Issue 7 / Dec 2013
Effective Budgeting
Delegation is trending
7connections .com
Dealing With The Cut Price Offer
New Year Fitness
Dreamers
Patient Numbers Game
“How would you deal with this?”
Getting back into good habits
The Icarus of Dentistry.
“The more patients you see per day, the less money you make”
Letter From The Editor
Contents 03 - Dealing with the cut price offer 04 - New Year Fitness 05 - Effective Budgeting 06 - Dreamers 07 - Is Dentistry a “patient numbers game”? 08 - ‘Truth’ – the Prestwood Financial Planning tool
“I’m working with The gaps in society appear to be getting wider. clients who are The media is full of reports and comments having their best around “the rich getting richer and the poor getting poorer” and I’m thinking about how ever year and the affects dentistry and what we have to do about it? those who are visitor to Chez Barrow/Bradley, having their worst.” Awhorecent left the dental industry a few years ago, asked me “how are things out there?” and I replied with my usual response:
“I’m working with clients who are having their best ever year and those who are having their worst.” So what separates the two extremes - and what happens in the middle?
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written by Chris Barrow
Best Year
Average Year
Worst Year
Niche demographics - focused on the needs of a particular age-range or gender
Family-based private dentistry with a possible kids-only NHS contract
Jack of all trades with no clear niche brand
Principal spends 80% of billable time on highvalue treatment
Family-based private dentistry with a possible kids-only NHS contract
Principal is chained to the oars doing check ups
Associates on sliding scales and producing over £1250 per day
Associates on flat rate 50% and producing over £1000 per day
Associates on flat rate 50% and producing less than £1000 per day
Product mix focuses 80% on dental implants, smile design and/or short-term ortho
Product mix is widely spread with only 20% on dental implants, smile design and/or shortterm ortho
No high-value treatments - mainly preventative maintenance
Over 20 new patients per month per full time surgery
Less then 20 new patients per month per full time surgery
Few new patients for FPI treatment
Excellent Front Desk team fully trained
Average Front Desk team with little training
Poor Front Desk
Above average staff salaries
Average staff salaries
Poor staff salaries
TCO’s working alongside clinicians with good communication skills
No TCO’s but clinicians with average communication skills
No TCO’s and clinicians with poor communication skills
Investing 5% per annum of sales in strong modern branding and marketing systems
Investing less than 2% of sales per annum in tired brand and poor marketing systems
No investment. Out of date brand and little marketing
Excellent financial reporting
Average financial reporting
No financial reporting
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management accounts
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KPI analysis
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Production analysis
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marketing ROI
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TCO conversion stats
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management accounts
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Bank balances
Regular team and 1:1 conversations
Occasional team and 1:1 conversations
No conversations
Marketing constantly alive with new themes every month
Marketing in place but rarely changes from month to month
What marketing?
Physical environments are contemporary
Physical environments are tired
Physical environments are worn out
Hire trainers, constants, coaches and attend courses on business development
Attend courses, mainly clinical to get more post-graduate badges (but never do anything much different)
Look for opportunity in every event and relationship
“Consultants are a waste of money (why pay someone to look at your watch and tell you what time it is?) and I haven’t the time to go on courses”
Avoid change
Criticise, condemn and complain
A Patient Experience design to create moments of unexpected delight
An adequate (but not remark-able) Patient Experience
Very little attention paid to the Patient Experience
Principal sees 6-10 patients a day
Principal sees 20-30 patients a day
Principal sees 30-40 patients a day
Low ratio of debt to revenue
Some debt but manageable
Very high levels of debt in relation to sales
02
Dealing with the cut price offer
written by Chris Barrow
“how would you deal with this?”
A client sent me a link over the weekend
to a cut-price web site in his city, offering a 59% discount on short-term ortho at a neighbouring practice. Understandably, the question followed “how would you deal with this?”
The chap in the photograph dealt with exactly the same problem in 1890. John Ruskin was the leading English art critic of the late Victorian era but also observed and commented on the world of business. His famous quote on prices used to be a regular topic of conversation at The Dental Business School workshops over 12 years ago: “It is unwise to pay too much but it’s worse to pay too little. When you pay too much, you lose a little money – that’s all. When you pay too little you sometimes lose everything, because the thing you bought is incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot – it cannot be done. If you deal with the lowest bidder, it is well to add something for the risk you run. And if you do that, you will have enough to pay for something better.” Clearly, little has changed in over 100 years.
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This is always a race to the bottom – price wars continue until the last business is standing and that business usually has very deep pockets.
As a business coach, I have no interest in working with practices who subscribe to “deals” to get punters in that erode their profit margins and cash flow.
