#213 3 Revenue Benchmarks for Your Dental Office

📥Resource Download: https://go.smcnational.com/resources/dental-practice-expansion-guide
🚀Check out our new Dental AI Receptionist! It schedules better than humans:  https://bit.ly/48RHMt2
🚀Grow Your Practice with Cherry Payment Plans: https://bit.ly/4p48qoC
➖➖➖➖
In this episode of Dental Marketing Theory, Gary Bird and Perrin DesPortes break down dental practice growth benchmarks, explaining how dentists can grow revenue faster than inflation, outperform industry averages, and increase profitability through organic growth. Learn the key metrics for scaling a dental practice, including revenue per chair hour, EBITDA margins, new patient acquisition, case acceptance, and strategies for expanding from a single practice to a multi-location dental group. If you're a dentist, practice owner, or dental entrepreneur looking to increase dental practice revenue, gain market share, and build a scalable group practice, this episode covers the frameworks and growth strategies you need.

Thinking about building or scaling a group practice?

Download Perrin’s “Top 20 Mistakes People Make in Building a Group Practice” and register for his upcoming 3-part video series here:                                                    👉 https://grouppractice.coach

Connect with our Guest Here ⤵️
Website: https://thenextlevelexecutive.com/

Connect with our Host, Gary Bird, Here ⤵️
SMC: https://bit.ly/4jFhb5T
Personal: https://bit.ly/3SCEQZy

Want the strategies we talk about delivered to your inbox? Subscribe to Dental Marketing Digest: https://hubs.la/Q0436vZG0

➖➖➖➖
Dental Marketing Theory gives dentists real strategies to grow smarter and scale faster. Hosted by Gary Bird, founder of SMC — recently recognized as the best dental marketing company — the show features candid conversations with top dental leaders about marketing, operations, and what’s actually working in today’s practices. If you want predictable, profitable growth, this is your podcast.

➡️Want to see how SMC can help you grow?
📅Book a call here:➡️https://smcnational.com

🎙️ Check out our 3 Dental Podcasts ➡️ https://smcnational.com/podcasts/
📅 Upcoming Events ➡️https://smcnational.com/events

Transcript

SPEAKER_01 0:00

A negative revenue number can be perfectly okay if it's intentional and if it yields a higher dollar of income for the the business owner. If your business isn't growing three to four percent per year, you're not even treading water. While it might be a number that's in the black, technically it's greater than what you did last year. It's challenging because, you know, the catalyst that is inflation eat up all of your revenue gains. And the likelihood is that it did. Organic growth is within the four walls. It's what we did in each individual practice over the same time period.

SPEAKER_00 0:39

Welcome back to another episode of Dental Marketing Theory. I'm your host, Gary Byrd. I'm the owner of SMC National, where we help offices just like yours level the playing field against the big guys out there so you can grow the way that you want. But you can't grow if you're not beating inflation and you're not growing faster than the average rate of the dental industry. Today I have my friend Perrin, who's the CEO at the next level executive, and he's going to dive deep into how to create benchmarks for revenue growth and how to make sure that you set yourself up for the next stage in life as you expand your practice to either multi-location or multi-doctors. We go deep in the weeds. I promise you, this will challenge the way that you think and will actually give you some frameworks to help you figure out what the next step in your practice is. This is going to be super helpful to you. Stay tuned. All right. This is going to be a good one, guys. We got the one, the only Perrin. If you don't know Perrin, then you probably haven't been in dental for very long. Perrin has an amazing mind when it comes to helping practices grow the way that they want. And he tackles it. I'm top a funnel of what I usually explain. Is like, I can help you figure out at the top what's going on. But Perrin goes deep, deep, deep into the numbers, and he has all the frameworks that you could humanly possibly need to grow your practice. And he has a great group that he helps people actually make it happen. I've seen him do it over and over and over again over the years. And I love working with him. I love working with his clients because it makes my job super easy. Like all I'm doing is jumping gas on the fire. So, Perrin, I am super excited to talk with you today. And the thing that really sparked this, me wanting to bring you on today was I I you you made a comment one time. You said your dental practice has to be growing faster than the rate of inflation for you to actually be growing. And I started thinking about that because inflation's can be pretty bad in some, especially in some markets, it's even worse than others because you're factoring in you know all kinds of things into that number. And so my wheels really started spinning like, man, you gotta, you gotta really be growing to stay ahead of what the economy's doing. And you were gracious enough to help us build a whole framework around that. So if anybody, if you like listening or watching us, great. If you want a framework that you can actually go through and read, we have that right down below. But Perrin, could you start by just explaining what that means? Like you your office has to be growing faster than inflation.

