It’s asserted that the psychological pain of losing is about twice as powerful as the pleasure of gaining. This cognitive bias known as loss aversion, has become acutely obvious among dental practice owners over the past six months, many of which have been locked in fight, flight or freeze responses.
It’s been the case among other types of business too. At Hive we’ve felt it, and we’ve seen resilience in our team members who have responded to a sense of urgency the likes of which we have never experienced before. People have absorbed masses of information to make decisions under pressure without all of the facts they would usually rely on.
Dental practices, very quickly, have had to adapt and shut down, get a grip on their cashflows, and then focus on preparing to reopen. I’ve seen lots of good things coming out of this. Innovation has multiplied. At Hive we went from working as a group in offices to managing a team remotely, dealing with compliance affairs for dentists but also being a support for them in a more holistic sense.
Practices we support have managed to reopen since June, some, incredibly, at 130% of their usual turnover, and we’ve realised via doing their accounts that they are doing this on a lower than usual staff base. This is hard evidence that people can cope with the extra demand (demand for dentistry has remained, while supply has been squeezed thanks to cuts in NHS and some private provision).
It’s obvious that you can’t live your life in survival mode. You’d burn out through chronic stress. But a question I’ve been pondering is how can you keep behaving in the dynamic way that you have been for the past six months once the urgency and chaos has subsided? That passion and focus was sparked by loss aversion, and your natural reaction was to grab on to what you had for grim death. Yet you could have so much more if you integrated this stuff into your routine behaviour.
Maybe that’s impossible because you need an authentic experience of desperation to produce the conditions for more innovation, illustrated in the way technological innovation accelerates in wars. You need to really feel the fear of loss. But Hive can offer a special level of support to dental practice owners here by putting structure around these opportunities, before and after the emergency.
Many practice owners and associates were suddenly motivated to get their finances in order because of Covid. I have the privileged position of seeing where people can save money via a reorganisation of their finances, although it doesn’t necessarily follow that when I tell them they will trust me. But when I frame it as a potential loss perhaps it becomes easier for them to act. If I told you I was going to take £30k off you unless you did x, y and z, would it focus your mind?
I’m trying to describe the fundamental challenge when working as a wealth advisor: the difference in perception of what an emergency is. Many practices are open and functioning again today. It’s been tough but the patients are there, and so the focus of owners is quite rightly elsewhere, but that doesn’t change the fact that they’re haemorrhaging, say, £40k in tax when they needn’t be, and that we’re heading into a big recession. If you want a reality check, whether or not you feel you need one, we’re here to help.