are looking at it from the outside, it's easy to advise. And one of the things very early on I realized was that there's a couple of things I did that I would advise my clients not to do, and I'd be very specific about it. And something as small as using a solicitor, that's a dental specialist, and I was sort of like I did it and I used sort of a property solicitor and you know they sort of didn't understand some of the intricacies that they needed to, and halfway through I thought I wouldn't let my client do this to, and halfway through I thought I wouldn't let my client do this. Um, but there's little aspects that you learn through the process because it's sort of it's somewhat do as I say, not as I do, but at the same time, um, you sort of look at it and think, well, you advise it for a reason. So you know, follow it. So I didn't make that mistake again. There were various times through the project that I thought to myself what would, what would I advise my client here? But, yeah, lots of learned other than that in terms of you know the intricacies that you don't get to see, you know the equipment and the detail of the equipment, the understanding of the equipment that might be within a practice, the different types of scanners and x-ray machines and CBCT and this, that and the other that you sort of hear a lot about. You know autoclaves. What does autoclave do? I don't think I knew that previously, so you know it's little bits like that. But, like I say, it opens up conversations when you're speaking to clients, and now I've done so much with squat practices over the years and I feel like now the conversations I have are that much more detailed and I add so much more value.

Dr James, 5m 16s:

Yeah, well, you've been in the trenches now, right? You know what those dentists go through firsthand and you can no doubt weave that into finance solutions as well. And we should just clarify, if I've got this right, Jawad, when it comes to your area of expertise, when it comes to finance, it's not so much equipment in the dental practice, it's more for practice purchases and squats and things along those lines.

Jawad, 5m 36s:

Well, it's a mixture of the two.

Dr James, 5m 38s:

Oh, is it? Oh, I've learned something, okay.

Jawad, 5m 40s:

I do the asset finance and I can raise the finance needed for assets, but majority of what I do is acquisitions, refinancing startup funds for practices, whereas there's a lot of others. So it's just flipped. It's probably 80%, 90% is acquisition and a little bit of asset. You've got brokers out there that almost just do asset.

Dr James, 6m 5s:

Right, awesome, okay, cool, listen, let's jump straight in with two feet, because this webinar is all about getting your dream dental practice and how. Obviously the finance is the thing that facilitates that. Right, and the better the deal that we can get on that front is going to mean more money for the practice, more money we can reinvest, and the sooner we get to that goal and objective. So, on that very note, when it comes to conversations that you're having with clients because here's the thing, here's why I love this knowledge this is, in the field, knowledge that everybody can benefit from effectively and it comes from direct experience. It's not from, like, a youtube video or an ebook or anything along those lines. It's too niche for that. Are you with me? You have to go to somebody who has expertise in this field so you know, when it comes to dentists and whenever it comes to scope for them getting a better deal when it comes to their financing solutions to make that dream dental practice happen, what are the big no-nos out there, what are the biggies, what are the things to look out for or what are the areas in which dentists often run afoul potentially and don't get as good a deal as they could do, as they should do really I think sometimes and this might be a a debatable point, but I think believing too much of what you hear.

Jawad, 7m 12s:

You know a broker selling a practice is not acting for the buyer and fundamentally there's a number on there. They're trying to achieve that number and you can believe in naivety that that number is the correct number. I'm having a handful of conversations. I was having a conversation earlier um this afternoon looking and assessing um a prospectus from a sales agent and we're trying to work the figures and we're looking at them, thinking it doesn't quite add up for the practice value. And you know, evaluation will sort of pull that out in terms of is it right, isn't it? But we want to establish it early on. But a lot of first time buyers will take a figure and say, okay, we'll run with it. Is it accurate, is it correct? Due diligence needs to be undertaken and that's so important at the early stages because what happens down the line is that you can sort of go on hunky-dory this is brilliant, that's the price Seller wants. That Buyers agreed that we go down the line is that you can sort of go on hunky-dory this is brilliant, that's the price seller wants, that buyers agreed that we go down the line when it comes to valuation, the deal falls apart, and that's the last thing you want. And at that point you've committed various costs in the process, whether that's solicitors, whether that's valuation, and that's both sides, so everyone's incurring costs. You get to that point and actually it's worth 100 grand less than we've agreed. So the bank aren't then going to lend on the price agreed. They're going to lend on the valuation if it's lower. And then, in addition to that, is the seller going to negotiate or are they going to expect you to put your hands in your pocket? So it becomes an area in which there's you know the deal can fall and you don't want it to fall, but you've got to do, you've got to do the right thing at that stage. But, like I say, my point here is that do the due diligence early and understand the numbers, speak to a specialist and understand it in detail.

Dr James, 9m 14s:

Cool, so do the due diligence before you even get to the offer stage, right? Is that possible to do it that way, ron?

Jawad, 9m 21s:

It is, and there's a few different ways to do it. You can either have a formal valuation done it's going to cost you a couple of grand, but in reality you can have offers placed and accepted, subject to valuations, um. But that's like that's a formal, formal approach. But if you speak to somebody like myself who has a good understanding of valuations of practices with my background and experience, I can sort of look at it and say that's there or thereabouts, that's way off or there might be. There might be a tricky one where you look at and say I'm not 100 on this, um, and then you might need to go down the formal process.

