The Right Personal Choice

David Burch

They say one of the most difficult work positions is private business ownership. The amazing thing is that over 75% of your peers will do exactly that in the next five years. Most of the business owners that I know outside of the Dental industry have significant business training and many have accumulated Masters in Business Administration degrees. But you may be surprised to learn that less than 5% of dentists actually have any significant business training outside of lunch and learns from lawyers, accountants, equipment sales reps and grumpy old bankers like myself. So what are all of you doing as entrepreneurs?

The answer? Dentists are succeeding against all practical odds and at a very high level.

The publisher and our marketing team may have picked the wrong guy for this article. Statistics show that your business acumen is not as strong as you’d like it to be and my writing skills stopped between 3rd and 4th grade when for some reason I did not figure out how to write cursive or disseminate between an adjective and a noun. I still have no idea when to put an “i” before an “e” even though a nursery rhyme was supplied to help me. Like you, I have found success against the odds by piecing together education and learning from friends & mentors and from the daily successes and failures that occur in my life. What I would like to deliver is some high-level direction that I have learned over the last 11 years from dentists, mentors & friends.

If there is one thing that I can guarantee for most of you is that after graduation you will have a job. I know that seems like a stretch but I am willing to go out on a limb. Most of you will have a job for only a short while, and then you will be forced to make a few huge decisions that will direct the rest of your life. The main business questions are these:

Will I continue to associate?
Should I start a practice from scratch?
Would acquiring a practice from a retiring Dentist make the most sense?
What about a partnership? Would that help me meet my personal and professional goals?
Should I sell everything I own and travel the world as a gypsy offering free dental work?

Although the thought of being a gypsy has some attraction, very few will take that option. That means that most of you will be making a strategic (MBA word) decision about business ownership.
It is my opinion that the key factors when making this decision have more to do with personality than they do with the economics of the event. Thinking risk versus reward and making a talent assessment will take you down the road to a decision. Here are a few key simple questions that can make a world of difference:

What do you want?
What can you do?
What can’t you do?

These questions seem simple but are the key to finding peace at work. All of us have limits to our personal abilities. We all should look to push ourselves, but you do not want to break yourself down.
Let’s look at a few positive and negative aspects of your career options. Here are some points that should give you some footing to begin an analysis of what will work for you. These may reconfigure your current thought processes, or they may affirm your direction.

Associating Positives

  • Opportunity to practice procedures and increase hand speed.
  • Work with patients and fine-tune communication and people skills.
  • Earn good income without the stress and risk of owning and managing your own practice.
  • Gain an understanding of the business aspects of a practice.
  • Provide an opportunity to work in different offices to build best practices.
  • Reduce the risk of an unsuccessful venture.
  • Income opportunity as an associate can be as good as or even better than owning.

Associating Issues

  • Patients may not connect with your style and personality.
  • You can pick up bad operating habits or practice techniques.
  • You may work long hours, building value for the practice owner and not yourself.
  • You may only be paid a percentage of the production and collections of the practice.
  • You may be asked to do the harder or less attractive procedures.
  • Working in multiple practices can yield a higher income.
  • No control of staff or patient selection.
  • Some practices limit management training.
  • Not involved in the decision making process.
  • Restrictive covenant.

Starting From Scratch Positives

  • Build a practice the way you want to build it in the space you like the most.
  • New equipment and furniture that reflects your personal style.
  • Hire and train your own staff using your business and service philosophies.
  • You are the decision maker.
  • You ultimately get to reap the rewards of your hard work with 100% of profits.
  • Your work produces results that create value in a business that you own.
  • You are responsible for the growth of the practice.
  • You get the opportunity to learn and understand how to grow a practice from scratch.
  • Patient selection matches your personality strengths and weaknesses.

Starting From Scratch Issues

  • Stress of managing and running an office.
  • You have to deal with the growing pains and problems.
  • Staffing, billing, insurance, benefits, pay plans, scheduling – to name a few.
  • You will have to continue as an associate until the practice can support itself.
  • In the beginning, income will be lower than when you were an associate.
  • You are the owner, so the success of the practice is on your shoulders.
  • You need to possess the intellectual capital and emotional strength to make hard decisions.
  • You are responsible for all marketing and advertising of the practice.
  • You must address all human resource responsibilities and problems.
  • The risk of failure.

Practice Acquisition Positives

  • Have a patient base already established.
  • Staff understands job descriptions and is already trained.
  • Staff maintains relationships with patients.
  • Guidance available with individual needs and care.
  • Selling doctor may be willing to assist you with transition.
  • Immediate income, enabling you to pay yourself immediately.
  • Your patient base is mature.
  • The practice has been marketed and maintains a consistent flow of new patients.
  • Established insurance relationships.

Practice Acquisition Issues

  • You are buying someone else’s philosophy, treatment planning and systems.
  • Possible loss of patients in transition.
  • Staffing conflicts with new owner.
  • Bad habits of patients and staff from old owner.
  • The number of active patients may be unclear.
  • Revenue may not have been accurately represented or projections are not accurate.
  • Existing staff is over-paid due to time in the practice.
  • Staff may resent new owner and leave the practice.
  • Equipment and office may be old and worn out.

Partner Buy-in Positives

  • Earn salary plus net income and hygiene production depending on partnership.
  • Involved in decision-making process regarding business planning.
  • Ownership.
  • In control of your treatment planning.
  • You will be involved in the decisions regarding staffing.
  • You are buying into an established practice which provides stability.
  • You already know how the practice is performing before you get in.
  • You already have a good idea what your income will be.
  • Additional expertise from a partner and future mentor.
  • Learn best business practices from an experienced and successful owner.

Partner Buy-in Issues

  • Does your opinion matter?
  • How well do you know your partner? Will the skeletons come out on the second date?
  • Conflicts with the way the business should be run.
  • Two bosses managing staff; different styles can create conflict with team.
  • Partnership agreements usually favor longer term owners.
  • Different clinical philosophy and treatment planning.
  • Sale prices are at times higher.
  • Approval from lender more difficult (no first position on asset available).
  • Partnerships are historically difficult to manage and maintain.

Take the time to match yourself up to the opportunities and issues of each destination. A self assessment of your skills and what makes you comfortable will provide great value as you start to make future business decisions. I would recommend having several people participate in your assessment because sometimes you may view your talents slightly different than what they actually are.

The coming years will be some of the most exciting that you will have in your career. Exploring all of your options and the possibility of taking a few enormous risks will provide rewards that are similar to completing Dental school and may only be matched in the future by getting married and starting a family. Take your time and be true to yourself and know that if you have a good plan, good things will happen. ■

David Burch (david.burch@bankofamerica.com) is a senior vice president at Banc of America Practice Solutions the nation’s leading provider of financing to Dentists. David has over 11 years of experience financing dental practices. He enjoys managing his team to lofty goals as well as helping students and dentists in general find the tools that will help them navigate the business world of dentistry.
For more information about Banc of America Practice Solutions™ financial products and services, call 1.800.491.3623 and mention priority code ADD0808A. You may also review our products or schedule an appointment online at www.bankofamerica.com/practicesolutions.
 
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