SPEAKER_01 3:11

Gary, it's it's great to be with you again, first and foremost. And and I always enjoy our conversations, whether it's over a cup of coffee at the water cooler at a conference or something, or in a more uh, I guess this is a formal setting over over a video. But you know, look, all of us are business owners. We're all entrepreneurs at heart, and we all uh are subject to falling into the trap of sales cover sins, right? Okay, if I'm just growing the revenue in my business, I'm I'm I'm doing good, right? And maybe oftentimes not. What I find is that there are a lot of people that do grow revenue in their business, but they're not really connected to what that revenue number should be, and they don't really think about how to break down the revenue number to or the revenue number into components to achieve it. So when we when they go through a strategic planning session or goal setting session or vision setting or whatever you want to call it at the beginning of every year, they slap a number on the board, they rally their team around it, and and then most oftentimes they only re-evaluate it on the 364th day to see if they've actually achieved it, right? So I think let's dig in, let's first and foremost dig into a couple of revenue principles that some of your audience can hopefully think about and maybe more effectively relate to when they start judging their own top line performance. And and you touched on part of it, right? So we all are depending on when somebody's watching this or reading the document, there we're all subject to a varying rate of inflation. Um, the cost of goods and services going up over period over period, usually annually. Inflation's kind of the silent killer because it erodes buying power. So the first thing would be you know, when we think about revenue growth, did you post a positive number over the same period last, you know, over the last year? Were you up or were you down in revenue?

SPEAKER_00 5:21

So just total revenue. So maybe let's say so let's say that in 2024 I did a million dollars. So in this year I did $1.1 million.

SPEAKER_01 5:30

Right. Well, uh up 10% in revenue. That and let's say that you would want to grow 10% again this year. So, you know, end up at $1.21 million, so $110,000 in revenue. Well, all right, well, is that a good number? Is that the right number? Am I connected to how that how I can influence that number? The first thing is if your revenue number year over year is negative in the red, meaning your business posted less revenue this year than it did the prior year, that may be okay. All right. So stop the presses, right? Wait, wait, wait a minute. You know, you just said sales cover sins, and and my revenue's down year over year. Well, if you made a lot of changes in your business, maybe quit taking certain insurance plans or dropped a day a week or something like that, you may intentionally host a negative revenue number.

SPEAKER_00 6:29

So instead of going, so so 2024, I did a million and then 2025, I did 95,000.

SPEAKER_01 6:35

Now, so if you dropped revenue 10%, that may be a good thing if your cost structure dropped at a greater rate than your revenue number.

SPEAKER_00 6:46

Put a different way. This and Dennis and Dennis love this. So this is when you talk about optimizing, Dennis love optimizing. They love, like, I'll have a conversation with a doctor, and they're like, I want to grow and I want to spend less on marketing and less on team members. And I'm like, you're not looking, that's a different kind of growth that's growing in a different way.

SPEAKER_01 7:07

So that's right. But it it may be that we want to literally shrink our business in some way, shape, manner, or form and take home more income. We want to work less time or maybe do fewer higher value cases than a volume type of an equation. We want to have fewer staff necessary to support those efforts, maybe less in marketing, who knows? But it can be a negative revenue number, it can be perfectly okay if it's intentional and if it yields a higher dollar of income for the business owner. So that's that's the first thing. We don't see that a lot, but it is one way to think about it. It's it you know, it's think of it as kind of quality over quantity in a roundabout kind of a way. All right.

SPEAKER_00 8:00

But let's go back so, real quick before we go dead dive into that, because I'm interested in this kind of growth or this kind of optimizing, is this is it, can is that something people can do long term? Because I've always been of the impression if you're not growing, you're dying. And so I've optimized and done this to my business, but then I had to quickly turn around and like, okay, now we need to grow again because the business just naturally dies, right? Businesses just naturally die if you don't do anything.

SPEAKER_01 8:27

Uh it it it can. So I think your your question is really around like what's the future horizon and the competitive advantage or the competitive strategy of the business. Okay.

SPEAKER_00 8:39

So am I crazy or is there other are there people out there that are optimizing and they just kind of bolt down and they do that for 20 years?