Dr James, 10m 0s:

But that's the way to do it gotcha, and if I've got this right, that pertains to the multiple a lot of the times on the ebitda.

Jawad, 10m 7s:

Yes, yeah both, both them points. You know how has the ebitda been arrived at, what's been taken into account, what type of method has been applied? Is it associate led? Is it principle led? Then yes, the multiple. And look, valuations are so subjective and a formal rick's accredited value. One could have one number, another, something different, so they are subjective, but it's about the justification. And so, yeah, them two points EBITDA, multiple are the important factors and we've got to understand how certainly EBITDA have been arrived at.

Dr James, 10m 44s:

Oh, do you know what? And it's too juicy for me right now to not ask what little things to look out for whenever it comes to EBITDA, because that's really useful. These are the little areas people get caught on sometimes yeah, so.

Jawad, 10m 57s:

So look like I said, you've got an associate-led model. Now, with an associate-led model, you've got to make sure that all the fees within the practice are being undertaken by an associate, and that's not that they need to be taken, it's for the financial modeling um. So if there's and let's put it simply there's a, there's a million pound nhs contract and so, yeah, million pound nhs contract um with, let's say, uh, 10 000 udas, them numbers probably don't make sense, but 10,000 UDAs need to be undertaken. There's no private, let's say them 10,000 UDAs, 5,000 of them might be undertaken by the principal and the funds are then left in the account and they don't draw. But the way you've got to look at it is that if all them 10,000 UDAs were undertaken by an associate that's paid £13 per UDA, what would the associate bill be? So that's one really important factor that needs to be pulled in. That's right most of the time. But the arguable and the debatable point there is is £13 right for the area? Can you recruit an associate for £13 UDA? Is it more? Is the demand better? Is recruitment difficult there? So there's a few different things in that. The other thing is just a general wage bill. Is it heavy? Are they paying a lot? Are they overstaffed? Is it nice, comfortable practice with two nurses in in each surgery or, you know, is it just one and you know there's a few other bits going on, so you've got to analyze these bits pretty carefully.

Dr James, 12m 41s:

Um, they're two big points so yeah, there's and listen, here's the thing. You know, an answer to a question like that is huge. There's a billion things to watch out for. That's why it's such a skill to be able to analyze that accurately. I'm gonna ask an interesting question just now, and I know that this is such a broad um, there's such a broad answer to this question, but I'm gonna ask it anyway. Let's have some fun multiples what's a good multiple at the moment? What's a good multiple to look out for? I know that there's so many answers, but I'm just curious so.

Jawad, 13m 12s:

So it's ranges, fundamentally, um, and what the range looks like, and there's a different range for for an associate-led model, there's a different range for a principal-led model. So, an associate-led model, the range is broad, by the way, and I can't I can't get closer for you until I'm you're talking about a specific practice, because geography plays a big part, whether it's nhs, whether it's private, what the mix is is the plan income, um, what the nhs contract looks like. There's so many different variables. Number of surgeries, um. But for an associate-led model you're looking at and this is national, by the way you're looking at sort of between a six and an eight, and for a principal-led model, you're looking at four to a six. The reality is Sounds about right.

Dr James, 14m 7s:

Yeah, that stacks up with what I've heard before. And then obviously, the fact that the multiples higher accounts for the lower profit. Right, because obviously associates take on more from the business. So, yeah, they kind of like balance out a little bit, or maybe actually that's an interesting question to answer in your experience. Pure valuation yeah, associate led versus principal led very similar practices. Do the associate led tend to be valued more when we take into account the increased multiple but the lower profit margin, so to speak, do they roughly balance out? I get that that's really general, but I'm just curious to know in your experience.

Jawad, 14m 46s:

So in certain circumstances that they'll, they'll balance out. But if you do them, if you do them both ways, they'll be. They'll be there or thereabouts. But some practices, the smaller ones in particular, if you apply an associate lead, it just just doesn't work. You know you the number will be so low, um, it's sort of like that's not what it's worth. So then the only way to look at it is a is a principal lead where you're leaving a lot of the funds in, because the justification behind that and the reasoning for that is because a small practice like that will most likely be principle led. Um, but it's each practice on its own merits, fundamentally, and you've got to play with a few models and you know I work very closely with one of the largest sort of um uh, rick's accredited valuers, um in the country for dental practices and watching them work, understanding how they work, and I took a very, very keen interest in it because I like that side of things. Um, and literally that's what they did. They looked at that model and they looked at that model and then looked at that model and they sort of said which one? And does it work, does this make sense? And there's a few sense checks that they'll throw in there, um, and then they'll get a few opinions and then a bit of comparable evidence within the area and then eventually they arrive at it. But it's all. It's all interesting stuff. I love valuations, yeah, so subjective.

