"Good luck is when opportunity meets preparation, while bad luck is when lack of preparation meets reality."
Every blog and podcast I post is inspired. Often at the side of the road. Often after a meeting with a friend. My post today is inspired by a 5 am text...
"I can't sleep" says my friend
Since I am usually up at this time, I replied.
"Welcome to my world. Were you up early because you had to pee like me? The joys of getting old!"
"Nope. I'm stressing about work. Starting to hate this whole thing. Seems like I am always bleeding money! Equipment I bought just recently is breaking and needing to be replaced. A sterilizer (cavitron, handpiece, xray, panoramic, sensor, endo motor, computer, software) should not break after only 10 years!!"
"I can help you with that...."
Learning Business - why do corporations want you to work for them?
As an experienced dental practice and business evaluator I have heard this many times over my career. I have learned MUCH MORE over the last decade as an investor. I have co-owned a business, I understand 'bleeding money'.
If you want to see what bleeding money really feels like, invest several hundred thousand into a bakery. Imagine the hours of a baker working from 3am until 5pm then working on the accounting and management. Imagine being there 6 days a week to bake and on the "days off" heading to the store and working with suppliers and estimating what product you need for the week (and if you get it wrong, it expires and tastes bad). Imagine a day where a blizzard hits and your entire inventory is now a donation. Imagine after working the 80+ hour work weeks you get to PAY/BLEED $2000 every month of your other household income for the privilege of doing this...
And then the 2 year old commercial fridge quits working....and then you shut it down.
That's bleeding money.
What if I gave you $1,000,000?
-You will not get the gift for about 5-7 years.
-you must at minimum maintain the value
-I will pay you a small percentage to maintain the value (5 - 15%). You also have the option to be the full time manager and can pay yourself according to the rise in the investment and the type of work you do to manage the money. It is actually possible to pay yourself $200K - $400K a year while you manage this money!
The super bonus is the end value will ALSO be reflective of this hard work. Maybe you can get paid AND make the end value 50% higher!
-You are committed and can't walk away. If you do - you may be responsible for any difference in value.
I will ALSO help you with my 35 years experience of managing money and enjoying 15-20% returns.
In my entire life nobody has ever offered this gift to me. Some people consider the gift a curse and give it to someone else to manage....others take the gift and struggle and eventually do ok at it....there are a few that are incredible mentors, learn, take advice, continue to improve and grow the $1M to major multiples.....
This is why the people who understand the "business" want you to work for them. The success rate of Dental Clinics as a business is in the high 90 percentile....the average "bakery" is closed within a few short years. Which business would you rather own?
FYI - the bakery I co-owned could have made it. My partner at the time did NOT have the same vision as I did on running the operation.
Divorce is sometimes a part of life you didn't expect when you make certain investments....
The bigger the investment, the bigger the risk...the bigger the return
Many business owners fail to recognize the full value of their business until many years into ownership. Just like a mortgage on a house - you have ownership and a payment to service. Eventually you gain equity and over time full ownership. Right around the time you own it, you have to replace a water heater, the central heating system, the entire roof.....But you have spent many years slaving to service that debt. you paid up to 50% of your take home earning to have this investment paid in 25-30 years.....
The business you own is similar. The $1,000,000 I gave you will be yours to keep - but you will have to work for it. If you do it right, and apply good business principals it could be worth 50% more and you may even have paid yourself dividends....
The option is to let me give you the $1,000,000 and you can just work for me. Ill take care of the business end. Manage the profit. Negotiate with suppliers and keep the business running tight. I get to keep ALL the returns, you just get paid well to do the hard part.
I will incorporate efficiencies - TIMEfactors that will help the business see more patients in less time. I will invest in the marketing and patient experience that will keep those chairs full! The fee guide is fantastic since its paying more or less a fixed rate on the service. In other words if more dentistry occurs in the same amount of time - my cost to supply this is capped as I pay by the hour, or by the service (40%). If I can maintain my support labour at 25% of overhead and keep the rent paid, electric and heat, supplies, lab at 20% then I get 15% - so my $1M pays me $150,000 a year. I'll buy 10 of those please.
As an investor that is a safer and better bet than many other investments. The security is a physical business that will also continue to thrive and grow. I control it, and I'm good at what I do! Using business principals, I will actually double the production while keeping my fixed costs fixed. Soon I have a 20% a year return on my money PLUS the 5-8% from the change in value of my house....
Get it yet?
We are in this together
The beautiful thing is the ABUNDANCE of help that is available to get you in a position to realize the profit and lifestyle.
A few of the reps coming to your door every week to broker cotton rolls for example are very well versed on how to get a clinic running efficiently. For an ever decreasing percentage of product you need to buy anyways
- the opportunity they may offer can be the difference in whether you get a full night sleep and feel secure in your investment.
A race to the bottom
In an upcoming blog I will discuss the current race to the bottom!
If our industry doesn't start to grasp the concept of profit relative to service - healthcare will suffer. Without profit there is no incentive to become better. Without profit there is little incentive to work harder, to be better. If we don't pay attention to the "business" of dentistry.....someone else will do it and we will all be racing to the bottom.
Eliyahu Goldratt quoted "Good luck is when opportunity meets preparation, when bad luck is when lack of preparation meets reality".
His name came to me only as I was searching for a quote on the topic today. What I came across is a respected businessman - one that discusses efficiency in factories. The same principals I have been professing for years TIMEfactors!! LABOUR is EVERYTHING in creating a successful small business of almost any type.
Let's work together to keep our businesses profitable, succeeding and from ever racing to the bottom.