SPEAKER_01 8:46

So it could be that you want to run more of a boutique type of a practice versus I'm hasn't used the word volume type of a practice, but you know, do higher value cases on fewer patients. And if you think yours is your local marketplace is adaptable or in need of that service, then it certainly can be a higher quality of life for the owner and the operator with greater simplicity. And if it's a true niche market that there is an abundance of need in your market and fewer competitors, this can be akin to what's known as a blue ocean strategy. Not not competing in a high volume environment, but carving out a niche where competitors don't exist and you are an in of one. All right. So if it's a matter of I've only got two or three years till retirement and I'm just gonna I'll transition the business when and where I want to, my retirement is secure, and I just want to work on my friends and family, so to speak, who are patients and do or do do fewer higher value cases, then maybe if it's a short-term horizon, you don't really care about the future competitive strategy. But on the other hand, if this is something that leads you to look at the context of the business dramatically differently and say, I wanna, I wanna I wanna get myself out of the competitive rat race and I want to niche down, as some people say, it can be a great, great strategy. Um awesome.

SPEAKER_00 10:12

Okay, so this is a this is a viable option if you do if you do it.

SPEAKER_01 10:16

I mean, you need to give it some thought and run some projections ahead of time, obviously, and and certainly test your thesis. But a negative revenue, going back to our original premise, our a negative revenue number is not the end of the earth in some instances. In most instances, it is simply because people end up with a negative revenue number that they didn't plan on or intend on, and they certainly did not adjust their cost structure accordingly. So let's let's go back to growing revenue and how we should think about that in the context of like what a percentage increase actually means. And what I've found through the years is that people do operate on if that sales cover sins. More is better. And I'm I'm just, you know, we should grow 10% this year because we grew 10% last year. All right. And that's that's not a great way of being a business strategist. You may have succeeded in that in times in the past, but in today's world, and I think you'd probably agree with me, as would most of your audience, Gary, that easy wins are harder to come by right now. There's no low-hanging fruit, and you cannot fall out of bed and rely on a rising tide to lift all boats. You've got to manufacture wins.

SPEAKER_00 11:38

Yeah, and I and the other thing I want to call out too, there's a huge difference between manufacturing wins. Let's say you're doing your brand new practice, you did $500,000 in in revenue the first year, you're probably gonna grow in year two, like just by getting out of bed and just showing up. But when you're at 2 million and you want to get to 3 million or 3 million to 5 million, you're that's it doesn't work that way. Like it the things that got you to where you are today aren't gonna get you to where you want to go tomorrow.

SPEAKER_01 12:06

An evolving business has to be intentionally evolving, and that has to be at the behest of the business owner. And and we all got it, you know, we should all operate with a you know a growth-minded and and entrepreneurial mindset at the core for sure. So let's go back to talking about just the revenue numbers for a second. And and you know, we need to be mindful of what we're forecasting and how we are intentional about creating the fulfillment of what that forecast is. So you mentioned uh inflation at the onset, and I would tell you that you know, if you're if your business isn't growing three to four percent per year, you're not even treading water.

SPEAKER_00 12:55

So while that number Yeah, you're you're so you're so so just so we're on the same page. So if you if you're at a hundred uh a million dollars and you grew to uh in 2024 and you grew to uh 1.03, so 1 million 30,000, you grew by 3% in 2025, you probably actually shrunk because inflation's greater than that.