Dr James, 16m 9s:

So subjective, I know well, is here's the thing. Right, because you can have 10 different people looking at a dental practice, right, and you know there might be a huge opportunity there because somebody knows something that could really take the practice to the next level. So it's always going to be a little bit of that. You know what I mean, but at least it's like a stake in the ground effectively, isn't it? I heard an interesting fact of the den. I wanted to run this by you. Well, actually I should probably backtrack slightly there. It's not necessarily a fact, but anecdotally, an accountant who knows the field of dentistry pretty well told me this It'll be interesting to run this by you. So this accountant, we were having a conversation about principal-led and associate-led in terms of dental practices me and this chap and we were talking about just how many practices out there are associate-led outside of corporate so this is not including corporates and he told me it was around about the 10% mark and I was like that's crazy, that seems really low.

Jawad, 17m 9s:

It does seem low. It does seem low. It does seem low, in all honesty, in terms of I undertake various research within dental practices, sales values and everything else that's associated to it. I've never actually looked at that as a ratio. That does pass the hell out of me.

Dr James, 17m 32s:

I was really curious. But yeah, 10% is what he said.

Jawad, 17m 35s:

The really interesting point in that for me, if the 10% is correct, is that valuers for formal valuations will almost always value a practice as an associate led. So it almost doesn't make sense if only 10% are. Why you? Why is that always the model? To be honest, I'm saying that I'm being devil's advocate a little bit, because I do know why it's. Effectively, if the dentist can't undertake the work, does the practice still work? Does the practice and the profitability still stand up and does the value still make sense? So that's sort of the reason, but it's always the social ed, yeah.

Dr James, 18m 22s:

I find that interesting. And then one more thing, because I do want to pull this conversation back to getting your dream practice, but I just want to share this stuff, given that we're on this very subject. Another thing worth mentioning. I'm sure you've come across this before, at least I've heard of. I've never been through this, but people have told me that this exists, so I want to run this by you. Do you know, whenever it comes to a group of dental practices say you have like one, two, three, four, five dental practices the ebit, the multiple they actually increase the multiple for those practices. So two practice individually, one's worth a million and others worth a million. When you actually have them together as a group, they might be worth 2.5 or something along those lines yeah, so so that's the, that's the corporate modeling, fundamentally, and you know you're talking.

Jawad, 19m 3s:

You're talking nines and tens multiples then, and that's because the accumulated revenue growth, the, the group activity um, just is, is within that corporate space where multiples are increased, and even that's not even just groups if you've got a large individual practice um that might be, that might be. Yeah, so it's the same with same, with, uh, large practices, individual practices, so it's not just. But if it's seen as a corporate type model and falls within that corporate banner, then nines and tens is what you're looking at for the multiples.

Dr James, 19m 44s:

Holy moly. And just out of curiosity, what are we defining? A large practice? How many surgeries? Ish, ish, I know it doesn't have to be so, so.

Jawad, 19m 54s:

So it's surgeries as well as revenue, and there's no sort of step if it's over this number of surgeries, like it's over this revenue, it's just looking at, uh, looking at each individual one, and when it gets to, you know, if you're over over one and a half, two million pounds worth of revenue, um, you know it's then. It's then falling into that type of space right. So it's more like a trend, more than anything else, rather, yeah but then when you look at you know a practice that's got two million revenue. You know they're certainly not going to have two and three surgeries. You know they'll be in the five, six, seven plus type of mark.

Dr James, 20m 33s:

Seems reasonable okay, anyway, let's revert this conversation back to what we were saying at the very start executing your dream dental practice and what you need to know whenever it comes to knowledge on that front. So there, there'll be two types of people who need finance. Correct me if I'm wrong. There's two types of people I would envisage need finance their dental practice. There'll be people who are purchasing for the first time. They're purchasing another practice not necessarily for the first time, but they're purchasing another practice or people who are setting up a squat. Right, so you're either purchasing a practice somebody else's it could be first time, or it could be adding to what you have already, or you could be somebody setting up a squat. Is that largely how it's broken down? At least, it is in my mind yeah, yeah, um, I'd say so.

Jawad, 21m 13s:

And then, like you say, the other point is just um first time buyers or existing operators that are buying and building their portfolios cool all right, let's start with squats and then we can kind of work our way towards those other ones.

Dr James, 21m 29s:

All right, and I'd be curious to know if it changes things based on your position or based on what you're trying to do, whether it's squat, buy another practice first time, practice things along those lines. So let's put yourself in the shoes of somebody who was setting up a squat or who will be setting up a squat. What do they need to know whenever it comes to finance? And bear in mind, this person has probably never ran a dental practice before or ever had finance before, at least most of the time when they're setting up a squat or ever run a business oh boom, yeah right there

Jawad, 22m 0s:

absolutely, that's a good point so that's always a really important point. Now, um, what do you need to to think about and look at? Um, the first point is well, I'm going to take a step back. Actually I was going to say location, but actually before you get into location, you've got to look at what you're wanting within the dental practice or within your career, I should say, because you've got to understand sort of the reasoning behind. And when I say you've got to understand, I mean that dentist in particular, because I come across dentists that just think and feel that the next step for them is to buy a practice or to set up a practice and they don't actually know why. And there was I think it was on Dentists who Invest, and there was somebody that asked a question on this and the response was about the why. And I responded as well to say the why is so important, because the why for a dentist will always sort of relay on to what they need to do and how, and whether a squat practice is right for them. Um, whether a squat practice is right for them, whether buying an existing practice is right for them, or whether just staying an associate and not becoming a practice owner, and that is actually the harsh reality at times, and I've had people that I've spoken to and I wouldn't ever talk anybody out of it, but I've got them to realize that it's not what they want and it's not the right thing for them, your own, why. Once you've decided that it's a squat practice, you know the first thing to look at is then location. You know where do you want to be where? Where should the practice be? You know you're talking affluence, you're talking accessibility, you're talking a handful of different things that need to um, need to all make sense. That's going to make it easier for your squat practice that you're building from scratch successful. You know, competition. Something else Now. I always say competition isn't always a bad thing. It actually means that there's demand within the area. Some people will shy away from the dental practice down the road. Okay, what are they offering? How are they doing it? Can your service be better? Will your offering be different? Um, so this is this is the initial initial piece is location. I've got a client that I met last week who's in this space in this initial stage and we talked about a few things. He was looking to buy a residential premises and convert it um, but I sort of put the idea into his mind, which is what we did with our dental practices old office block with a shop front floor to ceiling glass as sort of the opening and the reception area. So location is where to start and once you've found the location, you can start to create a vision. You've've got design and build, you've got a few other aspects. Obviously, finance, you've got to have an understanding of what you can raise, what you have yourself. But I always say that and you'll hear me say this within my posts on Instagram, within any conversations that I have that engage finance brokers early and not every finance broker will sort of offer a full service support and consultation and consultancy approach. But that is what here at Stanford Binance we do and consultancy approach. But that is what here at stanford finance we do. Um, grab it from the scruff of the neck as such because, again, first time practice owner, first time business owner and, you know, never worked for themselves at all there's a there's, there's a big gap and lots of gaps that need to need to be supported and filled and that's so important to make sure that, um, it's, it's established fully, you understand what you're getting yourself into and to have that support mechanism is always really important do you know with the whole why stuff, as in why we're doing it.

Dr James, 26m 18s:

I feel sometimes it gets misrepresented because it comes across a little bit airy-fairy, ethereal, but actually when things get tough which they inevitably do that's the thing that's going to keep you going. Yeah, why is the thing it's not when it comes to, I think, most people. A lot of the time people will start a dental practice to make more money, right, and it definitely doesn't look like that. The majority of the time for the first two, three, four years At least At it definitely doesn't look like that. The majority of the time for the first two, three, four years at least, right, and it's the why that you were talking about just a second ago. It keeps them going and it's true for any business owner, I would say.

Jawad, 26m 52s:

Yeah, and that's a common answer. I want to make more money. Okay, well, do you know that you're not going to make more money in the short to midterm? No, am I not? No, you probably make more money as an associate, and they start to question it a little bit from there. Now, again, it's not about negativity, because sometimes it can come across as negativity. Why do you want to open practice and obviously I wouldn't ever position it that way. But there needs to be some straight questions. There needs to be some some soul searching to establish the right answer. Um, for yourself and be real to yourself. Because wanting to make more money I love it when people say that to me, because I'd like to hear people with ambition, whether that's practice, ownership, whether that's making more money um, but establishing understanding, the point in which you will start to make more money is the key bit, because if it's going to be, if you think it's going to be within a month, two months, three months, it's not happening, not with a squat practice. If you think it's six months, 12 months maybe, but in reality 12, 18 months onwards is in reality where it's going to be, although I know one of our good friends would say that it's shorter. Do you know what I'm gonna say?

Dr James, 28m 11s:

I can, I can guess, I can guess dr bobby.

Jawad, 28m 14s:

Dr bobby, absolutely, that's exactly what I'm thinking bobby would say well, it you know, three to six months you can, and I don't disagree with him. I don't disagree with him if you've got everything in order and maybe if you sign up to bobby's car, there's your plug, bobby. Oh, that's, that's just his pitch.

Dr James, 28m 33s:

No, I'm kidding. Okay, he knows, he knows what he's doing. He knows what he's doing, but yeah it's, I think it's. I think even bobby would say that, uh, those are the outliers. I think that's fair to say. I think even Bobby would agree with that one. Okay, cool, we're moving on to people who are purchasing dental practices in two seconds. Just before we do that, something that would be hyper valuable for people who are setting up a squat for the first time. Do you know, whenever it comes to that finance conversation and they need to have the credentials to back up they are, that they are who they say they are and obviously prove that they're legitimate, what do the finance companies or banks need to see from those people? Business plan, all this stuff. I'm not sure you're.

Jawad, 29m 13s:

I'd be interested to hear what you say yeah, fundamentally, you know a decent business plan, a good set of thought out projections, um are the two main points in terms of the business. Obviously you've got a few of your admin bits you know to to sort of go through and look at um. You know cvs, uh, bank statements, uh the general sort of admin bits. But you know a cv is important in the sense that if you've just qualified a year ago and you're wanting to open a squat practice, you need a bit more experience. You know you need to be two, three years in at least. So it's little elements like that. But the main aspect in terms of the business itself is business plan projections.

Dr James, 29m 57s:

Right, and that actually there was a question in my mind that just popped in when you were talking there, but you kind of half answered it and it was. You know that everybody says that you need to have a certain level of experience to open a dental practice and whilst I'm not saying that that's not necessarily true, that can help. Just purely out of curiosity, what is the youngest person? How old was the youngest person that you ever helped get financed for a squat or even just any dental practice purchase?

