Taking Command of your Business.
We were last talking to Jonathan on how to get your business out of a plateau. To get out of a rut and grow your business, begin by assessing and tracking its performance. Business owners need a strategy to execute. Then track those results and continually refine the process until you get to where you want to be. “Execute, Track, and Refine” over and over for any process you want to implement for your business.
In this Interview Learn:
The Number 1 problem small business owners face.
Why your employees can be holding back your business.
A lesson you can take from Disney.
Why having the final say in your business can be a weakness.
The Key Ingredient for growing and maintaining a successful business.
Why the Solo Practitioner model is dying.
Do you think more business owners need to be using social media like facebook to bring in business?
For example, if I just got back from the dentist and posted something on my facebook newsfeed about how great of a service I’ve just had at ABC Family Dental and tagged them in my status update. Then all my friends and family would see that status update. If I post a picture of that as well, of me and my kids at the dental office, then my friends would take notice of the post.
Using social media can be a great way to get referrals from the network. Sort of an indirect advertisement to their friends and family.
I’m not a social media consultant, but I’ve heard many great success stories.
Can you discuss any major problems or issues you see with staffing?
You want to hire people for their attitudes and personalities over their experience.
The number one problem I see with people’s staff efficiency is that they don’t instill a culture of people being coachable. Being able to be coached and led is very important.
In today’s business environment, where things are changing so rapidly and competitively. It’s very important for your staff to be flexible and willing to change.
You can’t hire somebody today that is uncoachable, thinking they know everything.
If they’re not open minded, they’ll be the last person willing to change if you want to try something new or instill a new office policy. They’re not going to be on board or focus on the things that are important to you as the business owner. Their negative attitude can influence others and spoil the group.
The people that are coachable will do things differently and want to become more efficient. The ability to be flexible and coached, wanting to improve and do things better is important. They will help build your practice, train the employees around them, helping the patients, families, and community in general.
What are some major pitfalls or common issues you see most business owners facing?
The number 1 problem private practice owners like dentists have is not understanding their numbers.
Dentists don’t understand numbers because they are brought into the business world without any formal business training. They spent 4 years learning to be a medical oral health care provider, not a business owner.
They’re expected to run potentially, a multimillion dollar business. Managing staff, marketing, administration, etc. All while being in the back doing the actual dentistry.
Often, the front office staff runs the business aspect of the practice. And you’re at the mercy of these ladies who have been running it for a long time. They will have a lot more experience than you have, at actually doing the business, handling the finances and bringing in the money.
Starting out, new dentists will often inherit the bad business practice of whoever was at the front running the office, as they always have been for the last 15-20 years before you.
The doctor doesn’t know what they don’t know. They don’t understand the numbers, so they let the practice run by itself. They try to figure out numbers on their “admin” days.
They don’t figure it out, so they just go home early and maybe play some golf. Because golfing is a lot more fun than trying to understand the numbers and what’s going on in the practice.
So how can one get a better understanding of “numbers,” where should they start?
There is no way to just automatically know all of this stuff.
In business, literally everyday will have a new challenge.
If you’re a growing business, like most of us want to have, every quarter will be different from the quarter before it. So you will always have new challenges to face.
To be educated in business, you have to be able to look at it from a numbers point of view. The numbers don’t lie.
What I teach my clients is how to look at things as a larger fortune company would. How does a dental practice compare to Disney?
Disney has hundreds of thousands of employees. They’re one of the biggest companies on the planet, yet when you go visit Disney World, the street sweeper is the happiest person to street sweep. Disney can have many employees yet they’re all happy. Did Disney just luck out and hire happy people? No, it’s because Disney understands the work culture they want. They have instilled the work culture upon their employees. They also have a keen understanding of their numbers and what influences it.
We teach our clients to look at things from the perspective of a CEO. Every business owner has to become the CEO of their business.
A Chief Executive Officer.
They must Execute on plans and strategies to grow their business. They have to be able to look at their business as a whole and know what is going well and which areas are weak.
You also need to have goals and a Vision of where you want to take your company.
This is important to grow your business in a systematic and predictable way.
If you don’t understand your numbers, you won’t understand how to grow.
As Ben Franklin said,
The CEO has to understand:
- The numbers
- Where they want their business to be in 5, 10, 20 years.
They must have a clear vision. They must lead their practice in the right direction in order to reach their destination.
Without direction, your business is going to get to it’s own natural resting state. It will atrophy and stay there until you do something about it, something drastically different.
So having a vision is the key to leading your staff towards your business goal.
Having a vision is critical in building your business. But you also need accountability.
It’s not just about leading your staff, it’s also about being a leader to your patients, family and community.
Holding yourself and your employees accountable.
The biggest challenge business owners face is that they are at the top.
Being at the top means you have the final say. You tell others what to do and hold them accountable. But nobody tells you what to do or holds you accountable.
In a lot of cases for dentists, they are the owner and are just there working. They do the dentistry, they’re the final answer for a lot of things. But they don’t understand accountability.
Because accountability is a two way street. Not one way.
You hold other people accountable, but you also have to be held accountable as well.
The problem is that the buck stops with the owner. No one is holding them accountable.
So we try to hold our clients accountable. We say, “we need to start implementing these things in your practice.” Keeping them accountable, that these things get done. “If we don’t do X,Y,Z then A,B,C,D will never happen.”
If your not held accountable, then everything will be left to chance and nothing will get fully implemented.