SPEAKER_01 13:18

So so it while it might be a number that's in the black, technically it's greater than what you did last year, it's challenging because did the, you know, did did the catalyst that is inflation eat up all of your revenue gains? And the likelihood is that it did. All right. So that's that's the first number. We need to be growing at a faster rate than inflation, or else we're giving up dollars, we're giving back dollars to the overall economy, essentially, and we're losing purchasing power along the way. The second thing I would tell you would be that you need to be mindful of what the industry itself is forecasted to grow. And dentistry historically has been a very steady eddy business. It's evolutionary, you know, in nature by by the clinical terms as well as by revenue growth terms. And most of the analysts that follow the industry are projecting industry growth in in that 3 to 5% range. So slightly faster than inflation, slightly. And when we think about growing a business to stick with your example, you know, you did a million dollars last year, you do a million fifty thousand this year, it's a 5% revenue growth. Is that a number that we should celebrate, thump our chests, declare victory, and go home? Any of those aspects? And I would say in the world that I work in, which is the emerging group practice space, I would say that's not really cause for celebration. Simply because the rest of the industry is growing at that same rate. So 5% is the kind of the standard rate for the give or take. When an analyst, a company publishes their analysis of the profession of dentistry and they give a pro forma projection on revenue growth, the disclaimer is, you know, we're forecasting this to be a point to two points faster than the rate of inflation. So if inflation's 3%, our number, you know, industry aggregates probably about 5%. Now that's the entire industry. So that's traditional solo practices, that is emerging groups, that is enterprise-level private equity-backed DSOs, that's specialists, that's generalists, that's everybody, right? And so when we think about growing at the industry rate, while you're technically ahead of the rate of inflation, I can make a more than academic case that you're not gaining any ground on any of your competitors. You're just running alongside them. So this is this is where we really get into the revenue number now. Now, now that you and I have talked about some of the disclaimers and some of what the floor looks like and how to rationalize some of this, even though it's positive. What I would tell you, and what I tell the people in my program, we talk about projecting revenue, is a couple of things. One, again, I work with a lot of emerging group practices. So these are people who have a successful practice, they've achieved practice mastery, they do a lot of complicated clinical dentistry and they have sound operational processes and systems and things like that, and they start to wonder what's next. And usually what's next is either bringing in a partner or and or adding an additional location or maybe more than one. So when we go from one million dollar practice to two million dollar practices, we just grew by a hundred percent, right? Well, that's technically true, but we bought that additional revenue growth. We need to look at revenue growth in in an emerging group or adding locations. We need to look at it differently from MA activity, meaning acquisitions or de novos to a degree, like you mentioned before, versus what's known as organic growth. Organic growth is within the four walls. It's what we did in each individual practice over the same time period. And when we start looking at organic growth numbers, these need to be, in my opinion, in excess of industry averages. So when we look at, let's just go back to our one location million dollar practice, when we say that the the industry is growing at 55% per year, and if we go from a million in revenue to a million in 50, that's 5%, that's industry average. Again, in my opinion, that's not really a lot to celebrate. When we go from a million to 1.1 million, we grew 10%. That 10% revenue growth number is five points faster than industry average. And what it means is that we are taking market share from a competitor. All right. Now this this is growth not through acquisition of additional four walls, but actually either new patients adopting market share. And this is playing to win. And I think this is what you really want to get into in the meat of this. Yeah.

SPEAKER_00 19:15

You know, uh you know, ABC market, there's there's uh 200 new patients every month that are created. There's only so many new patients, right? And you're grabbing 30 of those, which means your competition is not getting those 30 new patients.

SPEAKER_01 19:32

Yeah. Essentially, you're taking more than your share, essentially, right? And you're not relying on uh inflation or the rising tide to lift all boats, and certainly not relying upon insurance companies through their benevolence to grant you more preferential reimbursement rates, right? You are go you are going out and generating more organic growth in revenue than the industry average. You are taking market share. This is one of the most important principles for all of your listeners to to adopt is that we want to grow our business.

SPEAKER_00 20:09

What if what if I what if I improve what if I improve case acceptance? Is that the same as that? Because those patients didn't go to another place, or is it because they're already in do you think of that differently?

SPEAKER_01 20:19

So I would say that I I I think about it slightly differently, but the the point is is still the same in that if we're growing revenue faster than the industry average, than the industry norm, and we're translating it into greater levels of profitability, we're running a better business. And and and conversions are definitely a piece of that that we can we can dive into in terms of the levers to pull.

SPEAKER_00 20:47

Okay, so okay, so let's just recap real quick. So we got first of all, you got to deal with inflation, which is we're kind of making up a number, but it's like we're calling it three, three something percent. It could be greater depending on what city you're in, rent's going up, down, and and it's a kind of a moving target, but let's just call it three percent. And then so you gotta outgrow that because that means that's just eating away at you three percent every single, every single month, every single year. And then and then you have what the industry's growing, which is four to five percent. So you you you should be growing what the industry's growing because that's taking into consideration the hyperscalers that are growing super fast and the people who are shrinking. So you should be getting that just cuz. And then and then now you so now you got your baseline. Like you've got to get up over that. And the bigger you get, the harder it gets. Again, it's if you're at 10 million, it's gonna be harder to grow six percent, and if you're at a million, six percent isn't as big of a deal. So now that we got those things in place and we got an understanding of okay, the next part is you gotta get up to a certain number, so you're grabbing market share from other people, you're not just tweaking out on your insurance reimbursements, to your point, right? And just get you know, s squeezing the There, do that. You should do that. But that that's not the same thing because you can only do so much of that. Now, now that I understand that, now where do I how do I go in and actually do that and start to make a uh I I think most people will be able to make a target now. Is that right? Like you should be able to put the information that we've given, you should be able to build a target.