Jawad, 30m 21s:

So I this, this is this is more so. Um, I don't think were they the youngest 26 and 27 but the the the substantial bit in this was not just the 26 and 27, it was a three and a half million pound practice. Okay, wow. So ratio of uh youngest with the largest purchase would be then, without a doubt, but I think sort of 25 26 is the. Uh is sort of where you what you'll need, because you need you need a couple of years, two to three years experience within dentistry, um, ideally to be able to step into ownership if there was some sort of coefficient and it was like age divided by practice valuation, they would be the winner.

Dr James, 31m 10s:

But straight up, purely, the youngest age is 25, something along those lines. I did once meet a chap who was 27 and he had four dental practices and he was setting up. His fourth dental practice was a squat that he was presently setting up when I was uh talking to him. So that's the all-time record that I've come across. Of course, that would be the extreme outlier. Uh, it goes without saying. Anyway, moving on from squats people who are purchasing taxes let's go first-time buyers. What do they need to know? What should they do? How does that journey look?

Jawad, 31m 38s:

so, again, you know we touched on this earlier in terms of getting to the right value um, bringing the right advisors on board that can help you through the numbers, the account servicing of the debt which comes from the EBITDA, the operating models, things. But you know in that first instance, when you're looking for a practice uh to buy you're scouring the market, you're looking at various agents and what they've got listed on their websites and you're speaking to the agents. It's getting a gauge for the type of practice you want as well. You know, what are you specializing in at the moment? Do you have a specialism? Are you thinking of specializing um within a specific area? Um, and looking for that right type of practice? You know I've got I've got dental clients that love nhs and there's one in particular that comes to mind that I tried to recruit at my practice and he was like oh, you're private, no, I don't want to do private, just nhs for me, most of you, the way they prefer to do private um. So when looking at a practice, do you, do you want nhs? What does nhs offer? Obviously, security of uh monthly income. Your contract is, you know you get paid a message. Obviously, claw back down the line uh, that gives you that security. So you've got to understand what type of practice in the first instance. If it's purely private, you know, are you expecting there to be plan income and if so, how much? So all these aspects when considering a practice are really important.

Dr James, 33m 20s:

I think one thing worth mentioning as well be interesting to see if you agree with this. One thing I've always noticed is that the best opportunities are represented by the practice in which someone can add the most value. So when you can add the most value, what is adding value? Well, it's always going to be a percentage of where it currently is, and the lower that is, the easier it is to add a specific multiple of value, where sometimes people will gravitate towards the flash practices that are already the finished product and it's maybe not necessarily as easy to do that. What are your thoughts on what I've just said?

Jawad, 33m 52s:

so I I completely agree and that sometimes as a preference, I've had clients saying not interested in opportunity within a practice. I want it fully flying um bells and whistles. One, eight, completely hundred percent of capacity, and that's the the minority. In reality, most people are looking for opportunity, you know, is there, is there a surgery spare? Does the property have capacity to add further surgeries and is there something that they're not offering? You know implants, for example. A few years ago not many practices were offering implants and you know they were outsourcing and they were sending them out to the practices. Nowadays it's more in-house but little things like this a high, high income, um, high fee income, um, that a practice isn't doing.

Dr James, 34m 47s:

You can add them in and especially if you can personally do that, uh, that treatment and that implant, um, it's going to help even more so yeah, 100, and actually that, uh, that actually reminds me, um, just going back to that chap we were talking about earlier with the four down practices, he says he goes out of his way to find practices that have analog X-rays and written notes Because he's like, right, these are like the calling cards right here, because I know if they have these, they probably haven't invested in other areas. Of course, listen, it's not universally true, we're definitely not saying that and we definitely don't mean to diminish any practices in those in that position. But what we are saying is it's some food for thought.

Jawad, 35m 27s:

That's where we're coming at this from yeah, yeah, no, definitely, and I think that's the. That's the case. I mean, I like the approach.

Dr James, 35m 33s:

I love that. Yeah, those are his two calling cards right there.

Jawad, 35m 36s:

He's got his eyes peeled for those, but yeah, anyways that's most likely why he owns four dental practices at such a young age because he's got that business and entrepreneurial approach there must be something to his philosophy.

Dr James, 35m 49s:

That's all I can say. There must be something, anyway. Moving on, now we're going to talk about the third category of people that we talked about just a second ago the old heads, the people who are adding to their portfolio of practices that they already have. How does anything that we said so far differ when it comes to that subsection of people?

Jawad, 36m 7s:

so I'd say the only thing that probably varies in that is um and from the finance perspective somewhat is we talked about the corporate. You know the threes, the fours, plus if you're adding. If you're ending up in that space, you've really got to look at your operating structure, your operating model and how active are you within now, when you've got three practices, you might do two days there, two days there and another day at the other one. You've got, you've got presence and you sort of manage them, manage them to some extent. I know people that won't have practice managers when they've got two practices and they sort of do it themselves. You get to a point where you're spreading yourself too thin and acquisitions seem great. You're adding revenue, you're adding an additional practice. You know your surgeries go from 9 to 12 or whatever that may be. But it can be detrimental and it can impact you negatively because it's then too much. I've seen it previously where exactly that's happened. They've gone from 3, they've gone from 4, 5. When they've got to 5 and 6, the operating model that you had when you had 2 and 3 now doesn't apply. You've got to take a step't apply. You've got to take a step back. You've got to take some advice. You've got to get the right advisors around you to look at the structure and say this now needs to change. We need this type of recruitment, we need this. You know, you might have a floating manager across across them, um, or across some of them. Your role changes. Are you clinical? Are you now completely managerial?

