Is your dental practice booming or has growth stagnated in recent years? Knowing the warning signs of a dying business is critical for any business owner. Ignorance is not bliss when it comes to declining growth. The same goes for dentistry.
Over the years, we’ve worked with a lot of dentists and, in this time, we’ve gained valuable insight as we’ve witnessed firsthand the various ways dentists run their practices — solo practitioners specifically. One of the most rewarding things we do is coach struggling business owners through the hard times.
Today, we thought we would use this blog to share 5 signs we’ve noticed early on, which can indicate the practice might be heading in the wrong direction.
1) Not establishing quantitative goals
Not having specific, measurable, attainable goals, both personally and professionally is sort of like Alice and Wonderland where Alice approaches a fork in the road and asks the cat: “Which road do I take?” “Where do you want to go?” was the cat’s response. “I don’t know,” Alice answered. “Then it doesn’t matter” replied the cat.
Before you can decide on a path to take, you have to have goals in place. You have to have a destination in mind because not having a destination means you’ll wander until eventual burnout. This isn’t the recipe for a successful business.
Having goals in place actually provides purpose to tax planning, business planning and personal financial planning.
2) Mistaking revenue growth for practice growth
One key smoke-in-mirror issue we see with the solo practitioner is mistaking revenue growth for practice growth. Chance are, if you have revenue growth, it indicates you are growing, but not necessarily. Remember, profitability is simply determined by calculating revenue less expenses.
Some of our dental clients initially come to us with overhead costs that are way too high compared to the industry, relative to their practice size. This is where a comparative analysis can be very helpful for dentists. It helps them understand their own practice compared to that of a healthy practice and equips them with the information to make sound business decisions. High overhead costs can sometimes indicate an inefficiently run practice which is not healthy.
3) Not investing in you and your staff
One of the best ways to invest in your practice is not by purchasing the newest equipment and technology, it is through investing in your team. A good team to represent your practice is your greatest resource as an owner. This means investing into continuing education for your hygienists, administrative staff, yourself, it means cross-training staff to do multiple functions. It means compensation and benefits to reward their work, staff outings and bonuses to increase morale which reduces turnover and encourages growth.
4) Spending marketing dollars on the wrong things
Spending marketing dollars on advertising campaigns not producing results is essentially throwing money away. You need to have marketing campaign objectives with clear, measurable goals so you can track progress. If the marketing or advertising campaign isn’t moving your practice forward, you need to be aware of this so you can spend your marketing dollars elsewhere.
5) Being all things to all people
A common thing we see is the dental practice trying to grow revenues by taking all insurances or trying to sell patients on extra services while the quality of care suffers. A sign of this kind of practice is patient turnover, or stated another way, patients not re-scheduling or not keeping their appointments. The owner usually makes excuses like “we have a lot of turnover from people moving, etc.” This kind of practice needs to concentrate on quality, not quantity.
Remember, the key word here is “dying”. Those that come to us with low marks with any of these issues do not have a “dead” practice, they may have a “dying” practice. This means, their practice, without some change in direction, will eventually die. It doesn’t mean they have no hope to change direction.
Proper planning and a healthy discussion on facing realities, asking tough questions, is often the best thing you can do if you sense your practice growth might be stagnating. Remember, you’re either growing or dying, there is no in-between.