SPEAKER_01 22:23

I think that for those who are running successful growing solo practices or building emerging groups, the organic growth number that I tend to impress upon people is high single digits to low double digits. So think 8 to 15% just for a range, essentially, but you got to have a number to shoot at, and you need to you need to understand why you're picking that number. You're picking that number because when we talked about the the aggregate growth number of dentistry being a point or two higher than inflation, then we use just 5% as a as a reasonable barometer of that. You know, those that are enterprise level group practices are are growing solid double digits and historically have been in that you know 12 to 20 percent or more range. And the the people that I work with are measuring themselves against a similar standard. So you need to know what the standard is if you're gonna compete with them and win. And that standard is probably somewhere in the 8 to 12 to 15 percent range for a revenue number. Once you establish that and you say that you know the the goal is to go from a million to 1.1 or it's three to 3.3 this year, we start to break it down into a series of connected outcomes, essentially. And and you and I can relate to this from being business owners ourselves in a completely different context, Gary, but but rarely is revenue growth achieved through one thing. It can be early on when you were talking about the business being really new and wins are easier to come by. But once an once a business is established, growing revenue becomes harder, and that revenue growth number has multiple variables or components to it. So we talk a lot about, you and I get to talk a lot about, you know, when you share your information in my group and when we collaborate on things, we talk about the marketing to revenue equation, right? The cost per lead, the phone conversion, the new patient value, the treatment conversion for a new patient, and the lifetime or first year value of a patient. That whole connected equation has multiple components, multiple variables to it, and it is usually the front end of the business. And you know, I would say that for a healthy practice, the bare minimum of new patients per full-time provider is bare minimum 20, ideally more between 30 and 40, probably per month. I mean, and and at that point, you know, your your marketing company is delivering and your ability to convert patient inquiries is delivering opportunities for your clinicians to grow revenue. So are we top of funnel or front end of the business? Are we generating enough throughput to get us enough at bats? The second thing to take in mind, to keep in mind, is you know, what is your overall provider productivity in terms of the fixed constraints of the business? So the business is presently open eight to five, Monday through Thursday. And, you know, if we were able to work with a quality marketing agency like SMC National, and they could generate greater pay new patient inquiry, and we have the ability to convert those new patient inquiries, do we have the opportunity to expand some days and hours, or God forbid, to open up a Friday if we're able to bring in an associate? What's how do we start taking greater advantage of the fixed capacity of the business without having to take on any more risk or more debt to add additional locations? And sometimes people look outside of their four walls when they have a lot of inherent capacity opportunity in the current practice. And I am not big on taking unnecessary risks when you have more potential in your core business. And then you get into things like, you know, dollars per hour in terms of productivity, and that's usually a measure of the complexity of treatment that you're able to diagnose and provide for your patients versus what you refer out in a general dentistry context. It's also a measure of being more efficient in terms of your scheduling. And obviously, there are things that I would relate to something called gap analysis and opportunity cost that we can dive into a little bit as well.

SPEAKER_00 27:08

Yeah, so before we jump into that, I want to quickly talk about the shiny object syndrome, which you mentioned, which is hey, I don't, that's great. I, you know, my practice is doing well, but it's not maximized yet, and I'm gonna go start another practice. I see this all the time. And I it causes so much damage, and you kind of it's hard to talk people out of it, right? It's hard to be like, whoa, you got a lot of meat on the bone here still. What's your what's your thoughts on that? Do you have any frameworks on that to help people so that way they don't hurt themselves? Because I I've seen it over and over and over again where second or third practice actually takes all the profit from the first practice, and now you're at like a wash, and now you're super stressed out, but you can't be everywhere at once, and you can't practice dentistry like you used to be able to do. So you don't you don't have the lever of your own hands like you used to anymore, and you haven't fully transitioned to CEO yet either. So you're kind of and you get in a weird spot and you end up having to sell practices at a loss.

