It’s probably a fair understatement to say that the global economy is experiencing a period of serious flux. Nobody quite knows what’s going to happen next (inflation, stagflation, even recession), and this rightly makes everyone nervous. Within the dental industry, there’s a great deal of noise about cost cutting and price rises.
However, it’s important to remember that nothing has changed in how to be successful.
A large proportion of practices will be cutting their marketing budget, seeing this as an easy way to claw back money. This isn’t quite the solution it seems, however. In fact, history has shown that maintaining or even increasing your ad spend during a time of recession increases sales and market share. With so many others shrinking their marketing, there’s a significant opportunity for the taking.
Nevertheless, with times getting harder, practices of differing sizes are likely to struggle in different ways. Large corporates are seeing associates demanding £15 UDA: a catastrophically loss-making move that many feel compelled to consider, through fear of refusal causing even worse repercussions.
Smaller lifestyle practices, such as those under £1.2 million, will also struggle with profitability as they’re simply not making enough money. Often, in order to help these survive, there’ll be an element of subsidisation from the principal, such as not paying rent on the practice’s building, if they own it. Indeed, we’re already seeing the distressed sale of squat practices. As we’ve written before, scalable growth businesses will weather storms the best, as they’re willing to flex and innovate – something that’s sorely needed right now.
Though dental business used to be the equivalent of a 5K run – something that almost anyone could get up from the sofa and manage to muddle through – it’s changed almost overnight into a marathon. Here, the fittest and healthiest will triumph. We’re not exactly sure what will change, and how it will change (this is still coming out in the wash), but it’s clear that we’re heading into the next round of tough times.
This is our cue to be bolder than ever. Though demand may dip, supply – or the perceived availability of supply – will also shrink. And with NHS dentistry largely out of the game in terms of competition, and some private practices struggling, there’s still plenty of demand left to service. All you need to do is to set yourself up as well as you can.
This doesn’t just mean looking at things like marketing. Consider other pillars of your business, such as your finance function, too. Pre-pandemic, very few practices had an interest in anything financial, but you can no longer afford for this to be the case. If you’re still in a situation where you don’t understand your numbers, do get in touch with us; it’s not too late to learn, and knowledge, as they say, is power.
Furthermore, at a time of high expenditure, investing in an accountant might feel like another expense – but what if that accountant is able to save you thousands in tax? Taking a holistic view of your financial situation can markedly improve it.
With costs increasing and demand seemingly decreasing, it’s tempting to slash your outgoings and put your prices up, but this is a crude solution. By all means, look for opportunities to save money, but don’t cut into the crucial areas of opportunity and success; those things that feature in the outer layers of our abstraction model, such as strategy, and leadership and culture. Investing more in every area – not just with money, but also with time and mental ability – will ultimately lead to greater results.
And finally, bear in mind the Matthew Principle, which reasons that the more you have, the more you’ll receive (in the Bible, “For to every one who has will more be given, and he will have abundance; but from him who has not, even what he has will be taken away.”) Put simply, both underperformance and over-performance snowball, with those who are more productive, and delivering higher value, yielding far more. The more money you’re able to generate, the easier it’ll be to operate.
Though things may seem challenging now, the global smart money is still flooding into UK dentistry. The UK market is innovative but underdeveloped, signalling the potential for massive investor returns. Its practices simply need to hold their nerve, be bold, and set themselves up for success.
Perhaps you’re not quite where you want to be yet, but don’t lose heart; weak areas can also be seen as areas of opportunity. To gauge how well prepared you are, and what you might need to do next, get in touch.