Unlocking the money in your practice using proven strategies, while working less, stressing less… and getting paid more.
You Might Not Be a Business Owner (yet…)
No dentist ever receives business courses in dental school. Our curriculum is focused solely on technical skills. Since we do what we know, the practice is often “doctor-centric.” This means the practice is solely dependent upon the owner/doctor, but that is NOT a sustainable business model.
Real businesses, true businesses, do not rely on the owner to be working on site. The owner of a McDonald’s doesn’t mop floors, manage employees, flip the Big Macs, or work the fry basket. The owner works ON the business.
A dental practice most often becomes a high-paying job for the doctor – not a true business.
(Quick test: do you ever resist going taking time off because of the income hit to the practice? If so, you’ve got a job, not a business…)
This is fundamentally a mindset issue that comes from the way that dentists are trained through school, and while it creates an industry filled with excellent technicians, it doesn’t create equity-rich small business owners.
What’s Your Practice Actually Worth?
There is no real freedom when the income of the business or practice is primarily dependent upon the owner. It’s not sustainable. Worse, the sale value of such a “business” or practice is very low, relative to other small businesses. Sale prices for dental practices are generally estimated by a multiple of 1.5 times the annual net income of the practice. Most real businesses sell for a multiple of 4-5, and sometimes even 7-10 times net income.
The reason for this relatively low multiple is that real businesses are run primarily by people other than the owner. They are managed by managers (imagine that!), and the owner does very little in the business, if anything at all, which makes it easy for a new owner to step in.
Corporations Are Taking Over, Here’s Why…
Corporate clinics funded by Wall Street have figured out how to create a real business mechanism in healthcare today. You see it in medicine – most physicians are now employed by corporations, large healthcare organizations or hospital organizations.
Veterinary medicine is going the way of the corporation. So has the pharmaceutical industry. The independent pharmacist is all but gone as CVS and Walgreen’s have taken over.
The same thing’s happening to dentistry today. Corporate dentistry has developed a real business model, and corporate clinics are absorbing more and more practices – and paying a high price for them.
Let’s Quadruple It
Whether you’re considering selling to a corporation or another doctor, you’d be well-advised to maximize the sale price. So… how do you do that?
For a practice owned by an individual doctor, the process is actually simple:
- Systemize new patient flow
- Maximize retention
- Develop team leadership capable of running the practice
In other words, put in real systems, real processes. Have a marketing funnel. Develop effective sales and conversion training (i.e. have a great, scripted response to incoming inquiries, whether it’s through the website or on the phone). Implement direct response marketing. Develop real relationships via “drip marketing” campaigns. Maintain relationships with prospects so they become patients. Then, make sure those patients receive excellent value so they continue to refer other like-minded patients.
Even practices with strong marketing often don’t put systems in place for retention of patients. They have a back door that’s wide open. They’re always working to try to open the funnel on the front end with more & more marketing dollars. Meanwhile, valuable patients are slipping through the cracks. High levels of patient “churn” gets very expensive.
Final Step (and most important)
So now you’ve been reminded of what needs to done to double or even quadruple the value of your practice. Just remember one thing…
Don’t try to do it by yourself.
Many doctors have no vision of what could be. Reasonably, their vision is based on their experiences, practice and what they learned in dental school. Doctors don’t take the opportunity to get outside and see what other real businesses are doing to create freedom for the owner.
Don’t reinvent the wheel. Several of the practice owners/doctors at Freedom Founders now have those kinds of practices that actually run like real businesses. They have multiple doctors and staff that are empowered. They’ve developed the right culture, and they have team leadership that runs the practices.
In these practices, the doctor uses his/her time to focus on what the doctor should be doing. That’s providing high-level care. All other functions of the practice are delegated – including the marketing and management. You need a team to take a patient from the first initial contact all the way through to becoming a patient who returns time and time again and refers other like-minded patients.
These are all processes and systems that in most practices are left to randomness – which means that they don’t work.
The opportunity to develop a vision, to see what other practices have done, even other industries have done – would be eye-opening to most dentists.
Where can you find that?
At Freedom Founders we have built these models for our members. We do masterminds “on location” at high-performing dental practices that run as real businesses. We take a peek inside their marketing. We learn what it takes to hire the right people and empower them. To have the accountability that’s necessary. This gives other dentists the opportunity to see and understand the process and take their own practice to the next level.
It’s All About Options
That’s what we do at Freedom Founders. By implementing those processes, the doctor does not have to work as hard in the practice. When other people are doing the non-dentist work, the practice valuation can be doubled, tripled and even quadrupled. Then you have options. You can sell fractional interest in the practice, take equity off the table in portions, or sell the whole thing – all at a much higher value.
In real estate we talk about adding value to a property. Usually this involves importing value, with a renovation for example. Maximizing its earning potential – that’s what adds value.
The same thing can be done in a dental practice. The members at Freedom Founders have certainly proven that.
Get Clear and Go
If you’re ready to catch sight of a clearer vision of what can be with your practice, start by completing our short survey. That will get you a strategy session with me, on the house.