ACT 3: BUSINESS SELF-AWARENESS
One of the greatest traits you can develop is the ability to take stock of where you are, where you want to go, and the blockages you have to break through to get there. We call this business self-awareness. Your ability to know what questions to ask, and what numbers to look at is invaluable for keeping you on track to have your best year ever. It is this discovery process that will refocus your efforts and insure your engagement. Here is a link that will allow you to download our Practice Growth Analysis spreadsheet. It shouldn’t take but 30 minutes or so to fill it out, but once done, you will have a self-diagnosis in digital form to help you see the blockages and where you should spend your time and energy. In the subsequent ACT articles that I write, I will go back and refer to your numbers and what they mean, and how to correct them if you are off course. The Excel spreadsheet has three pages. The first page (Practice Profile) is pretty straightforward, with hours, rooms and staff numbers. (You can use fractions like 2.5 assistants, etc.) The main thing is that you have to fill this out on your computer. There are formulas embedded in the spreadsheet that allow it to draw conclusions based on other practices with similar statistics. The second reason is so that you can use this sheet to continue to monitor your progress. So, fill in the entire first page, and then click the second tab at the bottom of the page (Monthly Statistics) and do the same for page two. You are suppling monthly numbers for the entire last year. Don’t leave anything blank. Once the first two pages are completely filled in, you are done. The third page will automatically populate itself based on the entries on the first two pages. This is super simple, but incredibly revealing. It literally tips a mirror up so that you can see your practice in a different light.
If you are following this Blog, and engaged in implementing these ACTS, you are about to embark on the most important journey of your career. Should you choose not to, I assure you that you’ll come to regret that decision as nothing is more expensive than a missed opportunity.
I want to take just a moment to give you a short overview of the key points that the Growth Analysis sheet will reveal.
- You should strive to produce $25,000-$30,000 of production a month from each operatory.
- You should want $20,000-$25,000 of production from each employee per month. Fail at either of these two first bullet points and your overhead suffers.
- You domain name should be designed to take advantage of the fact that women make most of the appointments and all of the decisions of where they and their family will go. Knowing that 46% of all organic searches for a dentist are the word “dentist” and a location, having your name as your web site is a foolish endeavor.
- The days worked should reflect the demographic of your area. Go to zipwho.com, type in your zip code and compare your area to the actual patients you attract. This will define how you should be marketing. You cannot escape the pull of consumerism: Giving people what they want, when they want it, at a price they can afford.
- Total number of new patients. The average practice will have 25-30 new patients per dentist per month. The problem with this is that it really takes 50-75 per doctor to consistently grow by 20% per year. Secondly, you need to determine where these patients come from and why.
- Number of direct referrals from your existing patient base. It needs to be over 50%. That percentage is the best indicator of whether you are doing things well: Systems, protocols, marketing, inspiring the patient, consumerism, etc.
- Adjustments are usually about 25%-35% in a practice that has three quarters of their patients coming from PPO’s. Great clinical skill is just the price of admission to a successful dental practice. Learning the business of dentistry and being able to deliver the product and service that your patients demand 25% faster is what will make you successful financially.
- Production for the doctor(s) should be in the $600-$800 per hour range (the average dentist will be between $350-$450 per hour). Low hourly production means poor case acceptance, limited understanding of a successful business model, and perhaps a clinical blockage.
- Collections should be over 100%. One percent of lost collection dollars over the life of an average dental practice totals over $2,000,000. Just take your adjusted production per year and divide it by 100 and you get the exact dollar value of 1%. This can show up as hundreds of thousands of dollars per year when we fail to collect that single one percent.
- Hygiene production needs to be in the realm of 33% of your entire office production. If total practice production is $100,000 per month, then the hygiene department should contribute about $33,000.
So fill out the spreadsheet, and as each month’s statistics are posted, just add them to the first of the spreadsheet to create a rolling analysis of the entire year. This is how you Summit. You can’t hit a target you can’t see. This ACT will define that goal or benchmark.
Michael Abernathy, DDS