Any words of wisdom on how to go about starting, growing, and maintaining a successful business?
Start by becoming a great leader.
Understanding the numbers is going to get you a long way, but being a leader will carry you to the end.
Numbers can show you where you need to go. But you need to be a leader to steer the ship.
In any business, people are the most valuable asset. Learn how to lead people to do things that you need them to do.
You can’t just say,
“We need to start scheduling telephone calls. Make sure you schedule every person who calls!”
You can’t expect them to do it that way. That’s not how you effectively lead your employees.
So spend time learning about leadership. Learn from other great entrepreneurs like Henry Ford, Bill Gates, Sam Walton, Michael Dell, John Maxwell, etc.
Try to understand what made them great entrepreneurs, so you can understand the mindset of being a leader and what it takes to run a successful business.
Educate yourself on the numbers. We have a podcast where we have different industry experts come in and discuss that.
To understand the whole picture, you have to start studying the organizational structure of bigger businesses that are out there. You have to understand what the marketing department is supposed to be doing. What is the COO supposed to be doing? What is the financial controller doing?
The owner will often get stuck having to wear all these different “hats” and job duties. So you need to know who should be doing what. And know when to delegate when it’s too much to handle by yourself.
Anything else you would like to discuss?
The business of dentistry is a really great industry to be in.
Unfortunately it’s getting more and more competitive these days.
We are moving more towards a small group environment, meaning we are facing consolidation.
Practices are joining forces more and more, whether it’s through partnership mergers or being under a business practice management group.
Bill Gates said,
“We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don’t let yourself be lulled into inaction.”
I really believe that within the next 10 years, we will be moving much more rapidly towards consolidation.
The same number of dental practices, but much less number of actual owners. There will be group practices, but it will only be owned by one person.
It’s already happening now, but I foresee more dental practices with 5-7 different locations, but all owned by one person. That one owner will be the one employing all the other Associate Doctors.
Consolidation is common among large industries. Most industries move towards the 80/20 rule. Meaning, of the total number of doctors, 80% will be employed by the other 20%.
That’s where we see it moving towards. Then there will be even more consolidation. With larger groups springing up. So in order for the smaller solo practitioners to survive, they will have to team up with other smaller practice owners. This will be the beginning of a massive consolidation.
There is a good chance in the next 20 years, the dental industry will be much much more consolidated than it is now.
Are you talking about Corporate Dentistry taking over?
I’m talking about the small solo practice not being a good business model in the next 10-20 years.
In order to be a business owner that does really well, you’ll have to be one of those guys that own multiple practices. There will always be room for that savvy business owner.
I was recently on an interview with Howard Farran the owner of Dentaltown.
We were discussing this inevitable consolidation of dentistry. Howard said,
“We’re in an industry where any average idiot, can make $150,000 owning a dental practice.”
Over time, that average idiot, will start to see that it’s not worth owning and running a dental practice.
This will be due to increased debt out of school. Increased debt to acquire a practice. Due to the lower reimbursement rates from dental insurances, the increased cost of living, inflation, etc. With all these increase in expenses, debt and fees; that $150k will not be able to sustain them.
This means that small practice, where they could just skate by and still make money, is going to be having a hard time. It just won’t be worth it for them to stay in business.
If you compare just 15-20 years ago, the average dental student debt was only 80-$200k. Graduates these days pay upwards of $400,000+ for their student loans. Add in trying to buy a practice, mortgage, other debt and expenses. It just gets more and more difficult to own and run a business. You need to really understand the business aspect to become profitable.
The savvy business owner will understand their numbers and have multiple offices.
Instead of working 30-40 hours a week in the chair for the next 30-40 years, hopefully you can get out of your chair and start working on the business itself.
My absolute favorite book which I recommend for people trying to learn about business, is “Scaling Up: Mastering the Rockefeller Habits” by Verne Harnish.
The other book I love and try to read every year is “The Alchemist” by Paulo Coelho. This is the book that helped me understand that you may not know everything that you think you know.
“You just don’t know, what you don’t know.”
It helped me to have that type of mindset and set me on a path for personal growth.
It’s all a big allegory and helps you understand that type of mindset and how to grow as a business owner. Without having read that book, all the other books I mentioned wouldn’t have influenced me as much.
Finally, how can others contact you to learn more about you?
In today’s competitive landscape, it is more important than ever to be aware of your business’s performance. Make sure you are profiting today so that you can be prepared for the future.
We specialize in this process and have clients in over 20 different states.
You can also email me firstname.lastname@example.org
Or give us a call at 501-404-2416 for a free consultation and to see if we’d be a good match for your practice.
Jonathan VanHorn, CPA, ABV
Jonathan is the founder of DentistMetrics.
His specialty is in Accounting, Taxes, and growing businesses. He coaches dentists to become better business owners by controlling their profitability through understanding numbers.
“I don’t know how many times I’ve sat down with a dental practice owner to talk about their dental practice’s performance.
It’s surprising how many of those practice owners know that there is something fundamentally wrong in their dental practice. They know that they are under-performing somewhere inside the practice. They just don’t know how to fix it or what is specifically at fault.
A lot of practice owners feel like their hands are tied. By far the most common excuse I hear is that there is some outside circumstance that is beyond their control.
The good news is that this is rarely, if ever, the truth. There is always the ability to change.
The same is true of dental practices. The longer a weak spot is left unchanged, the greater the opportunity for the practice to turn bad.”