2020 has been a big year of change. The dental market witnessed the introduction of fallow time restrictions, shifting contract thresholds, and the temporary closure of practices. But, despite this, the sector has come out fighting and has demonstrated its resilience. 2021 hopefully will provide a more stable trading environment in the market, and we are likely to see a variety of new opportunities, too.
Relocation and New Beginnings
In September, changes to Use Classes saw dental practices, along with other medical health facilities, leave behind their D1 status and become Class E businesses along with day nurseries, offices, financial services, cafés, restaurants, and indoor sports facilities.
Estates Gazette recently analysed lease data from 2015 suggesting some 975 million square feet of commercial space has lease breaks in the next five years, which, following a year where high street and hospitality businesses have been hit hard, is likely to result in a significant amount of commercial space vacated.
The combination of the Use Classes changes and significant handing back of space from retailers to landlords may present significant opportunities for practice owners looking to expand their footprint, moving into higher footfall locations, or opening new practices without the need to obtain D1 planning.
The significant impact of the coronavirus on the United Kingdom’s commercial economy may force those who can operate solely through digital channels to do so, creating availability in physical space for ambitious dental operators.
Aesthetics
There may also be opportunities in increased demand for specific services as a direct result of this year’s increase in working from home. New working practices are forcing the nation’s professional workforce to face themselves, very literally, through the increase in video conferencing. This has led to an increased demand for cosmetic dental and aesthetic work.
Focusing on this growing revenue stream is one way owners can adapt to current circumstances and take advantage of increased demand in the market. This is a particularly useful tool for private practices in appealing to National Health Service patients, offering services unavailable at practices focusing on general dentistry.
However, building a business around aesthetics is not without its own risks. The impact of Brexit on importing products such as Botox is yet to be seen, and changes to cosmetic surgery regulation, including a potential move to prescription requirements, are long-term variables to note.
Buying and Investing
One of the most common but understandable misconceptions about market turbulence is that uncertainty within the sector stops bank funding, which, in turn, halts the market for dental sales. Throughout 2020, banks have been keen to continue lending to the dental sector, and the number of credible and competitive lenders extends beyond high street brands.
During the first national lockdown, many practices took the opportunity to invest in new equipment and refurbishments, particularly in air circulation and other measures that restrict the spread of germs. In a commercial landscape, where volatile lockdown restrictions have made hospitality businesses a more challenging investment for banks, many are happy to lend into a dental market that survived the initial lockdown in relatively good shape.
“We have seen CBILS (Coronavirus Business Interruption Loan Scheme) funding used to support the acquisition of a practice from administration, debt consolidation, Covid-19 related refurbishment/expansion, and to boost vital working capital,” said Shaun Watts, head of Christie Finance Unsecured. “We have also been successful in sourcing traditional funding for the sector. One example is a recent ‘VAT Inclusive Hire Purchase’ for the fit-out of a squat practice in South London.”
Mr. Brown is an associate director within Christie & Co’s specialist dental team, advising those wishing to buy or sell a dental practice in the South and South West of England. Whatever your plans, you shouldn’t make any decisions without taking professional advice from the experts. Christie & Co is best known for business sales, but sister companies in the Christie Group provide a range of services to help business owners save money and expand their business. Christie & Co’s RICS accredited valuation team provides rent review and valuation work. Christie & Co’s consultancy team offers in depth analytical project work, and Christie Finance & Christie Insurance complete the Group’s full-service offering.
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