Not too long ago, succeeding as a dentist required only good dentistry. Time could be focused on the day to day business of treating patients, with just a smattering of other ownership responsibilities.

Today, there’s a lot more to consider, from marketing and sales to leadership and financial management. To help me expand on this, imagine you’re hungry, and faced with a conveyor belt of sushi. In the past, dentists could pick one dish, take one bite, and throw the rest over their shoulder. They could feel safe in the knowledge that there was always another dish coming along.

Now, the gaps between those dishes are growing. Despite this, some dentists are still taking just one bite ­– and wondering why they’re hungry. Others are taking two bites. A small percentage have been eating the entire dish from day one.

To really “eat the sushi”, there are lots of things to look at in your business. When you’re just starting out, it’s fine to “Move fast and break things” (the team motto adopted by Facebook to encourage innovation). But as you become more established, you really do need to know what’s working, and what’s not.

For instance, what’s your return on marketing investment? What are your ADYs and staff costs? If you don’t know your numbers (and many practices don’t), the first priority is running a diagnostic session with Ross and myself very soon.

Improving your associate relationships

All of the elements I’ve mentioned above are important, but today, I want to focus on the relationship between owner and associate. In particular, creating an environment in which associates can earn more income for themselves.

These days, it’s hard for business owners. The split between owners and employees became stark in March 2020, as the pressures of Covid-19 arrived almost overnight. From then, operating a small business has only become tougher – with owners constantly being asked to pick up the check.

But associates don’t see this in the same way. They don’t have the same experience, so they can’t understand what you, as a business owner, have been through. It’s easy to resent those we think have “had it easier” (and trust me that this is a recurring personal battle…), but this does your associates a disservice. And ultimately, the business and yourself.

Instead, bring them into your world – speak to them openly, and help them understand what it’s like for you. Talk about the environment you’re creating, and how you can collaborate to generate income. This gives them the chance to become a great associate, and by having better conversations earlier, you’ll find yourself in a better position.

The myth of 50%

One of the biggest distorting factors in a dental business is the pay rate for associates. There’s a deeply entrenched idea that being successful as an associate means hitting the 50% mark. Around two years ago, I wrote one of our most popular blogs, exploring the manifold reasons why 40% is actually far better. In reality, some of the best associates I now know are at 38% ­– or even 30% – at great sites.

Those final three words hold the key here. A great site will be investing in its marketing, working hard to bring in patients and keep them for the long haul. It’ll have a good understanding of its financials and a keen eye on its patient journey. Fundamentally, it’ll be generating significantly more profit than its static, underinvesting competitors. As I’ve said before, it’s perfectly possible to win by taking 40% of a higher figure.

So, if you’re an associate and you find a practice today that’s blindly offering 50%, it may be too good to be true. Dig a little deeper. Ask how their team operates, and how much they invest in marketing. Then, if they have fantastic answers, and they’re a great practice, you can bite their hand off – but chances are, you’ll find that they don’t, and they’re not.

Large corporates have different priorities

An important note here about large corporates. If they’re backed by private equity, they’ll undoubtedly have different priorities, and it’s vital to be aware of this. Their strategy is to acquire EBITDA and revenue as cheaply as possible, by buying more practices. Some are better than others, but on the whole, large corporates like these aren’t looking for performance; they’re simply looking for maintenance. Their markers for success in a practice are much lower, or at least different.

This creates a challenge, because as the market changes, a maintenance level of management gives very little room to grow or leverage your way out of tight corners. For this reason, some loss-making corporates are considering charging their associates fees for marketing and operating costs. On paper, they may be willing to pay 45-50%, but in practice, associates will take the hit in a different way – one that’s likely to break the percentage-led dynamic entirely.

I spend a notable amount of my life on LinkedIn, and I know I’m not the first person to notice the gap or canyon between social media and reality. But I am still stunned by some of the content I see, which is at best misleading, and at worst – well, I don’t really want to say. However, if you put the time in, you can spot clues as to what is going on. Just as body language gives away what someone really means, business posts can illuminate at a deeper level. I remember years ago seeing the warning sign that a very large corporate was offering associate jobs at a £15 UDA rate. I knew, given what I know professionally, that every bit of dentistry done at that deal would be loss making.

I could see that this was wrong, but I could also see why: this owner was in the business of maintaining, so that they could buy more practices. As a move, it’s fine as a short-term loss leader, but only for so long. There’s always a risk that you’ll be caught standing when the music stops. And for associates, it’ll never be a recipe for success.

Bring out the microscope

This all leads me to one rather blunt conclusion. In a nutshell, it’s time to stop talking and get to work. Take a cold, hard look at your practice and whether it’s running at peak performance. If you’re doing something to haemorrhage cash, you’re not just shrinking your own bottom line – you’re also taking money out of the pockets of good people.

In today’s climate, being a practice owner isn’t an easy ride. If you’ve chosen to buy a business, you’ve worked hard to get here, so embrace the ride, have fun, and try to make it the best business it can possibly be. Or, if this just doesn’t chime with where you are, be a great associate – at a 35% practice.

If you’d like to learn more about our diagnostic service, get in touch.