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.
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.
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