Dental Practice Owners: 8 Simple Steps to Preparing a Business Plan for 2012

I am very pleased say our business has more than doubled over the past four years – a time period when more than 50% of the recruiters in the country exited the recruiting business due to the difficult economic environment. Certainly, much of our success here is due to our outstanding team of Account Executives/Recruiters, but I also attribute much of our success to taking the time and making the effort to write a comprehensive business plan every year. Even a talented team needs a plan!
Every week our Account Executives/Recruiters speak with hundreds of practice owners. We have found that a surprisingly small percentage of business owners actually take the time and effort every year to develop a business plan, and that most of the truly successful practices we work with do have a plan in place.

A business plan consists of three parts, which I will break down into eight steps:
1. A statement of what you want your practice to be in the future. (Step 1)
2. An assessment of where your practice is today. (Step 2)
3. A realistic breakdown of the steps you need to take in order to get from where you are to where you want to be. (Steps 3-8)

The 8 Simple Steps to Preparing your Business Plan:

1. Develop a Mission/Vision Statement for your practice – Simply stated, why does your practice exist? Who do you serve? What do you offer patients that they can’t get elsewhere?
• Vision – Write out a compelling description of a future desired state of your practice. Make sure you can clearly picture what your practice will look like in the future. Think in terms of where you want to be. The purpose of the business plan is to lay out the steps between where you want to be and your current reality.
• Values – What do you stand for? What are the guiding principals by which your practice operates? Values motivate us before we achieve a goal and determine how satisfied we are once we attain it. Does your current culture support your values?

2. Assess Current Reality – In a few paragraphs summarize your results for 2011. It helps to look at your monthly financials.
• Positive Effects on Growth – In which areas of your practice are you experiencing the most success? How do you optimize those to produce continued results?
• Negative Effects on Growth – In which areas of your practice are you experiencing more challenges? What do you need to change in order to obtain positive results?
• Current Office Structure – Diagram current office structure. Will your current team, with their current duties and responsibilities help you achieve the vision for your practice?
• Understand your key metrics – What is the average per patient production for each Dentist and Hygienist in your practice?
• SWOT – Draw a box with four quadrants: Strengths, Weaknesses, Opportunities and Threats. Be honest with yourself. Give a lot of thought to each area.

3. Describe what your practice will look like in 2016 – This is the fun part. Now is the time for specifics. There are plenty of ways to grow and be successful. In fact, some practices even choose to shrink and be profitable. It is up to you.
• Will you limit your practice to a certain type of patient base?
• Will you cater to patient needs by expanding hours, days and providers in your current facility?
• Will you expand your facility to accommodate greater patient demand?
• Will you expand your presence in a market by acquiring or building new practice locations?
• How many patients will your practice see?
• What clinical services will you offer?
• Will your equipment be all state of the art?
• Will your practice thrive because of your strong engagement with and ties to the community?

4. Commit to your 2012 Key Initiatives – Decide on a small, achievable set of initiatives that will help move you toward your goal. In most cases, you can’t achieve your vision in just one year, but you can take steps toward reaching it. Typically these initiatives fall into one of five categories:
• Improving office efficiency – Improving your responsiveness to current patient demand by treating more patients, maintaining or improving the quality of care with the same number of resources (team members and operatories) by eliminating inefficiencies in your current systems and processes.
• Broadening your level of services – Providing your patients with more clinical choices, which in turn improves the value and revenue from each patient visit.
• Increase Demand – Do a better job of filling your teams schedule through advertising, referral programs or adding new/profitable plans.
• Add Capacity – Add new Dentists or Hygienists to your practice to satisfy demand. (Don’t take this step until you have the demand and efficiencies to add someone profitably).
• Buy or create a new patient base – Serve a new patient pool by buying or starting a new practice.

5. Break your goals up into Bite-sized Chunks – Figure out what your 2011 objectives mean to each team member. It is critical that you involve your team. If you involve them in the process it will improve their buy-in. They will probably be the source of many of your best ideas. Define what the plan means to each team member:
• Does it mean they need more training in a certain area?
• Does it mean they need to schedule more efficiently?
• Does it mean they need to improve recall?

