By Ross Martin, Accountancy Director at Hive Business
Being a good clinician used to be enough to run a commercially successful dental practice. With entry costs regularly exceeding £1m, three other skill sets are now needed: marketing, finance and leadership.
Fortunate owners might find they can do one of these specialisms, but not all three. Yet many or most owners keep on trying to do all three, which inevitably plays out in wasteful behaviour.
I don’t blame them for doing it, but it’s self-evident that someone who is good at dentistry and finance won’t be good at taking risks and acting on incomplete information like good leaders do.
This is about personality type. We all have our strengths and weaknesses. Owners who enjoy marketing might be good at revenue growth. Even so, without financial awareness all their hard work is pointless. I know owners who would be better off doing nothing and renting out their freehold.
Normally businesses outside of dentistry with, say, £2m revenue have a skilled board of directors to avoid such things. When you have a board well stocked in expertise across different skill sets it checks and balances your weaknesses and blind spots.
The best decisions happen when people disagree and hold each other to account. The more you separate the roles into separate people, the easier it is for this to happen. There’s no sense in pretending to be good at something if you’re not — you don’t need to.
Yet dentists often tell us they are “really good at websites”. What does that mean? I’m talking about a different level of expertise, right down to the personality type, which goes beyond phoning up BT and negotiating 10% off the phone bill.
We certainly see that talent in marketing and finance are mutually exclusive traits in our own team. Our accountants and marketers look and behave differently. A finance person can understand a business model and deliver profitable practices with meaningful mass, and often this is about auditing, so that no area of the business leaks the hard-earned profits of the rest of the organisation.
This kind of work is pervasive and often doesn’t produce flamboyant dental practices covered in glass, but those aren’t necessarily the ones with the best balance sheets. They may look successful but it’s a mirage.
Mirages don’t happen in companies where there is a healthy tension on the board between finance and branding. Everything in life is a trade off, and you have to ask yourself what you want, the appearance of wealth or actual wealth.
If you’re not sure which one you’re engaged in at the moment, book a diagnostic day with us. Call 01872 300232 or email [email protected].
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