Dr James, 37m 47s:

um, but yeah, that's, that's the key thing for me within um, within additional practices and it's a skill set in and of itself, and what I mean by that is being able to have a nose or the pair of eyes to find a person who can actually fill your shoes effectively, because you're only one person right, and it hits a certain level where there's literally just not enough hours in the day, unless you want to be running around like a turkey, 16, 17 hours, something along those lines. So, yeah, worth considering, worth considering. Is that okay, cool any more? To add to that final category um to the final category?

Jawad, 38m 22s:

I don't think so. I mean, you know, look, you have. If you've got a group of practices, if you've had finance previously and you've still got it and it's from a few years ago, you're looking at an additional practice. Or even if you're not looking at an additional practice, actually reviewing your finances is really important because regularly reviewing what your finance package looks like gets you to understand whether what you have got is right for the market currently. There are so many people right now because the market in terms of Bank of England base rate and everything else has sort of gone like that and it's now sort of dropping and stabilizing. People are caught out right now and they don't know what they don't know. So I'm trying to and constantly within this industry that I'm really passionate about trying to get people to look at things from the right lens, um, and review certain aspects and elements. If you're buying, that's the perfect and opportune time to review what you uh your funding looks like across your other practices. In reality. I don't think you should wait until you buy. You should review regardless. If you haven't reviewed it in 12, 18, 24 months, 100%, you need to speak to somebody and understand whether what you're paying at the moment is right and relevant.

Dr James, 39m 50s:

Well, it's worth remembering. A conversation is free, isn't it? And it could be a huge saving there, but you know what I? actually, I actually want to touch on that a little more, and I'm sure that you and I could bounce off each other in terms of us chatting and discussing all the things that we talked about tonight in even more detail, but what I do want to do is I actually want to make the most of the fact that we're on a live webinar right now, with a fair amount of guests in the room, and I'm going to throw the mic out to the floor. Would anybody like to jump on the camera or indeed pop a question in the chat for Jawad? And we can get to it this evening in terms of asking Jawad anything that you'd like whenever it comes to A, finance, but also B, just generally running a practice as well, because you've got experience on that front too. So the invitation is there. I'm throwing the mic out to the floor. Anybody wishes to avail of it this evening? Or maybe people would just like a little bit of time to think about what their questions are? That's fine as well. Well, just that is totally cool. Well, guess what? Just why everybody is doing that? Why don't we just pick up where we left off there, Jawad and you know what? If, guys, anybody does think of anything. Feel free to put your hand up or put something in the chat, and we can definitely get to it this evening. We usually like to keep these zooms to about 45 minutes, and we're just coming up to probably the tail end of that right now. Oh hello, we've got a question in the chat. How do you decide? Oh okay, here we go how sam row says good evening. Sam row, shout out sam row. How do you decide what to finance cash and what to hire purchase? So actually, that that's pertains to something we didn't even get the chance to talk about really, which is more the equipment side of things. Do you want?

Jawad, 41m 32s:

so I sam um when you say how, how do you so this? This is an interesting, interesting point and topic, because financing some of the assets and it's an accountant question, if I'm completely honest with you, um, because they are the best people to advise, because there are tax benefits and ways in which you can save with certain structures and I'm not an accountant, just for the record and then sort of areas and elements for that type of funding is best to speak to an accountant. So sorry not to answer that question, but it's just not my field.

Dr James, 42m 14s:

Listen, it's a great question. It is a great question.

Jawad, 42m 16s:

Yeah, it is, it is.

Dr James, 42m 18s:

What you're saying, Jawad, is there's some numbers that needs to be crunched and some additional context there. Right, that is helpful to know. I feel like that's what you're getting at. Have I got that right? Yeah, absolutely, yeah, absolutely, absolutely, yeah, maybe there's, maybe, if there's just some rules of thumb, how about that? Or what are the criteria? There's a good question criteria for criteria for deciding do I want to go cash purchase or do I want to go finance purchase for any piece of equipment, as in what would make it? What are the? What are the criteria like? Okay, you want to consider this, this, this, this and this, rather than saying, saying specifically how do I do it? Do you know what I mean? You see the distinction.