6. Install Guardrails – Make sure each member knows their daily, weekly and monthly goals.
• This is as simple as taking your annual goals and dividing them by the number of working days in a year.
• The key to exceeding your goals every year is to exceed them every day.
• Make it a routine to share results on a daily and weekly basis.
• Reinforce how important each team members part is to the practices overall success.
• Celebrate the daily and weekly victories.

7. Create a Budget – This is the tough part. Budgeting is the toughest part of the process because it makes you say no to things you really want to do. Tips:
• Zero based budget – Challenge each cost. Don’t assume you have to pay for something this year, just because you did it last year.
• Never count on revenue from a new hire or new initiative until it becomes a reality. Most practices count a very rosy picture when a new team member joins their practice.
• Fund new initiatives off the excess. Don’t buy something or hire someone unless you can survive a failure. Don’t borrow money and risk your practice because you think a new Associate, new location, new piece of equipment will produce. Wait until you can afford a failure. “Plan for the worst, Hope for the best”.


8. Print and Bind the Plan - Commit to the plan. Don’t just put it in your desk drawer.
• Carry it with you.
• Check progress weekly.
• Refer to it in team meetings.
• If you are falling behind, be aware of what needs to change and take action immediately.
• Celebrate the little victories and share them with your team.
• Bankers and perspective team members will LOVE you when you show them your plan.

You can do this! In fact, you should do it right now! You don’t need an MBA, CPA or Law degree to write a Business Plan for your Dental Practice. Certainly, advice from a trained professional is helpful, but in most cases you have what it takes to get the basics down on paper.
You are the leader of your practice. If you are serious about growing your practice, offering new services, expanding your reach, serving new patients, and preparing for a comfortable retirement, you need to write a Business Plan. If you haven’t done so already, start your plan today!

Written by Mark Kennedy, Owner/Managing Director of Executive Talent Search (ETS Dental, ETS Vision, ETS Tech-Ops). To find out more, call ETS Dental at (540) 563-1688 or visit us online at www.etsdental.com.

Landing a Buyer for Your Practice: (Part 3)

This is part 3 of our 3 part series.
Click Here for Part 1.
Click Here for Part 2.

The following are three real life examples of why “Being Prepared” is so important when selling a practice.

Example 1: (Get an Appraisal)
Unprepared: The Practice Owner did not have an independent appraisal of the practice prepared before she started talking to interested parties. She thought she was saving money. Since most buyers need to obtain financing, banks and other lending institutions won’t loan money without an appraisal.

Prepared: The Practice Owner got an independent appraisal of her practice done prior to speaking to any interested parties. She recognized any buyer would need to get their own appraisal, but the appraisal gave both her and prospective buyers a realistic expectation of the selling price. She quickly sold her practice to another Dentist interested in moving to her community.

Example 2: (Prepare Historical Numbers and Metrics)
Unprepared: The Practice Owner had not prepared the financial information necessary for a potential buyer to make an informed decision.
Examples:
• Monthly, Weekly, Daily production numbers.
• Mix of procedures. Mix of Fee for Service, Insurance, or Medicaid.
• Hygiene production. Procedures referred. Growth opportunities.
• Number of active patients.
• Number of new patients.

All the owner knew was that he wanted to sell the practice for $500,000. He spoke with a number of potentially interested parties, but could not move ahead because they didn’t have any specific information they could use to make an informed decision.

Prepared: The Practice Owner tracked all of this information monthly. He prepared reports summarizing last year’s production information. A potential buyer realized the Practice Owner was referring out all of his endodontic and many of his pediatric cases. Since the potential buyer realized he could immediately increase production by $150,000 a year, he purchased the practice at the asking price.

Example 3: (Don’t Quit Before You Sell)
Unprepared: The Practice Owner wanted to retire two years ago, but his retirement funds shrank dramatically. The owner came to work begrudgingly and let the practice atrophy. There were a number of potential buyers. When they looked at the practice they saw it was disorganized and dated. Production had declined and key staff members had left, sensing they did not have a future there. The practice eventually sold but for $350,000 less than it would have sold for three years ago.

