Debt: A Tool for Growth?

Debt: A Tool for Growth?

There is a common misconception that debt is always a bad thing—that it is something that a
business should avoid at all costs. However, the team at LenDRgroup Consulting believes the
opposite, and if managed correctly, debt can enable a dental, medical, or veterinarian practice to strengthen cash flow, increase assets, and hit goals. In this blog, the finance experts at LenDRgroup Consulting will help you understand the pros of leveraging debt for your dental, medical, or veterinarian practice.

Debt Can Be a Positive Business Driver

Inevitably, there will be a time in your practice journey where you are faced with needing
money to grow. You may require new equipment or need to expand office space. There may be a need to hire more staff or invest in new technology.

So, where do you find the money?

Generally speaking, there are three ways to do this:

1. Use existing business cash flow (which could deplete your cash reserves)

2. Seek money from an investor via equity financing (which also means giving up a share in the practice)

3. Take on debt (which is cheaper than equity financing and allows you to remain in control)

Keeping that in mind, taking on debt is a big decision and has to go beyond simply needing
money to buy things. You must validate the reason for the debt and there must present a clear benefit and business case to the practice’s future.

As such, here are some reasons that could validate your decision to take on debt:

You are presented with the opportunity to strengthen your cash flow. If you have access
to an available line of credit, you are offered flexibility along with additional funds that
could help you in your operations. Additionally, you have added peace of mind that you
can face unexpected situations or emergencies.

You are looking to start, grow, or expand your medical, dental, or veterinarian practice. By using debt, you have access to funds that can be used to secure practice space, build out an existing office, purchase inventory, and cover other needs such as
equipment procurement and payroll.

You are looking to consolidate or refinance existing debt. If you are faced with multiple significant loans and credit payments, refinancing could help you simplify, lessen your
payments, offer better terms and APR, and enhance your cash flow. Ensuring your reason for taking on debt falls into one of these categories is a must and will protect you from bad debt, which will only leave you deeper in the hole.

Remember, good debt has some key traits, including:
  •  A lower interest rate
  •  Payment terms that offer smaller amounts over longer periods of time
  •  Designed with the ability to help you increase margins or revenue strategically

LenDrgroup Consulting can help you create a plan that allows you to use debt to grow your
medical, dental, or veterinarian practice strategically. Furthermore, we would love to speak
with you about how to tackle other financial decisions, create a roadmap to enable your
practice’s success, and assist in goal setting.

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