What does practice growth mean to YOU?
Business: Best practice
Richard Pearce talks, understanding the difference between sales, margin and strategic growth will help you to achieve what’s best for you, your practice and your patients
Growth is talked about often, whether in relation to a dental practice or the economy as a whole.
But do we properly understand it and know what sort of growth we want? Here, we will consider different sorts of growth and make observations in relation to a single practice and consider growth to create a small group of practices.
Normally we think in terms of growth in revenue, not least because this does tend to lead to growth in margin (profit). But you could be more interested in the growth of you and your family. This may mean that the practice affords you a three-day “clinical” week, crucial time out of the practice, but still provides your minimum income requirements.
Let’s consider three types of growth within a practice:
- Sales growth – more revenue, fill the appointment book, do more per hour
- Margin growth – increase prices/reduce costs
- Strategic growth – increase opening hours, add more surgeries,
add specialisms, add practices.
The majority of practices work at ‘1’, think about ‘2’ occasionally (perhaps once a year) and never consider ‘3’ (or might do when some event jolts them into contemplating a development, e.g. a practice three miles away has been offered to them off-market).
Businesses don’t tend to make money out of their core product, and dentistry is no exception. If exams/check-ups are our core product then we know that we must limit the number of check-ups in a day (let’s say no more than 10/day and two new patient consults/day) and ensure that we have clinics available. Diagnosing
the treatment need is one thing, but being able to bring the patient back quickly for the treatment they want takes real organisation.
Practices have traditionally focused on sales growth – with offers, for instance – but more recently, some have started to realise that brands sell faster. This is evident by the rise in significance of reviews. Reviews don’t dwell on how cheap the appointment was (see FREE consultation), but on the friendly staff, the dentist who didn’t hurt and a great “experience”.
Videos sell a brand and therefore some are realising this. Going to the dentist (and receiving significant dental treatment) is an emotional journey for many. Connecting with patients’ emotions can lead to real margin growth.
So, if your practice is not delivering what you want in terms of income and/or non-clinical time then it needs to change – to grow. So be clear about this to begin with. Create a brand and then promote it consistently through your staff and then through every part of how your patients ‘meet’ you. This means that your website, with videos, the practice kerbside appearance, the entrance and the marketing collateral are all consistent with a brand that connects with the patients you want.
A word on strategic growth
Top down works faster! This means that if you started with a vision that you would have 10 practices (key criteria: less than one hour’s drive between any practice), then you can organise operations so much more effectively from the outset. Therefore, achieving your aim so much quicker.
And don’t forget the ‘Rule of 150,’ referred to by Malcolm Gladwell in his book, The Tipping Point. Put simply, with more than 150 people in an organisation, communication breaks down, cohesion is lost and convergence of goals is very hard to maintain.
If I was a 35-year-old dentist, currently working as an associate (who wanted to sell a business and potentially retire at the age of 50), I would consider the following strategic growth plan:
- Decide on the geographical area I want to be in for the next 10-15 years.
- Target where my first Practice will be – which town(s).
- Be able to list what it will have (no fewer than four surgeries might be one requirement).
- Start looking – it could take a while!
- Acquire the first Practice and think ‘10 Practices working as a coherent Group’ from Day 1.
- Hire the best (associates and support staff, particularly a business manager).
- Develop operational standards that you can keep replicating.
- Become known throughout the area as a great dentist and practice owner (you want nearby practice owners to come and ask you to buy them).
- Be ready to acquire ad-hoc – practices won’t become available just when it’s right
- Think group/integration/economies of scale at every step.
But remember, nothing goes according to plan! So, you need to maintain some flexibility and be ready for the unexpected.
Growth is a very over used and misunderstood term. Understanding the difference between sales, margin and strategic growth might help you achieve the most important type of growth – growth for you and your family.
Richard Pearce spent some of his early years living in Ballymahon and now lives in Northern Ireland. Following a business career in various sectors and an MBA, he joined his dentist wife in dentistry. Richard combines his wide commercial experience with being attuned to what it is like for an associate dentist, a practice owner and a practice manager. His unique perspective ensures he can assist a practice owner with every area of the practice to create a more profitable practice and to achieve their smart objectives. www.smartpractices.co.uk