Prepared: The Practice Owner recognized he would not be able to retire for three years. Rather than cutting back, he realized that this was the most important three years of his career. He didn’t make major investments in equipment, but he repainted and updated the waiting area and operatories. He landscaped the outside. In addition he worked to grow his practice recognizing that its sale price was determined by the last three years production. He worked with a consultant and gave the staff incentives to increase production. After three years he sold the practice for $350,000 more than it was worth three years previously.

Written by Mark Kennedy, Owner/Managing Director of Executive Talent Search (ETS Dental, ETS Vision, ETS Tech-Ops). To find out more, call ETS Dental at (540) 563-1688 or visit us online at www.etsdental.com.

Snooze You Lose

This is a very busy time of the year for both candidates and practices. Graduations are in full swing, residencies are nearing an end, and contracts are coming up for renewal. As a search consultant, we specialize in helping practices hire the best Associates and candidates in finding the right opportunity. Here is some advice to ensure that both hiring practices and candidates don’t lose out on a great situation.

When conducting a search for a practice owner, we screen and present to them qualified, interested doctors, then the interview process begins. The time lapse between when we present the candidate to the owner and the owner making contact with the candidate is very important. With each day that passes, the candidate will begin to think that the owner isn’t interested in them, and they will start looking for other options. Showing interest or intent to hire isn’t enough. If you want to attract the top talent, you need to be prepared to act quickly. Create a clear, documented plan for bringing on a new Associate and have a sample contract ready that can be easily tweaked to your needs.

On the other side, candidates who are actively pursuing opportunities should understand that time is of the essence, as well. When you receive an offer from a potential employer, please take the time to review it carefully, but don’t take too long. Once you reach the offer stage, be prepared to move quickly. We recommend that an Associate be ready to accept or decline an offer within a few days. Your actions speak louder than words. An owner may view your delayed response as a show of indecisiveness and they may begin to wonder if you really want the position, in turn making them question their desire to hire you.

In the past two months, we have seen over a dozen practices miss out on hiring great candidates because they failed to act in a timely manner. We have also seen many great candidates miss out on excellent opportunities because they took too long to make a decision. You’ve heard the expression, “snooze you lose.” We hope you don’t miss out on that exceptional candidate or that fantastic position!


Written by Marcia Patterson, Account Executive/Recruiter for ETS Dental. You can reach Marcia at (540) 491-9118 or mpatterson@etsdental.com. Find out more at www.etsdental.com.

Business Planning For Your Dental PracticeDental Practice Owners: Are You Planning for a Record Year in 2011?

Every week, our team has hundreds of conversations with practice owners about their plans for the future. Some of our client practices are growing and want to add an Associate simply to keep up with demand. Others are seeking an Associate to replace a Partner or Associate who will be transitioning out of the practice. A number are interested in expanding their reach and acquiring other practices. Additionally, some owners are nearing the end of their career and looking for an exit strategy.

I am always amazed at how few practice owners take the time and effort every year to develop a business plan. Most of the truly successful practices we work with have a plan in place.

A business plan consists of three parts:
1) A statement of what you want your practice to be in the future
2) An assessment of where your practice is today
3) A realistic breakdown of the steps you need to get from where you are now, to where you want to be

You can do this! In fact, you should do it right now! You don’t need an MBA, CPA or Law degree to write a Business Plan for your Dental Practice. Certainly, advice from a trained professional is helpful, but in most cases you have what it takes to get the basics down on paper.

Steps:

1. Develop a Mission/Vision Statement for your practice - Simply stated, why does your practice exist? Who do you serve? What do you offer to patients that they can’t get elsewhere?

• Vision – Write out a compelling description of a future desired state of your practice. Make sure you can clearly picture what your practice will look like in the future. Think in terms of where you want to be. The purpose of the business plan is to lay out the steps between where you want to be and your current reality.


• Values – What do you stand for? What are the guiding principals by which your practice operates? Write down what your values are. Values motivate us before we achieve a goal and determine how satisfied we are once we attain it. Does your current culture support your values?

2. Assess Current Reality – In a few paragraphs, summarize your results for 2010. It helps to look at your monthly financials.

• Positive Effects on Growth: In what areas of your practice are you experiencing the most success? How do you optimize those to produce continued results?


• Negative Effects on Growth: In what areas of your practice are you experiencing the most challenges? What do you need to change to obtain positive results?


