Should Do You Do A Dental Startup or Acquisition
Two Billion Dollars
When you think of Warren Buffett, one of the first things that comes to mind is his legendary ability to spot a great business deal. He’s a master at taking a good investment and turning it into a phenomenal one. But not everyone knows about one of his smartest, most profitable acquisitions: See’s Candies.
Two billion dollars. That’s the value of See’s Candies today, thanks to Buffett’s foresight. But how did he turn a simple $25 million candy company into a business worth over $2 billion? The answer holds key lessons for anyone looking to own their first business—especially if you’re thinking about whether to build from scratch or buy something already proven. And let’s face it, Warren Buffett could have easily started his own candy company. So why didn’t he?
The reason is simple: Smart people buy businesses.
Why Starting from Scratch Can Be Risky
Warren Buffett didn’t want to reinvent the wheel. Sure, he could have started his own candy company from scratch, but that would have meant competing with established players, building a customer base, and hoping people would love his products enough to keep coming back. And even then, there was no guarantee that the company would be successful.
Starting a business from scratch is like planting seeds in a field you’ve never farmed before. You can plan, prepare, and work hard, but at the end of the day, there’s no guarantee your efforts will pay off. The risks are high. You have to build everything from the ground up—products, customers, systems—and wait for the seeds to grow into profits. The time, effort, and uncertainty involved in this process can be overwhelming.
Buffett knew better. Instead of risking years of hard work with no guarantees, he bought a company that was already established, loved by its customers, and had a track record of profitability.
The Power of Brand Loyalty and Pricing Control
Buffett’s genius with See’s Candies came from recognizing what the brand already had: loyal customers. See’s wasn’t just any candy company—it had what Buffett calls “pricing power.” This means that the company could raise its prices without losing customers because people loved the product that much. When you have pricing power, your customers aren’t just buying candy; they’re buying into the experience, the brand, and the memories associated with it.
With See’s, Buffett didn’t have to worry about constantly cutting prices or launching massive ad campaigns to attract new customers. The loyalty was already built in. He focused on maintaining the quality of the product and steadily increasing prices over time. This allowed the company to grow profitably year after year.
Steady Cash Flow: The Real Game-Changer
Here’s where the real magic happens. When Buffett acquired See’s Candies for $25 million in 1972, he wasn’t just buying a candy company—he was buying its steady cash flow. See’s was generating consistent revenue, which gave Buffett the financial flexibility to make other investments.
In fact, Buffett famously used the cash flow from See’s to fund other high-return investments, including stakes in companies like Coca-Cola and American Express. See’s didn’t just provide great returns on its own; it acted as a financial engine that powered Buffett’s other ventures. This compounded growth strategy turned See’s Candies into a $2 billion business.
What’s the Lesson Here?
The story of See’s Candies teaches us an important lesson about business ownership: Don’t reinvent the wheel. Buy a business that already works.
If you’re approaching the milestone of owning your first business, whether it’s a dental practice or any other kind of enterprise, you need to seriously consider the power of acquisitions. Starting from scratch might sound exciting, but it’s also incredibly risky and time-consuming. Building a customer base, developing operational systems, and hoping for profitability can take years—and there are no guarantees.
On the other hand, acquiring an established business, like See’s Candies, gives you immediate access to everything you need to succeed. You inherit loyal customers, proven systems, and a steady revenue stream from day one. Instead of struggling through the unpredictable early years of a startup, you step into a business that’s already thriving.
Why Acquisitions Make Sense for Your First Dental Practice
As a dentist, you’re faced with a similar choice: should you start a practice from scratch, or should you buy an existing one? Think about it in Buffett’s terms. Buying an established dental practice gives you several key advantages:
Instant Cash Flow: Just like See’s Candies had loyal customers, an existing dental practice has loyal patients. From day one, you’ll have income to cover your expenses, pay off loans, and draw a salary.
Established Systems: When you buy a practice, the operational systems—scheduling, billing, patient care—are already in place and have been tested over time. You’re stepping into a well-oiled machine.
Loyal Patient Base: Building trust takes time. With an acquisition, you’re inheriting a patient base that already trusts the practice and its staff. This means steady appointments and revenue without spending years on marketing.
Acquisitions Are a Safer Bet
Here’s the reality: acquisitions have higher success rates than startups. With a proven business, the financials are already established, and the customer base is real. You’re not hoping for success—you’re stepping into it.
The risks with startups are much greater. You’re battling to attract patients, hoping the systems you’ve set up work, and trying to build a reputation. You’ll likely face months, if not years, of uncertainty. Why put yourself through that when you could buy into success from the start?
Final Thoughts: Smart People Buy Businesses
Warren Buffett didn’t start a candy company because he knew that buying one would be smarter. He didn’t have to worry about whether people would like his product—he bought a company that people already loved. And he didn’t have to struggle to make ends meet—he bought a company with cash flow to fund his other ventures.
When it comes to owning your first dental practice, follow Buffett’s lead: buy something that’s already working. You’ll not only save yourself years of stress and uncertainty, but you’ll also set yourself up for immediate success and long-term growth.
In business, smart people buy businesses that work. Will you?
