Have you ever wondered how a pilot successfully lifts a 400 ton piece of metal off the ground and returns it safely to it’s destination? The most challenging time for a pilot is take off and landing. To avoid difficulties, pilots watch dials in the cockpit and go through a checklist to help stabilize the aircraft. Similar to a pilot…a dentist’s career has a “take off” (starting a practice) and a “landing” (transitioning the practice). The “Five Dials of a Dental Practice” are listed below to help ensure a successful landing.
Dial #1. Airspeed indicator (Growth Percentage of Practice) The airspeed indicator shows the speed of the airplane through the air. The growth percentage of the practice shows the historical production growth of practice and should be the first thing a dentist reviews when considering selling their practice. We have been through a challenging economy of late, but if the practice has stayed stable since 2008 at 0-5% growth it is very marketable. If it has not, other steps can be made to help promote the practice.
Dial #2. Altitude indicator (Community Perception) The altitude indicator is like the horizon you see looking out from the pilot’s seat providing bearings for where the plane is headed. One of the most critical pieces of advice I can give clients considering selling in the next 3 years, is to keep the practice open at least four days per week. It is remarkable how a community will perceive a practice if the parking lot is empty two of the five days per week…with this perception the new patients will stop calling.
Dial #3. Altimeter (Net Income) The Altimeter shows the airplane’s altitude in feet above sea level. With dental school debt of buyers at an all time high, young dentists need the practice they are purchasing to be at a minimum of $175,000 net income. Considering they have to finance the practice, continue to pay on their school debt and have income for personal expenses, this “dial” is critical in them getting the financing they need to purchase your practice. Every one of my 26 practice sales has obtained financing without the need for a “seller’s note”…which puts the seller at risk. There are quality banks willing to finance most practice sales, but net income is critical in having that be a reality.
Dial #4. Vertical speed indicator (Service Type Productivity Report) The Vertical Speed Indicator shows how quickly you’re climbing or descending in feet per minute. When you’re in level flight, it reads “0”. The Service Type Productivity Report is a great guide to the potential “climbing” of the practice. If your practice revenue is mostly crown & bridge, hygiene and restorative, there may be opportunity in some of the specialty categories (endodontia, extractions, periodontia) for young dentists to treat patients.
Dial #5. Heading indicator (Monthly New Patient Flow) Heading indicator is a compass which requires a source of power to work. It shows the direction that the airplane is flying. The “Heading indicator” for a dental practice is Monthly New Patient Flow. It is critical to continue to market the practice to earn new patients…a minimum of 5 new (non-Medicaid) patients per month is a good goal. Notice I said “requires a source of power”…a marketing plan. Compared to the Magnetic compass…like the compass you have seen in a car or boat, it tells you the airplane’s heading — the direction it’s flying it requires no power source. A practice without a “power source” of a marketing plan bringing in new patients…is not viewed as positively as one with good new patient numbers. You must make the effort to keep the new patient flow stable.
I hope this analogy was helpful for you and your planning. If you are considering a transition of your dental practice in the next 3-4 years, please contact me for a complimentary confidential discussion on my services and the Trusted Transition Process I use with my clients to help them seamlessly transition their dental practice.
Thad Miller, dental industry leader with 16 years experience is the founder of DDSmatch.com, he envisioned a better way for dentists to make practice transitions by pairing technology with a human touch to produce a professional and exacting match.