Jawad, 42m 55s:

Well, it's spreading the cost of the assets that help and that's the question for accountants. So, just to rewind, and if Sam was actually getting a question in a different manner that's just come to light is that if you are trying to assess your cash flow and cash availability, that's the element that um would would then trigger whether you could do with that cash at bank to keep your cash flow and liquidity and finance. And if that's the question, then look there's, if a squat practices, this would be, um a very opportune where you want to keep, as, as I say, as much, but three months worth of um expenses, six months worth of expenses and everyone's slightly different within your, within your cash flow and liquid within your bank account and not have to rely on patient fees and income. And, like I say, everyone will have a different sort of stance. If you've got that, and some, then maybe you don't want to pay the interest, you don't want to pay the fees for asset finance, but, um, if that's tight, then spread the cost, um, don't pay for it upfront. Keep your cash liquid, um, and use someone else's money, fundamentally, um to buy the things that you need to. But, like I said, the other the other element of spreading it on a on a lease basis, um through asset finance, um. There are benefits um as far as tax and other elements are concerned, so definitely speak to your accountant about that okay, cool, well, listen, thanks for that and thanks for that question.

Dr James, 44m 42s:

Uh, just then from sam, which provoked a little bit of conversation, which is a good thing, of course, and but I just want to ask a question. Actually, I just popped into my head and this might be a complete noob question. All right, I'm going to get that out of the way at the start, before I say that, in case it happens. I'm just wondering, right, you know, in terms of asset purchases and in terms of finance for that, what sort of interest rates are you looking at on that stuff?

Jawad, 45m 12s:

And maybe it's specific, I'm not sure. No, you can, you can. So the interest rates are sort of um, based on yields and they're structured slightly differently. Um, and you've got to sort of understand how the yield process works. But I would say if, looking at conventional type interest, um, you're talking nine, ten percent% of annual, so that's sort of where it roughly is, you know you can end up at four or 5% flat rates. So it sort of it varies. You know the dental sector is a sector that's quite light within a lot of lenders. So you know you fall into the lower area of interest rates. The other thing with the asset finance is that you know you're talking five, seven years. You know you're not getting to spread that over a substantial. You know 15, 20-year type of term which you can do when you're buying practices. So you know the mixture of the two. And this becomes even more prominent when looking at squat practice finance. You know you can get five to seven year terms for asset finance for your build. But there's also options out there that are 15 years at better interest rates as well, years at better interest rates as well. So some dentists that are looking at Scott Practitioners are actually getting caught out there because the first person they're speaking to is telling them about asset finance and they're thinking that's the only option. I've had a few clients recently that present that they've got these deals and it's all asset finance. So you're setting up a practice on five-year money, um, and your loan is circa 300 grand and the interest rates are nine, ten percent plus. Actually these are more. These are like 12, 13 percent, um, when I can get you money over 15 years and your interest rate is seven, eight percent% and it makes a difference of probably two or three grand a month that you're paying in repayments.

Dr James, 47m 19s:

There we are. Food for thought. I'm actually glad that you said that second thing, then, because I was just going to actually ask you what do the repayment periods look like? We've got another question that's come in on the chat this evening. We're coming up to the 15 minute mark. So, yeah, we definitely got time for this one and potentially one more before the final whistle, depending on how much there is to flesh out here. So we've got a question and that question is from let me just go ahead and make this window a little bigger so I can see it. This question is from Ramakrishna. Good evening, ramakrishna. I hope you're doing well this evening. Ramakrishna says what's the scenario for buying first NHS practice for an associate wanting to become practice owner? How much deposit is needed? Or banks finance 100%? What does it depend on? This is a great question, because we never actually talked about this tonight and it's, in terms of the deposit, effectively right.

Jawad, 48m 16s:

Yeah, so for a first-time buyer, nhs practice and again I'm going to give a broad brush answer, because each specific practice and its profitability and how much debt it can service is very important within the analysis. But if we're just talking LTVs and let's say everything else ticks the box you know it's a 90% loan to value should be something that can be achieved in the first instance and then, in addition to that, that extra 10%, there are ways and means and, depending on structure, that you can get that as well. So you're actually putting down zero deposit. So that can happen. And it comes down to structure. It comes down to looking at the deal holistically, looking at you as an individual, as a dentist, your background, your experience, your assets, liabilities, as well as then the practice of profitability, the location you know, does it need money spending, blah, blah, blah, the usual stuff. And then, when you've got it all in front of you and that analysis again, this is important within the initial analysis that I always do is holistically understand it all and then say, well, this is how we can get 90, this is how we can get 100 and this is how we can potentially get 110, and they're sort of the bits that we've got to look at. So rule of thumb 80 90 comfortable working on the structure and looking at other aspects. 100 achievable.

Dr James, 49m 54s:

Brilliant question. I'm actually slightly ashamed for saying that we didn't talk about that.

Jawad, 49m 58s:

Yeah, that's a good point.

Dr James, 49m 59s:

How did that not come up? How did we not talk about that? We skirted over that one somehow. Anyway, okay, cool. Thank you for that, ramakrishna. All right, cool, listen, we have probably got times. You're welcome, ramakrish. Ramakrish says thanks in the chat. What was I going to say? What was I going to say? One more cue before we wrap up the season, and I know that this is everybody in the debt world's least favorite question Interest rates up, down, staying the same the next few months. I know nobody likes that question, but I just wanted to ask anyway, just for fun. What are your thoughts?

