26 Apr Everything Dental Blog May 2018
Anyone can be entrepreneurial
Anyone can be entrepreneurial but entrepreneurs tend to be repeat offenders. These extraordinary people are driven to accomplish their dreams and goals. The idea of potential failure doesn’t faze them. They are optimistic, confident and they do their homework. These people hate to fail, but they view failure as part of the process. They realize that failure is just a tiny footnote in their success story. Entrepreneurs like to work with people and companies that are deliberate, reliable and that execute. They have no time for fluff and distractors and will not delay or forgo their progress because of others.
My experience tells me that the most common road blocks for dental entrepreneurs are; financing, risk and debt tolerance and human capital (talented, dedicated providers). I have several clients that would open or acquire more offices if they had the funds and clinicians to do so. They know how to operate a profitable business and they have the infrastructure and systems to replicate it.
Risk Tolerance
Risk tolerance is the degree of uncertainty and volatility that an investor or business person is willing to take on the journey towards success. An investor is looking for a high yield on their money. A business person seeks sustainability, growth and profits while an inventor may be looking for consensus, approval, empowerment or funding. While outcomes differ, these exceptional people accept an elevated level of risk or failure and debt service doing what they do.
Decision Making
Decision making is very individualistic, even in this new world of analytics. Most of us think that the numbers don’t lie or the facts determine outcomes. It isn’t quite that simple. Don’t forget that businesses are run by people. People have financial motives, idiosyncrasies, risk tolerance issues, leadership or leader-less challenges and money can accelerate or suffocate the best laid plans. If we have all the facts and the human experience than decision making should be relatively easy, right? Well, yes and no. The way in which one sees the world can change the decision-making process. Some leaders believe that the world of opportunity is abundant and others see the world of opportunity as scarce. This variance in philosophy combined with one’s risk tolerance will impact decision making. Therefore, decision making is an imperfect calculation.
Most leaders and E-suite officers are excellent decision makers. They measure the data against specific criteria. Their knowledge of mergers and acquisitions, industry trends, impending governance (compliance) or competitive disadvantages, provides them with a backdrop of expertise and the critical data necessary to make an educated decision guess. However, some management teams are so focused on the P&L, shareholders or media pundits that they have forgotten about people power. People power is the engine of invention and innovation. It is fueled by motivated professionals harnessing great ideas and strategic relationships. While it is extremely difficult to measure the talent, effort and outcomes of motivated people, they must never be discounted or underestimated. People are a company’s greatest asset whether you are a dental office or multi-national conglomerate.
I am sure we’d all like to go back in time and buy Fang stocks (Facebook, Amazon, Netflix and Google) when they were IPO’S. Many of us, at the time, thought that these companies didn’t make or own anything and they were over-valued. We couldn’t wrap our heads and hands over the fact that they didn’t have the traditional brick and mortar business that we understood. Most of us thought that they were distractors and the big boys, that operated in their space, would eventually figure out how to beat them, acquire them or crush them. In the end, these companies were indeed distractors but more importantly, they were disruptive. They single handily disrupted the space they operated in and transformed their perspective industries. In turn, they have changed our world.
*The lesson or take away for every business is this; today’s consumer grew up with a smart phone and the internet of everything. They seek convenience, authenticity, fairness and solutions. They have grown up watching their parents and big business resist change, frozen in political gridlock and polarized by generational disputes. Today’s new consumer won’t accept the “Status Quo”. They seek continuous improvement, advancement or a positive trajectory.
Investment
On the healthcare provider front, we see a handful of management companies opening several dental offices every month with no signs of slowing down. At the street level, dentist investment is very high but not ominous. The larger practices that provide multi-specialty care or operate in a group setting are making big investments in technology. The smaller practices are struggling to keep up and many have decided to opt out of the technological revolution completely. The real excitement is in the mid-sized private practice sector because they are poised for remarkable things. They have an enormous upside when they integrate technology (CBCT and CadCam) and grow their clinical offering and community relevance. Patients want to have the same clinician every time they go to the doctor and they want to have a relationship with their caregiver! The windfall for the mid-sized, cutting edge practice is that private buyers and groups recognize the distinction and are willing to pay top dollar for these practices when they go on the market.
When a homeowner sells their house after they’ve raised their kids and lived in it for thirty years, they hope the buyer has a similar experience but they want a great price for their home. Buying and selling a home is a financial and emotional transaction just like selling a dental practice. On the flip side, the buyer hopes that the amenities and the house are in excellent condition because they are making a huge financial investment. Most home buyers don’t have the funds to upgrade or renovate right away, so they want a turn key house. That’s why real estate agents say, “It’s all about the kitchens and baths”! A home with nice amenities will sell at the top of the price range and will sell fast. In contrast, a similar home that requires updates and investment, will sell for less and will be on the market longer. The same goes for dental practices! Keep your practice current (good curb appeal, well decorated and equipped with the latest technology). Enjoy the new equipment and technology now and capture the revenue. When you sell your state of the art practice, it will be extremely desirable and will yield a very profitable ROI for you.
The Journey Continues…
Entrepreneurs know that the journey of growing a business or empire is mired with challenges. Some of those challenges are external and are imposed on us. Other challenges appear because of our mismanagement or lack of skill and resources. Today, my job is to remove those barriers and connect my clients with the tools and resources they need to grow their business. I spend sixty percent of my time being a confidant and adviser to dozens of practices. I take pride in these relationships and I am happiest when I can identify a unique opportunity for them or help them accomplish their goals.
A few years ago, I changed my business model and took a leap of faith. This was my way of taking responsibility and being entrepreneurial. It was the scariest thing I ever did and perhaps, the most rewarding. It was no subtle change either. I went from being the seller to becoming my client’s buyer. I now manage the supply spend for dozens of independent and group dental practices. I am currently creating an e-catalog with budgets for several offices and I’m developing training and education programs for a few others. I use my knowledge of the market place and vendor tolerance to help maximize free goods. I also audit my client’s product selections to reduce their monthly supply costs. I am a firm believer in operational efficiency, cost containment and growing revenue.
My greatest challenge from clients is a lack of engagement and/or communication. Many long-term clients that have become personal friends do not reach out for this help or don’t realize the benefits. In a world where time is money, I respond best to those who are engaged and provide feedback.
In the last eighteen months my blogging and social media activity has resulted in five practice transitions (some clients bought and some clients sold and one merged). In addition, my job postings at www.heknowsdental.com (limited to the norther NYC suburbs) has landed nine associateships within my network and thirteen auxiliary hires since its inception. Changing times requires us to reexamine how we do what we do.