Dentaltown September 2013 - (Page 16)

howard speaks column » Getting Poised for Growth by Howard Farran, DDS, MBA, Publisher, Dentaltown Magazine Humans are social animals. Social animals exist in tribes, and for the survival of every tribe you need order. For there to be order, there needs to be control. Social animals are hard wired for control, and because of this a lot of businesses become unsuccessful because the owner or CEO abhors delegation and feels the strong need to control everything. How does the CEO of a Fortune 500 company run her operation of 100,000 employees if she doesn’t delegate anything? It would be impossible! The leaders who rise to the top don’t fear risk or delegation - they retain and attract quality key people, give them responsibilities and then get out of their way. Success is counterintuitive to how humans operate. Another great example is how most dentists imagine the way they are going to retire and sell their practices at age 65. At age 55 they start thinking, “Well, I’m going to retire in 10 years, so the last thing I’m going to do with this practice is invest in any new equipment or new technologies or implement any new techniques into my repertoire.” They’re content with milking the cow dry and refuse to feed it anymore oats, grass, grain or water. But here’s the amusing part: when it comes time for that dentist to sell her practice, she thinks it is going to sell for some huge amount, but it’s not going to happen. Nothing in the practice has been updated, new patients have dwindled to zero and it has become a business that nobody in their right mind would purchase at the price in the dentist’s head. You have to realize the final 10 years that you are in practice are the most important years to double down on your business bet! In this time you can’t be milking your practice of what it’s currently worth only to sell it for pennies on the dollar. You need to modernize your practice. You need to move it from a lousy 1,000 square foot rental space on the third floor of a medical building to a premium 4,000 square foot building right out on Main Street with a huge sign. This is the time for you to upgrade from 2D X-rays to 3D cone beam computed tomography! This is the time to invest in CAD/CAM! In dentistry the only dogs that can’t learn new tricks are dead dogs! If your practice is neglected because you milked it for the last 10 years, you will end up with an illiquid asset. You have to get your business poised for growth. You can’t sell a sinking ship. Just like with the sale of a home, when a window breaks, you don’t say, “Let’s just wait until two other windows break and then we’ll fix it.” No way. Here’s another housing example tied to liquidity: a three bedroom, two bath house in Phoenix, Arizona, can easily sell within 30 days, but a 10 room house with an eight-car garage and a tennis court and Olympic-sized pool can sit there for three years because it is just not a liquid asset. Nobody wants it or can afford it. Along these same lines: the corner commercial lot on the corner of 1st and Main, you can sell in a heartbeat for premium price. But if you go just 300 yards down the street either way, you might be looking at half the price and, worse, you might never be able to sell it. I mean there are intersections in Phoenix that are still vacant from when I moved here 25 years ago because they just weren’t perfect. This is why location is key! So if you’re renting in a medical building or you aren’t set up on a great location, you need to be poised to sell, so get moving! Here’s something else you need to think about if you’re considering retiring and selling your practice in the next 10 years: interest rates on CDs right now are at two percent, so that means for every million dollars in cash you have in the bank, in government bonds or CDs, you are going to make $20,000. Let’s say the average dentist makes $140,000 dollars a year. That means they would have to have $7 million in cash in a two percent government bond or CD at Bank of America or Chase to maintain their income. That is just not going to happen. I don’t know of too many dentists that can walk away at 65, sell their practice and have $7 million in cash earning two percent. If you’re a renter and you sell your practice for $400,000, that’s it. That’s all you get. But if you owned continued on page 18 16 SEPTEMBER 2013 » dentaltown.com http://www.dentaltown.com

Table of Contents for the Digital Edition of Dentaltown September 2013

Howard Speaks: Getting Poised for Growth
Professional Courtesy: Say Hello to Great Service
Second Opinion: Why Won’t My Practice Sell?
Advice Regarding #8 RCT and Large Apex
Patients Who Refuse Perio Treatment
Corporate Profile: Sesame Communications
Office Visit: Building Bridges in Dentistry
Enhancing a Smile with Cosmetic Dentistry in the New Economy
Top 10 Questions Dentists Ask When Buying or Selling a Practice
Women’s Time in Dentistry Has Come
The Benefit of Associate Agreements in Dental Practice Sales
Retirement Transition: “Mr.” Instead of “Dr.”, What Do I Do Now?
Paperless is NOT the New Black
Simple Safe Gingivectomy Around Implants Prior to Impression
Laser-Assisted Peri-Implantitis Procedure
In This Issue: Close Your Mouth
Perio Reports
Profile in Oral Health: Nose Breathing for Good Health, Fitness and Correct Craniofacial Development

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