Jawad, 50m 32s:

So the thing we've, the thing we've got with interest rates at the moment is that they're higher in in the sense of overall, because the bank of england base rate now, in terms of the margin that the banks are offering, the lower than they've been for many years. You know I'm doing deals at sub two%. You know 1.5%, but that's over base. So then you've got to put the base rate onto that. So you know it's 6%, 7% there, almost immediately. So, look, it's a really good time for funding and finance. 12 months ago it wasn't the case. You know, if you entered deals 12 months ago, then you know you're probably in a very different position. But that was because the banks and the lenders take time to sort of stabilise the need to see where the market's going, because after COVID, in reality it's been one thing after another. Um, you know there was the energy crisis, there were there's, there's, there's the wars that are taking place, there's this, that and the other. That all start to start to play a part. So it's stabilizing takes a bit of time and I think the banks this year have done that and they're sort of at the right place, where they where they need to be and a good place, which is why I'm urging a lot of people to look at the refinancing piece in particular. But also, if you've been thinking about buying a practice or setting up a squat practice and you've been hesitant because of the things happening in the market, now is the time cool and you know what.

Dr James, 52m 13s:

I just want to ask this one teeny tiny follow-up question, because here's something that I've never really understood about practice finance and I hear people talking about this from time to time. So you know, when you go to mortgage on the house, right, you get the fixed rate, two years, five years most of the time right, and yeah, you can get variables and stuff like that, but most the of the time people either go for two or five year fixed rate. If I've got that right. That's my understanding of the mortgage world, would you say accurate.

Jawad, 52m 36s:

Yeah, I think resi side, yeah, definitely.

Dr James, 52m 39s:

Cool. So you know, when it comes to practice finance and people who've already taken debt out, am I. Does it not work in a similar way then, like they have two or five fixed rate because another way?

Jawad, 52m 57s:

you were talking about refinance a second ago, but surely that only comes up whenever you've expired your two or five year period, whatever you've agreed to. Yes, so there's a couple of things on that. Um, you do have almost almost the same options as you have in residential mortgages, in which you can have a variable rate. You can fix for one, two, three, five, seven, ten years, and each bank's different in terms of how long the term can be. But the time in which and it's the same with residential is the time in which that you are entering a deal. There's got to be some speculation in terms of where the Bank of England base rate's going, because if you're in the variable rate, you're linked to the Bank of England base rate, so you've got to think where's it going to go? Is it going to go up or down? When you fix, then that's what you're paying for, that amount of time. So for the two years or whatever your term is. So, for example, when the Bank of England base rate was at 0.25, if you went to the variable, the reality is it's only going to go up, it's just a matter of time. So do you want to fix? So when it starts to go up. You are not going to be subject to that increase on a regular basis. And if you've got the timing wrong of that, which a lot of people have, they've been sat on variable rates. That's great, and when it started to go up over that short period of time, they're now paying thousands more a month because they didn't fix at the right time and I was urging a lot of people to fix their rates and some listened, some didn't. So they're in quite a bad place, um, and money that could have been in their pockets. But then you've got the flip of it, which is sort of now where the base rate was was going to start coming down, which it has. Um, it didn't move on the last budget, but um, is it going to come down more now? Speculation, it's such a such an interesting one, because you know the specialists in uh, the, the economists that will um, that work closely with base rate, will never say this is happening and that's happening because they don't know. They just don't know um. So you've got to look at the time and you've got to look at what your um where the market is potentially going to go. You could be right, you could be wrong. The other thing really quickly is preference. There's a lot of people that will say I just want to know that my payment is five thousand pounds a month and it's not going to change for five years, and that gives them peace of mind and that allows them to sleep, whereas they could start on £4,500 a month, so saving £500. But what doesn't allow them to sleep is that that could go to £6,000, £7,000. So preference and mindset and perspective on these things is also a key aspect.

Dr James, 55m 56s:

Understood. So those are the variables. Well, listen, Jawad, you've been super generous with your time and knowledge this evening. I think that we all owe Mr Jawad a clap up, so I'm going to clap up, thank you. Hopefully everybody else is clapping too. Behind the camera. All the cameras are off. I can't tell them behalf.

Jawad, 56m 11s:

Hopefully, everybody else is clapping too behind the camera. All the cameras are off.

Dr James, 56m 12s:

I can't tell them no. Thanks for having me, thanks for having me, hey, listen, a complete pleasure. We need to do this more often, because it's the first time we got around to this in like a year and a half of knowing each other, so we need to pencil another one in. And, do you add, if anybody listening tonight, who's present on this webinar, or who's listening to the podcast or on the live on the facebook group afterwards wants to reach out to you, how would they be best off doing that?

Jawad, 56m 31s:

so a few few ways. They can do it on facebook. Um, I'm probably more active on my instagram, which is jawad.anjum.1, um, but my contact details mobile number, email addresses are sort of spread pretty broadly. I'm not, I don't hide, uh hide my mobile number. I'm one that offers it out because I'm happy to have conversations with dentists at any point and, uh, I've got one later this evening as well with a with a potential client. So, uh, yeah, whatever's best for you, but dm'd on social media, emails or mobile top man.

Dr James, 57m 8s:

Well listen, Jawad. Thank you so much once again for your time this evening. I hope you have an absolutely amazing Wednesday, what is left of it, and I'm sure that you and I will speak again super soon.

Jawad, 57m 17s:

Sounds good. Bye-bye. Thanks for that. Speak soon. Have a good day, guys.