When a large organisation offers cut-price goods and services it can often be a ruse to get people in their door and cross-sell them other products/services.
In the end – patients looking for the best price will drift – so don’t waste too much time on them.
They take the hit because the losses they incur are just loose change. When a small organisation does this – they usually close/change hands/struggle with their creditors after a short time. A loss leader is never a loss leader – its just a loss. This type of activity is a road to nowhere for those in the small business sector who offer it. The problem is – that doesn’t help you when you are on the phone or face to face with a potential patient who is waving the offer in your face and asking: •
why you can’t do the same?
•
why they shouldn’t take up the offer?
This smacks of the South West and the West End of London and we have all seen the carnage that price wars have caused there. I thought that independent dentistry had weaned itself off Groupon and similar – but here we have a re-appearance of this dangerous phenomenon.
Patients looking for a quality experience will stay with you. Marketing and pricing are the processes by which you eliminate the patients that you don’t want to work with.
New Year Fitness
written by Chris Barrow
– the training fell away again and I knew that Houston had a problem. It was a chance conversation in Costa Coffee, Hale with dentist, client and friend Roy Bennett that led me to Paleo nutrition and The Devany Diet (which isn’t a diet) – and a somewhat desperate decision to “give it a try”.
The team at 7connections have
been getting me back into some good habits recently, one of which was to start asking existing clients for testimonials for the difference that we make – hence Testimonial Tuesday will become a regular blog feature. Fitness Friday will be another and I was tickled pink when a testimonial came in earlier this week as follows:
The girls say the moment of truth was finding out you are 60 and look 40, they realised that they have to live healthier or will look old quickly That wasn’t what I asked for – but none the less a lovely moment for me. On the subject of fitness, many years ago I heard someone express a balanced approach to personal self-care as a combination of: •
nutrition – eating and drinking the right stuff
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exercise – simple aerobics
•
flexibility – stretching
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sleep – enough of it and of the right quality
So if I’m to create a bit of a series here – I don’t want to make people who don’t like sport feel uncomfortable – its not about “when are you going to sign up for a marathon or get to the gym?” There are just some simple steps that we all can take that have the possibility of improving your experience of life.
Simply by changing what I eat (without any reduction in my capacity to fill my face and with NO exercise at all), my weight reduced over three months back down to 11st. So lets start with nutrition. I hate, hate, hate dieting – it makes me miserable and irritable. I love, love, love eating and drinking – both privately in the intimacy of my own home (often watching TV) and socially with family, friends, clients and colleagues. Over the years, my capacity to eat and drink have been counter-balanced by running – my first pair of trainers went on in 1978 and I’ve been a constant jogger ever since, first marathon in 1997 and my 18th marathon a few weeks ago. So the food and drink went in – and the miles on pavement and cross-country used up the calories – result. Until about 5 years ago when two things happened: 1.
2.
this classic car called my body started to wear out and break – resulting in long periods of injury and abstention from training even when I did train, for some reason my weight kept on increasing – that’s called getting older
I’ve been around 11 stone forever – and the “tipping point” came in early 2011, when I hit the scales as 12 st 10lbs and was disgusted with my holiday snaps from the British Virgin Islands (vanity). Later that year, to make matters worse I was diagnosed as suffering from fallen arches (now rectified with permanent orthotics – miraculous and thank you to my podiatrist)
In fact – I started heading down below that and family/friends called me to account as I became too thin. Now I stick to Paleo 90% of the time and enjoy the occasional sinful meal- but not very often. I am not OCD about it (you can’t be when you are a road warrior) and do not follow the programme like a religion. Some of the web sites and blogs on the subject are way too fundamentalist for me. I’m also guilty as hell of LOVING alcohol and drink far too often – but the trainers are back on nowadays and I think I’m burning off most of the “bad”. My simple man’s version of Paleo is easy to remember: YES to meat, fish, fowl. YES to vegetables, fruit, nuts. NO to spuds, bread, pizza, pasta. NO to dairy (not in the book but dropping milk and milk-based products for soya has made a positive difference). Can I remind you – 90% of the time – so if you spot me at BACD next week with any or all of the aforesaid vanishing down my gullet – don’t start that “I thought you said………” malarkey. Changing my nutrition truly has changed my life for the better – and I never go hungry. Now – I’m off to breakfast – a fry up, of course.