SPEAKER_01 28:11

Yeah. So how much time do you have, Gary? If we want to go into this. So so here's the what what you hit the you hit the nail on the head, and and here's the here's the problem, if you will. So most successful practice owners are master clinicians. And when I say master clinicians, they can do a lot of complicated dentistry, and their case conversion is extremely high. All right. I mean, and I say that with all deference to them. At that point, in one practice in a solo practice where they're the lead economic engine, they can usually outwork their problems. So whenever they make a mistake, if something ever goes wrong, they can work a couple of extra Fridays, work a little harder for longer, and magically the problem when it's financial goes away. All right. You cannot do that in multiple locations. The business is now bigger than you are. So you're exactly right. Are you taking unnecessary risks when you start to acquire another location? And I started laughing when you went through that scenario because I'm going to be doing a three-part video series in June. And the first one of those parts is how do I go from one location to four and make 50% less in income? Well, the the math's pretty straightforward on that, you know, and unfortunately I've seen it all too often. So here are a couple of things for your audience to keep in mind, a few frames of reference that might help. In a general dentistry context, what we're looking for in terms of something called utilization rate is about $125 to $150 per chair per hour. All right, $125 to $150 per chair per hour. So let me define what utilization rate is real quick, and then we can share the you can share the equation with your audience, which is not too difficult to create. When we think about a practice and the inherent fixed constraints, the capacity, we're thinking about really available chairs, available hours per day, days per week, and weeks per year. Right? So how many how many hours a day, how many days per week, how many weeks a year is the practice open? That's the first thing, and then multiply by the number of chairs that you have. And then at that point, you have an available bucket of treatment hours available on an annual basis. When you take your revenue number and you divide by that volume of chair hours per year, you get some dollar of revenue per chair per hour that the business generated over that period of time, over that year. All right. And I said if you're in a general dentistry context, if you're $125 to $150 per chair per hour, then you're probably doing pretty well in terms of revenue generation. I've seen some that are a lot higher than that, that do a lot of specialty treatment or cosmetic treatment, can generate a lot more revenue. But those that are that are producing or collecting less than that probably have some inherent untapped potential in the business. If you have inherent untapped potential, or you could open up another day or another couple of hours and even take greater oper uh take greater advantage of the opportunity of the of the four walls of the building, then my advice would be to do that before you personally guarantee a million-dollar loan to buy somebody else's problems. It also goes without saying that when you are, even if you are generating an optimal amount of revenue per chair per hour, are you doing it in a truly profitable way? And I still fall back to EBITDA as being the measuring stick for operational profitability because it normalizes owner compensation and takes a lot of the non-cash deductions out of the expense structure of the business. So when we're looking for an EBITDA-margin number, bottom line type of a number, we're looking for high teens to mid-20s for a general dentistry practice. So think 18 to 25% on a dollars per chair per hour number of about $125 to $150. If you're in both of those windows, then I would say you're running a very efficient, very successful practice. And it might be worth it for you to look at an additional location, be it an acquisition or a de novo. If either one of those is a maybe or a no, I would tell you to go back and focus on either one of those two aspects of the spectrum before you take on more risk to do it.

SPEAKER_00 33:20

I've heard you speak about, I've heard you do hours of presentation on this where you talk about there's, okay, so you got a like a single practice, you're the doctor doing the treatment, you're making really good money, you maximize the practice, just like what we talked about. You you figured out what it takes to grow, you've grabbed your market share, and and then you hire an associate, and that goes well, and that's working well, right? You're you're maybe giving up a little bit of treatment to them, but they're it's all working out and you're making more money. But then there comes this tipping point for growth where you begin to actually have to make less money to take your next step. Now, doctors hate this because I I do a podcast with Dr. Blake and he he talks about there's there's burger flippers, those are the dentists, right? You're flipping burgers all day, and that's how you're making money. And then there's the guy, the manager of the burger flipper store. They're two different jobs. You happen to make more money being a burger flipper in this scenario, right? And I don't mean to offend any dentists, but it for the scenario, it's like the burger flipper makes really good money. The manager actually makes less money in this particular scenario. And as you take that transition, you start to have to take a pay cut. And just to comfort everybody's soul, I think every entrepreneur goes through this. I know I did. There was multiple times where I was like, okay, like we have to invest in infrastructure. I have to hire a whole sales team. And to do that, I have to take a pay cut. And then if it works, I'm betting that I'm gonna make more money in the future, but I have to go in and make it work as the person overseeing the new sales team or whatever. Um, and that might take a year or two, right? Like it, or it doesn't work.

SPEAKER_01 35:03

Could you walk me through that scenario and where that tipping point is and and just the frameworks that you help doctors with when it comes to the Yeah, and the next time I see Blake Hamlin, I'm probably gonna punch him in the mouth for making me uh um deal with a fast food analogy for uh uh for clinical professionals, right?

