I thought I would write an article that may help new dental practice owners or those looking to get into dental practice ownership. These are 5 things that I think many new dental practice owners may not realise or are often given misleading information about.
I remember not long after my first year as a practice owner, I was hit with a tax bill that I didn’t really expect. Often when you first get into ownership, you don’t pay any taxes on profits in the first year until you do your tax return. I had a rough idea of what my profit was so it wasn’t really a concern to me as I had saved the tax. What I wasn’t prepared for was the fact that I had to also make catchup payments for the current financial year on top of the tax payable on the past financial year. Unfortunately, this has caught out many people in their first year of business.
On a general note, when you become a business owner and start earning profits, you do everything legally to minimize your taxes and a great accountant really does help in this regard.
2) Staff management
Most business owners will tell you that the hardest part of business is dealing with staff issues. Most of us have little to no management experience and suddenly we are thrust into the role of practice owner.
You will make mistakes around staffing. In recruitment, in dealing with sub-par performance, in terms of negotiating pay and a host of other areas. Most of this is learned and improved with experience. However the keys lessons with staff that I think are important are:
A) maintain a professional relationship where there is a line between owner and employee. Being “friends” and on the same level may seem good especially if you were an associate at the practice but the difficulty really starts to show when performance issues or disagreements arise. It’s much easier to discipline an employee than a “friend”.
B) do not tolerate or put up with poor performance because you don’t like confrontation and believe things may just improve on their own. This doesn’t happen, the situation often gets much worse and has negative impacts on other staff. If you don’t address issues quickly, they will become much harder to address later because you excused all the “little” things in the build-up.
C) try and have a plan for hiring and anticipating staffing need before it arises. Sometimes it’s beyond our control of a staff member suddenly resigns but if you are desperate or rushed when you hire, the results will not be as good as if you took the time to thoroughly screen many candidates.
3) Financial see-saw
As a business owner, the ups and downs in business can take a massive emotional toll, especially on new owners. Often there is really nothing concrete to be concerned about but our lack of experience in the cyclical nature of business combined with worries about overheads/expenses can cause major panic to set in.
With experience, you will realise the peaks and troughs are part and parcel of business and as your practice matures the troughs will decrease as you get a more solid patient base. In addition, your reaction to the troughs will also be more measured and less emotional.
4) Marketing is extremely important
I am sick of reading posts and hearing from experienced and very successful dentists who own large practices that “word of mouth is the only marketing you ever need – if you treat patients well, you will grow”.
This is what dentists did back in the day when there was no competition. You could open a dental surgery with full books almost immediately. Many of these experienced dentists, have no ideas about the reality of establishing a new business TODAY. For word of mouth to help, you need a solid, existing patient base. Yes when your practice matures, you can reduce marketing efforts and still grow. However, the average startup should be spending approximately 20-30k in their first year on a really well thought out and targeted marketing strategy.
5) Your dream practice will not happen overnight
Often young dentists will go and visit their “dental idols”. These guys have practices that are really well mature with lots of patient and often with lots of hi-tech equipment. They sometimes have fee schedules much higher than the state averages. They treat only certain patient types and most patients fit their “ideal patient”. Commonly, they have been established for 10-15 years and sometimes much longer.
Unfortunately the young dentist can come away from these meetings and have a false hope for their own startup. What would be more appropriate is if you could go back and see their fee schedules, equipment and fitout standards when they first started. They would be vastly different.
Your dream practice is not made overnight. Do not invest in loads of expensive equipment at the start. This is a massive risk and you need to see that the practice is doing well before committing to these things. Do not turn your nose up at emergency patients because they don’t fit your ideal patient. Do not expect to have a fee schedule that is much higher than average from day 1. It takes a long time to build a reputation in an area where higher fees are justified. My biggest practice operates in an area that is one of the lowest socioeconomic areas in the country. When I first started, I used to take out 4 wisdom teeth for $800 dollars. Nowadays I do the same thing for $1800. I made sure patients had a great experience and word spread. Not many other general dentists in the area did wisdom teeth and often patients had to goto a specialist 45 mins drive away in Brisbane city. Even though I have increased my fees, I haven’t had any change to treatment acceptance rates. I am certain that if I had started with high fees initially, without having a solid reputation to back it up, my treatment acceptance rates would have been very low.