04
Effective budgeting
Delegation is trending. The difference between an overwhelmed Principal and a relaxed Principal is an effective manager(s). Someone to delegate to – someone who you can trust to do it as well as you would yourself, 90% of the time – and quick to learn when they produce 10% of results that are less brilliant than wonderful you. I often hear that “I cannot afford a manager(s)”. The cliched response is that you cannot afford to be without a good manager – the reality is that you didn’t budget (or budget enough) for a brilliant manager(s). Ah – budgets. Question: ”do you have a 12-month cash flow forecast for your business that allows you to update budget figures with actuals on a month by month basis (and notice KPI’s and variances from budget)?” If the answer is “yes” I congratulate you – you are a member of a minority group in dentistry. If the answer is “no” then you know where we are going with this. You cannot fly an aircraft with no dials in the cockpit and the windows blacked out. You will know that you are airborne but will have no idea where you are, where you are going, how high, how fast, when the fuel runs out – for that matter, which way up you are.
05
written by Chris Barrow
In any business (yours or mine) the days are gone when you can just “work like hell” and see where you end up. Constructing a budget for your business requires: •
access to the last year’s numbers so that you can extrapolate them
•
the ability to construct a spreadsheet
•
a half-day uninterrupted every month to review the updated numbers (collected and collated by your manager)
•
the ability to make decisions based on the numbers
The benefits to you will be huge. A greater understanding of just how money moves through your business. Peace of mind through knowledge. Quick course corrections that will reduce profit leakage and improve your bottom line. An essential understanding of the profitability of each surgery and each fee-earner. An analysis of marketing activities that work (more please) and those that don’t (stop that now). Identification of products and services that your patients desire (and those that they don’t).
Put yourself in the pilot’s seat in your business, hire a co-pilot and a navigator, build a cockpit with a set of readings that tell you all you need to know to enjoy a safe flight and reach your destination. We are talking simple maths here.
Dreamers
written by Chris Barrow
Last weekend at the BACD I had the good fortune to meet quite a few dreamers:
My dreams aren’t over – even after the challenges of last year .
•
dreaming, 10 years ago, that there was room for yet another association in dentistry
•
dreaming about opening their own private squat
•
dreaming of the end to a war with a troublesome business partner
I am inspired by the speakers at TEDx, inspired by those who chat to me at conferences and share their dreams, revitalised every single day of my working life by my clients, who never stop dreaming and allow me to be a catalyst in the process of making their dreams come true.
•
dreaming of a secure and fair route to exit their business
Well can you put your hands in your head, oh no!
•
dreaming of breaking through their own glass ceiling
I said dreamer, you’re nothing but a dreamer
•
dreaming of delivering outstanding dentistry
Dreamer, you know you are a dreamer
Well can you put your hands in your head, oh no! I said “Far out, – What a day, a year, a laugh it is!” You know, – Well you know you had it comin’ to you, Now there’s not a lot I can do
A friend passed on the comment to
me at the BDTA that a well-known dental personality had described Chris Barrow as “The Icarus of Dentistry.” Well – quite apart from referring him to Seth Godin’s excellent book “The Icarus Deception” I pondered what that was supposed to intimate and what it actually meant. The intimation is that Chris Barrow has tried to fly too close to the sun and burned his wings. Point noted – I’ve done that 3 times in my career and 2012 was the latest. Godin suggest that the alternative to flying too high – is flying too low – and I doubt I can ever be accused of that.
The very next day, at TEDx Salford, I joined my eldest son and daughter in listening to more dreamers who: •
after 14 rejections by NASA, still became an astronaut
•
dreamed a story and became one of the first million-seller female writers in the UK
•
grew up in care and dreamed of writing poetry and discovering parents
•
dreamed of escaping apartheid and playing football – to play for Manchester United and score on their debut
•
dreamed of visiting every country in the world without using flight
Clay Anderson eventually became one of NASA’s top astronauts with over 127 days in space. Joanne Harris published Chocolat and became a super-star. Lemn Sissay is a world-renowned poet who is now organising The Christmas Dinner for Manchester’s children in care. Quinton Fortune is now a UNICEF ambassador and football coach. Graham Hughes now lectures worldwide on his travel adventures, having completed his world record attempt. I have failed in business 3 times in 20 years – and I’m still bouncing back and doing it again. This Icarus is going to fly again. If I could see something You can see anything you want boy If I could be someoneYou can be anyone, celebrate boy.
The world is perhaps full of dreamers who are not prepared to take risks – their dreams remain just that.
If I could do something-
Then there are the dreamers who take the chance and “have a go” – they are the people who change the world for the better.
If I could do anything-
Well you can do something,
Well can you do something out of this world?
Nobody stands on a stage at a dental conference or a TEDx meeting and tells a story about how they tried something, it worked first time and they had a great life. The speakers tell of overcoming adversity, challenging the status quo, failing over and over again and, eventually, mostly when they are least expecting – making it.