SPEAKER_00 35:24

He can use it. There was a there was literally he he uses that one, and that's why I was like, hey, Dr.

SPEAKER_01 35:29

Blake Hamlin said this, because I would I that that's gonna be a hard quote that I attribute because the day that you and I use that, we basically work ourselves out of a job. So all things being equal, yeah. So here's the here's the dirty secret that only a handful of people talk about, which really disappoints me because this is a predictable problem. To a degree it's preventable and or avoidable and can be navigated successfully if you know what you're getting yourself into. All right. So the the truth is that everybody who builds a group practice takes an income hit to do it. Now the question is how big of an income hit and for how long? All right, but it is exactly what you just said. You when you go from one location to multiple locations, you can't outwork your problems. You cannot, and I I would just if I could underline on a podcast or a video, I underline the word cannot. Um you cannot outwork your own problems and you cannot be an absentee owner. All right. That is a recipe for disaster. So if you cannot be an absentee owner and you cannot be in two places at once, it means that you have to be a part-time employee in both. And if you are gonna go from full-time, clinically speaking, four days, call it four days a week on clinical treatment, down to two days a week in your core practice to allow you to work two or maybe even three days in the new practice, that means the patients don't go away. The clinical demand doesn't go away in your core practice, but you're gonna end up paying somebody to do the work that you used to do. All right, and and and that's the swing. So I used to model this stuff out for people that were making this transition, and I called it the founder's dilemma for a reason. The founder's dilemma is exactly what you just said. I'm making good money right now. I've in order to keep growing, I'm gonna have to start to replace myself in one highly compensated role and transition into a role of call it CEO or visionary or executive or whatever you would like. I'm gonna trans, I'm gonna transition myself into that role that doesn't carry as much compensation, and I've got to figure out what the heck I'm supposed to do in that role once I land in it. And that's that's what I work with a lot of people on in my program, obviously. But the key to this is simply it's really it comes down to two things. One, before you undertake bringing in an associate and and starting to mentor him or her and and transition some of your clinical work into them, um, before you do that, you need to quantify what each of your clinical days is worth to you in income. Because when you start paying somebody else to do that work, they're earning the income you are not. So what is the number? All right, just get the number to start with. The second thing is have a have an honest conversation with yourself and your family. And the honest conversation looks like the following. I make a lot of money as a clinical dentist and a business owner. And we have a very good lifestyle. The kids are in private school, we live in a nice house, we have a couple of new cars with loan payments, you know, we're part of a country club, we like to take trips. I don't I don't regrudge any of that. And I don't want you to necessarily stop doing any of that. But what I do want you to understand is that when you have a lifestyle where the expenses are pretty much fixed and they demand 100% of the income out of the business that you pull, you have no margin for error. You cannot afford to bring on an associate because you can't pay them. When you pay them, it detracts from your family. All right, and it puts you in conflict with your family. And this is the avoidable part that I was talking about before. So, simply put, if you know you're gonna drop one day a week clinically and you know the value of that on an annual basis is $60,000 or whatever it is, then what's the $5,000 a month that you need to find on your personal income statement to alleviate that pressure? And can you do it ahead of time to build up cash reserves to allow for a softer landing for you and your family without having to make any draconian cuts? When you can do that, then you can start to fund that sales team, like you talked about, or fund that associate and have him or her do some of the work that you're no longer doing. Oh, by the way, you just freed up, you know, in theory at least, a day or two a week that if you wanted to start entertaining an acquisition of a subsequent location, you might be able to spend the time, those two days a week in the newly acquired practice to make sure that it reflects the culture of your core business, the systems and processes that you need, the clinical philosophies, the capitalizing on the revenue opportunities and all that other kind of good stuff.

SPEAKER_00 41:14

That's awesome. That's that's extremely helpful because I think some of the listeners are at that point and they don't know it's coming or they kind of feel it's coming, but you don't know how to navigate it. I think getting a number is huge. Like, how much do you have to have personally? And because you are the restraint in the business at that point. It's not the team, it's not the new patients, it's how much money do you have to take home? So I think that's huge. Perrin, I I know this is we've we've already gone for 45 minutes. So I want to I want to dive in a little bit. This is all great stuff, and I think it really helps people, but I want to talk a little bit about your group and how you help dentists. Are you okay with that? Of course. Okay, cool. So could you just tell the audience what you do? Like what what is your job, how you help dental offices, and what what that consists of.

