By Ross Martin, Accountancy Director at Hive Business

Oftentimes in life making a choice — any choice — is better than doing nothing. The nineteenth century steel magnate Andrew Carnegie famously said, “Most people will lose more to indecision than they will to a bad decision”, and his contemporary Mark Twain wrote, “Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do.” The way Twain puts it feels slightly more uncomfortable doesn’t it?

The sentiment obviously still rings true and I think it has particular resonance with dentists, incorrigibly circumspect as they are about risk. Let’s think of an example in dental business where no decision would be worse than a bad decision. Here’s one: we had a client whose dental practice was located next to a Sainsbury’s — very good because thousands of people either drive or walk past it seven days a week on their way to go shopping. They simply needed to capitalise on this with some signage to alert shoppers to their presence. But, alas, no sign appeared until nine months later. The delay was down to their search for the right signage at the right price.

The sign now apparently gets them 10 new walk-ins a month, so that’s 90 new patients they’ve missed out on in nine months in order to save about £200 on the sign. If each new patient is worth £300, the practice has forfeited £26,800 by prevaricating. Ouch. Dentists always say they want to do things the right way, and it’s difficult to argue against this on principle, but actually there is something worse than the wrong decision, and that’s too much prevarication — it’s not just a lofty sentiment; the practice near Sainsbury’s could have put any old sign up, then changed to a better sign later. They didn’t have to get it right first time.

In Dragon’s Den people ask investors to inject capital into their businesses to achieve growth objectives that would otherwise take much longer or not happen at all. In my experience growth in dentistry is nearly always pursued out of existing resources and cashflow. Incredibly, therefore, growth is intrinsically restricted in today’s booming dental industry, perhaps reaching a modest 10 per cent inflationary increase at the most. My question is, if practice owners could access the capital they need to fuel growth, why don’t they take it? Given that funds are readily available out there, I think I know the answer: the same reason the practice near Sainsbury’s took nine months to get a sign.

Time is an immovable limiting factor here. Let’s look at a hypothetical practice that has £750k turnover and £175k profit; it may be worth £750k. In three years, if you do nothing other than accrue a 10 per cent inflationary lift in revenue (say, £100k), you will, as the principal, undoubtedly be servicing most of those new patients yourself (having done nothing to structure the growth). Imagine using that time differently and instead of spending £100k on a strategically thought out marketing plan over a couple of years (with an up to date website, PPC, SEO, a shrewd refurb designed only to enhance new patient flow, and in-house resources to implement marketing tactics like social media). You’d hope for a return in the region of four to six times investment (although ROI on digital marketing can achieve 10 to 20). Let’s say £500k ROI to be prudent.

Let’s assume all this new work is serviced by associates. On average the increase in profit to the business where this happens will normally be five to 10 per cent, factoring in lab fees, commission and overheads. So over three years you’re looking at additional profit of £50k to £100k. Considering you’ve spent £100k on marketing that doesn’t seem great does it? You could be £50k out of pocket. So I can see why circumspect practice owners hesitate here. But here’s the thing: having started in the same place (with a practice worth £750k with £750k turnover and £175k profit), you have, in three years, increased goodwill significantly.

The business is now moving with momentum, all your marketing channels are purring, and you have a bigger team of associates who can handle a broader scope of clinical work. You’ve spent three years laying a framework over chaos. There’s no shortcut to doing this; despite everything you read about instant marketing results it usually takes six months to understand a marketing channel. You can’t buy marketing off the shelf that works and you never see it work unless you prevail past the first six months — many dentists never get this far, which is why they don’t think marketing works. It’s not their fault, it’s because, in our instant gratification world, marketing can be sold as a very simple fix. It’s anything but.

So, say you’ve made the £100k marketing investment and stuck to it over the three years. What you have at the end is a fully functioning marketing machine that works, generating new patients at an increasingly efficient rate. This has an exponential effect on your growth and the business will have accrued in the region of £500k in value in three years. Minus the £50k, that’s £450k of extra value, and now your business is in gear to go wherever you want to take it. In 20 years, do you think you’d rather go here or take the 10 per cent inflationary growth option? Although strictly speaking the latter’s not a choice is it, and there’s only one thing worse than a bad decision — no decision at all…

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