Recession-proofing business behavior in dentistry
Chris Sands offers advice on how to invest in your practice to grow through periods of recession and prepare for economic expansion.
Chris Sands discusses investing in your business for growth
”In times of recession there are massive opportunities and fortunes to be made, so for new up-and-coming entrepreneurs, this is the time to go and start a business.” — Richard Branson, founder of Virgin Records and the Virgin Group
I would echo Richard Branson’s sentiment as the greatest time to turn a dental practice into a dental business. It will require a focus beyond the dentistry you have to deliver.
More great companies and millionaires get created during recessions than in thriving economies. History will write that the COVID-19 pandemic was the triggering event that began the recession. It was also an incredible live test to see how businesses would respond through a crisis that had the ability to either break you like glass or sharpen you like a weapon. If all you learned was how to attain tax-free relief money but didn’t take any lessons about how your business, your people, or your patients responded, then you may still be at immense risk for what is to come.
In order to be a thriving success and not just a surviving mediocrity, you may have to abandon your natural instincts, avoid the herd mentality, escape your comfort zone, and embrace the contrarian approach to both business and finance. Fortunately for you, dentistry is proven and time-tested to be recession-resistant and crisis-proof (AIDS and COVID-19), and pediatric dentistry even more so because people still take care of their children and pets before themselves. However, when the economy contracts and layoffs happen and markets tank, you have to choose whether you are going to participate in the recessionary behaviors or reject them inside your business.
The average dental practice will contract and cut expenses. Now will be the best time in 40 years to be investing in your dental business for growth! When families’ pockets are being squeezed by inflation and layoffs in the household, it becomes even more important to fight to get their attention for the dentistry their kids need. Since marketing is typically the first expense cut by most businesses, the cost decreases, and you can buy more patients’ attention for the same dollar spent — a reverse inflationary effect for your business. If the recession causes your existing patients to visit you less frequently, then you are certainly going to need some new patients. Prepare your business with cash for this opportunity as well as the opportunities to acquire failing or bailout practices during a recession. It will also be an employer’s market again for hiring talent that flees those practices to join yours if you are ready with cash to pay them and patients to keep them busy.
The recession is not the time to focus on thinning the profit and loss (P&L) of expenses, but rather to look where to invest in the P&L for revenue growth. It will be time to invest inside your business walls and not outside. Invest in marketing, hiring, and training to outpace the rest of your competitors, while they wait for the good times to come to them. A growing business with cash reserves during a recession is a great candidate for good deals on real estate ownership for your dental practice. Make sure your team at the office and your team of advisors are in complete alignment with your commitment to growth through the recession and into the next decade’s economic expansion.
Chris Sands is cofounder of Pro-Fi 20/20 Dental CPAs, a managerial accounting and proactive tax advisory firm focused solely on helping growth-oriented dental entrepreneurs and business owners.
One way to invest in your practice is to practice strategies that achieve growth. Read this article by Chris Bentson in our sister publication, Orthodontic Practice US. https://orthopracticeus.com/observations-on-growing-an-orthodontic-practice/