SPEAKER_01 42:04

And Gary, uh, you're gonna want to kill me through the uh the monitor here, but I'm I'm basically almost two years into the new business, and I still don't have a two-minute elevator pitch. So here goes, buddy, right? Um all jokes aside, um I look, I spent 15 years in a prior career running businesses in a corporate America setting. Uh so I learned about enterprise level businesses in a publicly traded company, which was invaluable experience. And in the last, you know, eight or nine years, I've been involved with two startups in the group dentistry space, Tusk Partners and Polaris Healthcare Partners, which were part consulting for those that wanted to build group practices and part transaction, those that wanted to sell the business or do a debt recapitalization. So almost all of my work has been either as an entrepreneur or consulting with people building group practices or working in a publicly traded company at an enterprise level. All of that, 20 some odd years worth of experience, I've really distilled into about a 12-month program that focuses in a segment of the market of dentistry that is underserved. And specifically, for people in your audience that have worked with a practice management consultant, they probably have stable systems and processes at an operational level. Think scheduling efficiencies and hygiene retention and case acceptance and all and culture and all that stuff that's super important. They probably also take in some advanced clinical education. They do complicated dentistry. And once they hit that level, they wonder what's next, right? I'm kind of I've achieved practice mastery. What's next? I'm 38 years old, right? What's next typically involves one of two things or possibly both bringing in an associate who's potentially going to be a partner andor adding an additional location. Buy or build. And those may be, you know, readily apparent type decision points along the way. They're a lot more complicated than people understand. And the business that I have now is a coaching program called Next Level Executive. It is executive coaching for healthcare entrepreneurs. And almost everybody in the program is a dentist, and all of them have achieved practice mastery. They're all at different stages of their careers. These are the operators at heart. They're the entrepreneurs at heart. They want to build a business that complements their lifestyle so they don't get in conflict with their family, like I mentioned. And they also want to build from strength. And I know that sounds odd from what we've been through in the last handful of years, but they are not quick to acquire additional locations. They are methodical about it. They're methodical about bringing in a partner potentially into their business. And is it a buy-in or an earn-in? Is it at a management company or a practice level? These people start to understand how the decisions they make are interconnected to subsequent decisions. And that's critically important to understanding how to lead a business that happens to be a multi-site healthcare business. And most of them are one to two locations. You know, they have no desire to build a 10-location group by the end of the year. They're very methodical. It's a great ecosystem, it's a great group of people, and it's a lot of fun because I get to share a lot of experiential wisdom that I believe makes an impact in where they are in their growth trajectory.

SPEAKER_00 45:41

That's awesome. How can people reach out to you if they want to learn more about what you do and how you do it? Thank you for that.

SPEAKER_01 45:46

There's a couple of different ways. If you know, if you like this type of guidance subject matter, maybe I have a podcast, you've been on it a number of times called the Next Level Executive. You can find it on all the major outlets, Apple, YouTube, Spotify, all the others. The website for the business is the next levelexecutive.com, the next levelexecutive.com. And if you want to go to a second website that is grouppractice.coach, grouppractice.coach, you can download the top 20 mistakes that people make in building a group practice. Might see yourself in some of those as you read through it. And you'll also probably see, depending on when this drops, a uh a link to that three-part video series that'll be coming out the week of Memorial Day, and then the first and second weeks in June, where I tackle a lot of these subject areas of subject matter in a presentation format. And then we have a Friday group discussion to roundhouse anything that uh that might be of interest. That is going to be limited to a hundred applicants, though, unfortunately. So if if you're interested in it, go to grouppractice.coach and enroll to get a seat in it.

SPEAKER_00 46:58

That's awesome. Yeah, I would definitely recommend if you want to grow and you are trying to figure it out, talk to Perrin and it just at least have a conversation with him. He will shed lights on things that you haven't even thought about yet. So, Perrin, thank you so much for coming on, breaking down these topics. I know we covered a ton of areas. And if if people, if you guys are listening to this and you go, what in the world are you even talking about? Just reach out to him, talk to him, and he'll he's he's super gracious with his time and happy to talk to you. And whether you work with him or not is a whole separate subject, but he will he will have a conversation with you and is a wealth of information. So thank you so much for coming on and let me know how that event cut goes. That that sounds really cool.

SPEAKER_01 47:40

Gary, you're the best. I really appreciate your time and I always enjoy our conversations. Hope I can share a little bit of wisdom. Thanks.