• Current Office Structure – Diagram current office structure. Will your current team, with their current duties and responsibilities, help you achieve the vision for your practice?


• Equipment – What equipment, systems and software are you currently using? From a technology perspective do you have the tools you need? Or, are you underutilizing equipment and systems you currently own?


• Understand your key metrics – What is the average per patient production for each Dentist and Hygienist in your practice?


• SWOT – Draw a box with four quadrants: Strengths, Weaknesses, Opportunities and Threats. Be honest with yourself. Give a lot of thought to each area.

3. What will your practice look like in 2015? – This is the fun part. Now is the time for specifics. There are plenty of ways to grow and be successful. In fact some practices even choose to shrink and be profitable. It is up to you.

• Will you limit your practice to a certain type of patient base?


• Will you cater to patient needs by expanding hours, days, and providers in your current facility?


• Will you expand your facility to accommodate greater patient demand?


• Will you expand your presence in a market by acquiring or building new practice locations?


• How many patients will your practice treat?


• What clinical services will you offer?


• Will your equipment be all state-of-the-art?


• Will your practice thrive because of your strong engagement with and ties to the community?

4. 2011 Key Initiatives – Decide on a small, achievable set of initiatives that will help move you toward your goal. In most cases, you can’t achieve your vision in just one year. But, you can take steps toward reaching it. Typically these initiatives fall into one of five categories:

• Improving office efficiency – Improving your responsiveness to current patient demand by treating more patients; maintaining or improving the quality of care with the same number of resources (team members and operatories) by eliminating inefficiencies in your current systems and processes.


• Broadening your level of services – Providing your patients with more clinical choices, which in turn improves the value and revenue from each patient visit.


• Increase Demand – Do a better job of filling your team’s schedule through advertising, referral programs and/or adding new/profitable plans.


• Add Capacity – Add new Dentists or Hygienists to your practice to satisfy demand. (Don’t take this step until you have the demand and efficiencies to add someone profitably).


• Buy or create a new patient base – Serve a new patient pool by buying or starting a new practice.

5. Break your goals up into bite-sized chunks - Figure out what your 2011 objectives mean to each team member. It is critical that you involve your team. If you involve them in the process it will improve their buy-in to the plan. They will probably be the source of many of your best ideas. Define what the plan means to each team member:

• Does it mean they need more training in a certain area?


• Does it mean they need to schedule more efficiently?


• Does it mean they need to improve recall?

6. Install Guardrails - Make sure each member knows their daily, weekly and monthly goals.

• This is as simple as taking your annual goals and dividing them by the number of working days in a year.


• The key to exceeding your goals every year is to exceed them every day.


• Make it a routine to share results on a daily and weekly basis.


• Reinforce how important each team member’s part is to the practice’s overall success.


• Celebrate the daily and weekly victories.

7. Create a Budget - This is the tough part. Tips:

• Zero-based budget – Challenge each cost. Don’t assume you have to pay for something this year, just because you did it last year.


• Never count on revenue from a new hire or new initiative until it becomes a reality. Most practices count on a very rosy picture when a new team member joins their practice.


• Fund new initiatives off the excess. Don’t buy something or hire someone unless you can survive a failure. Don’t borrow money and risk your practice because you think a new Associate, a new location, or a new piece of equipment will produce. Wait until you can afford a failure. “Plan for the worst, hope for the best”.


• Budgeting is the toughest part of the process because it makes you say no to things you really want to do.

8. Print and Bind the Plan - Commit to the plan. Don’t just put it in your desk drawer.

• Carry it with you.


• Check progress weekly.


• Refer to it in team meetings.


• Get aggravated if you are falling behind.


• Celebrate the little victories and share them with your team.


• Bankers and perspective team members will LOVE you when you show them your plan.

You are the leader of your practice. Nobody will do it for you. If you are serious about growing your practice, offering new services, expanding your reach, serving new patients, preparing for a comfortable retirement, you need to write a Business Plan. If you haven’t done so already, start your plan today!


Written by Mark Kennedy, Owner/ Managing Director of ETS Dental, ETS Vision & ETS Tech-Ops. To talk to us about how we can help your practice, give us a call at (540) 563-1688. Find out more at www.etsdental.com.