Last weekend the title to this week’s blog was the preamble to a doctor who wanted to know how to take his practice to the next level. Later that same day, an older doctor was asking for help in how to sell his practice at a significant price when he began with: “You know, I never wanted to do that “associate thing”. That’s when the significance of that statement struck me. Everyone is thinking that they could do that associate thing if they wanted, which is not even close. Instead they should be admitting that their practice never acquired the momentum and level of success that would make the associate thing work. The next day I sat on a panel dealing with transitions with a couple of CPAs and one guy who brokered dental practices and I think one of the three had a spouse that was a dentist. I don’t remember what question was directed to the panel, but once again it was preceded with some numbers about their practice, their concern about a transition, and the words: “I never wanted to do that “associate thing”. Being able or needing to add another doctor might be considered the litmus test of a successful business. It continues to grow until you have to add more producers in the form of hygienists, doctors, and facility.
While each member of the panel gave their answers to the gentleman on the third row, I was thinking that I would probably disagree with each of them. One advised how important it was to start 3-5 years ahead of a transition in order to get a more favorable price (as if the doctor would pony up and be totally engaged in his practice), while the next agreed and added that “it would give you time to build up the value while improving the numbers” (I would hazard a guess that few if any of the attendees spent any time looking at the numbers anyway). Just before it was my turn, the next panel member reminded the audience that “you can’t just decide Friday that you want to sell and do it on Monday. It takes time to strategically arrange your practice for sale and find the right buyer or partner”. (Not really. Any practice can be sold quickly if the price is right.)
In a way, it was funny how each panel member saw a sale or transition in a different way. They each had a different perspective based on how they were involved in the transaction. The broker thought of it as a transaction where money changed hands and a fee was paid (to him). The CPA saw it from the tax implications and based the value off of numbers you might find on a Profit and Loss Statement. The last panelist (whose wife was a dentist and they owned a couple of offices while doing some startups) saw it as a destination for a dental empire. When it was my turn to answer the question, I had three very intelligent experts that I radically disagreed with. Certainly, what each said had value if it were taken by itself, but all failed to see the whole story. Right in the middle is a doctor with a story, a skill set, a commitment or lack of engagement, and a history that drastically affects everything in the transition or sale. While I offered somewhat of a contrarian opinion along with one or two caveats, I really felt like the audience couldn’t handle the real truth.
It appears that when audiences look at their exit strategy, they tend to minimize their participation and just want to pay someone to fix their business. They want that happy ending where everything turns out great. When it comes to selling a practice, it would be great if you had all the time in the world. Yet, I have rarely seen a dentist act that proactively. Even if they did, most of them would have to make a 180-degree adjustment and do all the things they failed to do during their entire career. Really, the dental goal in life would be to control your life style, save 20% or more of your earnings, keep your overhead below 60%, invest well and not even need the money from a sale. Again, 90% of the doctors have to sell well in order to retire.
While there were some younger dentists, most of the audience was made up of senior doctors and wives who were looking to cash out and move on to plan B. Here is the dilemma: When you reach the end of your career and begin looking for an exit strategy, it is almost always too late to make any radical changes to improve the value of your practice. Even if you had 3 years, few will make the changes necessary to drastically improve their situation. If they could, they would have already done it. The habits and actions that got you to that point are very difficult to break. I know, I sound like Debbie Downer but I have tried to help others change, watched others go it alone, yet few make a significant difference in that hour of their career. Let’s be realistic about the mountain of challenges and see this for what it is. Take on the accountability for your situation, change it or don’t, but know that the end of your career is far too late to effectively change the outcome of the value of your practice.
Everyone who watches football knows about the 2-minute warning strategies and red zone offences/defenses that teams work tirelessly on. Just so you don’t miss the analogy: They have always had a plan, practiced the plan, implemented the plan in every game they played, and trained members of the squad to implement it without a huddle or modifying the well thought out strategy.
Dentistry is different. Let’s call this the “Red Zone Neurosis”. This can occur any time during your career and can occur many times. Each of us see ourselves achieving a certain level of success. This level is based on our individual experiences and trials and tribulations. Many have a great self-image for no apparent reason, while others can’t see themselves actually enjoying a high level of success. (If you are the one out of one hundred that always knew you would do great things, stop reading. Congratulations!) Like football, we will consider that you are in the red zone (the 20-yard line to the goal line). You have moved your career down the field and are within sight of scoring, yet 94% of dentists fail to convert. Only 5-6% ever become financially independent.
In football we have all seen the secondary defender who gets out classed and allows a completion or long yardage run. Often times when they miss coverage they streak after the offensive receiver only to pull up with a strained quad or hamstring injury. I call this the “losers limp”. Admit it. They missed the coverage, played the guy with too much room, allowed him to catch the ball, and now their excuse is “I hurt my leg”. No, you blew it.
What I really wanted to say to the audience, but was afraid of the rejection or my inability to voice it in an encouraging way, was that you were in the red zone many times and failed to score. Usually it happened so often that they stopped believing it was possible to score. It is that self-sabotage that I define as the “Red Zone Neurosis”.
Each of the other panelists felt like all a doctor had to do was hire them and check a few boxes. Probably the boxes that were there during their entire career and were never looked at. People who stopped believing in themselves, stopped striving, and felt that they wouldn’t be able to go to the next level, also seem to not want to try that “associate thing”. The true need for another doctor in a practice validates everything that should be measured in dentistry. It is the natural progression of serving patients and inspiring them to refer their friends and neighbors. If you are inspiring consumers, it will be impossible to not need another doctor in your practices. If you are not growing, you are not meeting or exceeding you patient’s needs. Not meeting their needs is the number one symptom of stalled practices and average careers. Isn’t it time that you invested in your future, owned your results, and do something about it? If you are sick and tired of not having the practice you always thought you would have, give me a call and let’s talk about your challenges and goals. That’s how you Summit.
Michael Abernathy, DDS