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Is Dentistry a “patient numbers game”?
Wikipedia defines a “numbers
game” as follows:
“Numbers game, also known as a numbers racket, policy racket, or Italian lottery is an illegal lottery played mostly in poor neighborhoods in the United States, wherein a bettor attempts to pick three digits to match those that will be randomly drawn the following day.” Any attempt to define the delivery of dentistry as a patient numbers game is likely to fill the criteria of “bold, outrageous and provocative” (BOP) so beloved of the ardent commentator. So here is a new 7connections BOP-graphic, continuing our series of info-graphics but based more on casual observation than detailed scientific analysis. Listen, sometimes business is science but as Seth Godin proclaims in The Icarus Deception, sometimes business is art - and art is full of idiosyncrasy and contradiction. So if you open our BOP-graphic and immediately bust a blood vessel - please don’t write an outraged email or post - I’m intending to outrage you so that I can get you thinking - just for a minute - about what you do and the way that you do it.
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The BOP-graphic is based on my observation of practices over 20 years and makes a very simple point in a very simple graphic: “the more patients you see per day, the less money you make” and that statement IMHO applies both to the clinician doing the work and the owner of the business. Unless, of course, you are a corporate and can achieve enormous economies of scale in the purchase of equipment, materials, laboratory work, staff, premises and office supplies. A corporate might argue that if they can recruit 1000 dentists to see 60 people day then they can smash through their production, keep the costs low and generate maybe 17% EBITDA (the published numbers would seem to support that). But say goodbye to “people” and hello to “spreadsheets”. We live in a free market economy and there are some who will choose to work in that environment. But if you value “people” more then you value “spreadsheets” then I would argue that you
written by Chris Barrow
need to move steadfastly towards the right hand end of the BOP-graphic. We cannot all be super-dooper specialists. My experience is that the real problem occurs in the “30 a day” part of this graph - where a hard-working, conscientious Principal or associate is providing preventative maintenance to a mature database of membership plan patients. The clinician would love to slow down, do less work to a higher level of detail and complexity, spend more time with patients (and more time with the team) but they are between a rock and hard place - struggling to deal with that waiting list in the appointment book and the queue in reception. It is the pain of transition from “30 a day” to “6 a day” that proves THE MOST DIFFICULT in dentistry - and that’s a speciality at 7connections.
Actually - that’s not a numbers game - that’s a communication game. We know how to help you do that. If you would like help - let us know.
Truth’ – the Prestwood Financial Planning tool
A
case study which focuses on the use of ‘Truth’ – the Prestwood Financial Planning tool, in a scenario of helping a dentist to understand what his ‘number’ is: Dr X was in his late 50′s, working 50 – 60 hours a week running his dental practice, Sunday mornings were spent finishing off the week’s paperwork, his business was slowly killing him. Holidays? Few and far between. Hobbies? None. Stress? Lots. Dr X ran a 3 surgery practice, fully private in an affluent West London post code. The practice’s details were:•
Three Surgeries
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Fully Private Practice
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Fee Income of £750,000
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Income had been steady around this level for the last 4 years.
He was contemplating selling his practice and already had an offer on the table, which was turned down on the advice of his accountant (as the £450,00 offered was not near the £850,000 of potential value that believed the practice was worth).
His Lawyer introduced him to us and after getting to know more about him, we identified his real requirements: to escape from his practice and get on with his life. We also found out his ambition: He wanted to learn to fly ‘before it was too late’. On talking with us, it soon became apparent that substantial funds had been accumulated in various investments including pensions etc. More important, we helped him identify a desired lifestyle and then helped him to calculate his ‘number’ – the amount of money he needed for the rest of his life. So, we went ahead and created our financial model and here’s what we found.
written by Patrick Murphy
Patrick Murphy Charted Financial Partner CFPcm, FIFP, FPFS 70 St Mary Axe London, EC3A 8BE Tel – 020 3102 4085 www.zen-wealth.com
Dr X needed just an additional £500,000 to retire NOW, not in 3 years’ time at aged 60. If the cost of flying lessons and the purchase of a light aircraft was built in he needed just £750,000 NOW. And this was to start living the life he wanted NOW. With our help, and the help of his Corporate Lawyer, he managed to get the deal back on the table and ended up selling his practice for £700,000. Dr X continues to enjoy his retirement and now looks – AND FEELS – 10 years younger.
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With thanks to: Matt Cox - Graphic Design mattcoxmail@yahoo.co.uk Photography:
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Cover
401(K)2013 - Flickr
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7 Connections
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Jitze - Flickr
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401(K)2013 - Flickr
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7 Connections
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7 Connections
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Sal Falko - Flickr