Buying a practice – particularly your first – can be a little frightening. Well … downright terrifying, actually. It can be a bit isolating, too. You often find yourself alone, wandering around in your own head, bumping into one nightmare after another. You holler out, but only echoes return.
The good news is that you have friends – especially one friend who is frequently left out of your inner circle. In fact, he or she should be and can be, your very best friend.
Let’s look at the list. First, there is your accountant. Many can be a tremendous source of valuable information and someone to whom you can turn for explanations of tax and structural business strategies that you may not be aware of. However, don’t expect that they will do anything other than make suggestions and fill in gaps. They can’t make your practice successful. Only you – and maybe your best friend – can do that.
The same thing holds true for an attorney. They too can be a voice out there in the darkness, but once again, they are probably not going to make your practice more appealing to patients. Actually, you can do an entire practice purchase without the services of an attorney. That’s not to say you should, but you can.
How about a dental supply person? They can be a great friend. You will need supplies and maybe even some new equipment from time to time. It’s their job to make sure you have what you need and steer you toward ways to get it in a cost effective manner.
A good lab tech is worth their weight in titanium and can be a very good friend. You can expect to have a conversation about something or other with your lab person just about every week – sometimes more! Keep in mind, they often will have taken the technical CE courses you should have, but haven’t … yet. And then, of course, there is your transition consultant. Few friends are worth more than they are. It is important that you don’t think of them as simply the guy or gal who sold you your practice. The good ones make themselves available long after the transaction occurs, and they can be a huge source of information about both the industry as a whole and your particular geographic region. They are in the unique position of being able to feel the inner pulse of many different practices and generally can make many suggestions about how the heart of your practice should beat. Remember, their success is both directly and indirectly dependent on your success.
So, it’s not quite as lonely out there as it may seem, and we haven’t even begun to talk about your one very best friend in any dental transition – the seller.
Think about it. Who knows more about your soon-to-be patients than they do? Who knows the staff better? Who knows the community better? None of your other friends can even come close to knowing more about the truly important stuff about your practice better than the seller does. Most of what you buy when you purchase a dental practice is the goodwill the seller has established with the patients and the staff. Forget the equipment. You will probably replace it all at some point in your career. The goodwill – an intangible – is where the true value of the practice lies.
Yet, in many cases, it seems like the new buyer does everything they can to actually alienate their best friend. Worse, some buyers take this combative posture to the point where the seller actually becomes an enemy. This is a huge waste of marketing potential. Just because your seller steps away from your practice doesn’t mean they step away from the patients. They bump into them at the grocery store. They see them at sporting events. They have become personal friends with many of them and see them on the golf course or at dinner. And, whether you like it or not, some of their former patients – now your patients – will call them on the phone and ask for advice. Don’t think that actually happens? Wait and see.
We communicate with one another in multiple ways – verbally, with voice inflection, with pauses between what we say, with facial expression, with body language, with posture, with eye movements – many ways. When your seller meets any of your patients in any setting, you want the message they send with whatever method they send it, to be positive. All it takes is one tiny negative spore to spawn an entire colony of doubt in the subconscious of that patient. You can’t afford to let that happen. You want them out in the public acting like an auto-marketing machine!
Here is a blueprint, guaranteed to alienate your best friend (and if you are smart, you won’t follow it):
Try to Negotiate the Purchase Price
As long as it is within reasonable limits, trying to lower it is an exercise in poor focus. Sharp business people usually just glance at it. They are far more focused on what the net (after expenses and debt service) amount is to them– the cash flow (the EBITA, if you will) essentially the money they actually can put in their pocket (before taxes). That is the most important number to know in any investment – especially when a third party, like a bank, is willing to loan them the money and they don’t have to come out of their pocket to do it! Many dental buyers seem to look at the purchase price first, but the irony is that proposing a double-digit percentage reduction in the sale price increases the cash flow to a buyer by just a low single-digit percentage. All this really does is leave a sour taste in the seller’s mouth that patients are certain to smell on his breath.
Nickel-Dime the Seller
Say you’re not buying their accounts receivable. Not helping them collect that money or charging them a fee to do so will certainly irritate them. When funds due them come in, your staff (formerly their staff) has to adjust the patient records in every case, anyway. Don’t try to charge them for it. It’s their money. They sweated over it and spent time with it. They earned it. Taking part of it is a sure slap in the face. You’ll appreciate that more after you’ve been in practice longer.
Nitpick the Seller
Constant contradiction will ultimately cause trouble – subtle trouble, but trouble nonetheless. Trying to change every little thing during the transition could be that one tiny bit of negativity that takes root in the seller’s mind. There is no such thing as the perfect practice. They all have something wrong with them. You’re probably going to change many things during your term of control. And, guess what? The practice you end up with will still have something wrong with it. Worse, the pattern of nitpicking can lead to an even worse syndrome, Analysis Paralysis, which could easily mean you will never find the right practice for you.
Criticize the Seller’s Work
If you’ve been in dentistry for longer than a minute, you should know not to do this – and not for the reasons you would expect, like it being unethical. You don’t want to do this because you will soon find yourself treating that patient, and some patients simply can’t be treated properly. They are often easy to spot. They’re the ones with the worst dentistry because they’ve made it impossible for anyone to work on them.
That said, fillings do break and fall out. Porcelain does shatter. Decay does recur along crown margins. That’s dentistry. And herein lies one of the greatest marketing opportunities you will ever see. Spin any issues you see in the seller’s more recent work to the positive. Assure the patient that the seller did nothing wrong and that this kind of thing occurs frequently in dentistry. Then, fix it for them – for free or at least for a reduced fee, like for just the lab bill. The return on investment you will enjoy from this one simple act will far outweigh the return on any other marketing you will try – flyers, billboards, radio, TV, direct marketing – anything.
While the practice of dentistry certainly fulfils the simple mandate of providing needed services to patients, in the end it is a business. All businesses rely on a friend or two for help from time to time. Don’t overlook your most obvious friend. Keep the seller happy, and they will become the best friend you’ll ever have.