Date Added: 12/01/2014
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I’ve written this article more as background for anyone who may be interested in considering this business journey. It’s not a full diary representation of how we achieved or failed but simply a reflection of the past 5 years of a partnership and 3 years as an owner and as it is not a complete story it will probably raise more questions than deliver answers. If you wish, I am more than happy to respond to any questions that may arise over the coming days.
Choose carefully who you go into a business partnership with. They may not necessarily be your best friends but they must be people that you respect and trust, that you consider reliable and stable. You must understand their ways, their foibles, what drives them and what frustrates and annoys them.
Assure yourselves through lengthy debate that you each have the same destination in mind for your journey and that you all intend taking the same route!
Do you understand the business that you are getting into: not just the cash flow of the business but its innermost workings? Is it viable? Does it have potential for growth, what’s holding it back, where do the threats to the business lie and what are the strengths? Do a SWOT analysis of the business as you see it from a neutrals point of view (- never wear rose tinted specs) and then an analysis as if you were the owner to see if the 2 marry up. Don’t forget the hidden costs that will crop up, solicitors etc., although I’ve tried to cover these further down the page.
Where are you going to get the money from? How much is it going to cost you and what are the monthly repayments and at what interest rate? Are there any other offers on the table from any other banks? Are there any funding opportunities available to you? (Beware of certain loans and grants as they can come as a short term loan that may seem attractive when you’re looking for funding but in the cold, calm light of day carry a stinging interest rate and short repayment term.) Is the money coming into the business going to be able to repay these loans and if so, how? Because many established businesses may have been running without loans or mortgages that their income no longer has to reflect that expenditure. If the money falls short will you cut and run? How will you live when money coming into the business isn’t able to pay your salary? If the business does look as if it will go into the red, what would be your plans to turn it around if you were the owner?
How are you going to pay yourselves; percentage of work completed, flat wage irrespective of clinical work turned out, hours worked? What if you find there’s not enough work for you and others are having to subsidise your income? How are you going to write this into your Partnership Agreement? Think through carefully the exit strategies: what things would have to happen for the Partnership to fold e.g. long term illness, what rules will you have in place if a partner ‘misbehaves’, how will you pay a leaving partner off and over what time?
Choose a recognised dental specialist lawyer and accountant. Do not try to scrimp and save on this. Money spent thrashing out a well thought out legal agreement will be money well spent.
It cost me just over £4000 for my legal fees, my third of the £12000 fees and then about £3000 for all the survey reports for the building and business. Everything from drains to electrical safety was examined – don’t cheat because if something goes wrong and someone gets hurt it’s your signature on the dotted line…..
Where do you want to take the business? You cannot stand still and just carry on in same old, same old kind of way as that just leads to deterioration and major investment further down the line. Does the place need refurbishment, staff training (are you adequately/under/over staffed? How are you going to deal with that?), is it required to have staff brought into line with your way of thinking? How are you going to do that: do you close the shop and take the clients critiscm along with the financial hit or do it after hours and pay overtime and put up with the moaning?
The questions can probably go on for a few more pages and only serve to depress those that have read this far. In short, here are some of the answers that we used. They will not be everyone’s solution but they worked for us.
We had to choose Lloyds as they were the only bank open for business at the time. We split the mortgage into 3 separate parts using an EFG (European [or was it Enterprise, I forget at this time of night?] Finance Grant) that brought our total borrowing from the bank down to a level that they were willing to lend to us without us having to re-mortgage our own homes. The deal meant that we did not have to put any form of deposit down. The EFG interest rate is high but an evil necessity for us as we didn’t have the size of deposit required by the banks. It also only runs for 10 years so it does mean that your equity in the business builds quite quickly – so long as you can afford the repayments.
The business has loads of development opportunity with new housing coming into the area and with that a greater disposable income potential i.e. more opportunity for private work. The NHS contract is big but as funding into the NHS has not fundamentally increased and in effect has decreased with costs and overheads rocketing (have you checked your practice’s utilities bill recently and compared it with say, 5 years ago?). Therefore private work for us is a must. Difficult for us on a principle level as we are NHS people to the bone – but needs must where the devil drives and I’ve got 18 mortgages to pay.
We have increased our private revenue to 9-10% of gross which given our start point 3 years ago of 1%, we are pleased with. But by the end of the financial year 2015 it will have to be at a minimum of 15% and ideally nearer 20%. We have also put into place an excellent bespoke insurance plan, similar to a well-known plan currently available on the market but ours is half the cost. To us it is a fall back where if the NHS really goes pear shaped we have a ready alternative that will have been advertised for many months to our patients.
And, yes, there have been a couple of months where I’ve managed to pay the staff but not myself. You find out very quickly that just because you own a dental practice it gives you no God given right to print money for yourself. Do not over-stretch your personal finances as believe me, you will have to dip into your savings!
Never, ever take your eyes off the money. You must watch it like a hawk, examine it every day and understand it. Where exactly is it coming from and where exactly is it going to? And why?
You will have a business plan which you will have slaved over for many hours and will present proudly to your bank manager on request. Unless you are very careful it will last about 5 minutes before you throw it out of the window in frustration. Stick with it, keep returning to it as these were your hopes, dreams and aspirations from a few short months ago and these are the foundations of your partnership. If, under stress, you veer from them you may find it difficult to return to them and that in turn, puts the partnership under scrutiny and then suddenly problems begin to escalate. Build into your business a time for the partners to talk. Expect to talk openly and frankly but make sure that there are parameters, that nothing escalates and that nothing becomes personal.
As far as my business itself goes, it is split into 2 recognisable factions: the business of dentistry itself and the premises.
The dentistry we addressed by introducing structured and advertised private treatments alongside our existing NHS treatments. We have had to do this as the money generated by the NHS contract was leaving little or no ‘wriggle’ room on the bank balance. Treatment options were given and explained to all patients, something we take for granted today but not back in the dark days of early 2011 when we first bought the place. Prior to our owning the business there had been no advertising of any form on the premises. We bought a Medivision programme and a 42” TV and that started the ball rolling. Computers of as high a quality as we could afford were installed throughout with ports placed in all unused rooms in case they are needed in the future. We invested in new signage and a website. We invited and paid for a well-known dental marketing expert to advise us and made sure that we drove forward with (just about) all suggestions. Not all dentists wanted to work for us and that’s fine, we can understand that. Some left because they wanted to, some left because we wanted them to. The team that we now have in place is our team. Targets are being achieved, systems recognised and adhered to and dentists and staff rewarded accordingly.
The premises were in a shocking state.
The roof needed completely re-doing and took weeks along with simple things like loft insulation and drainage. The waiting room was refurbished and a lick of paint here and there goes a long way. A new boiler was installed and for the first time in my 20 years there, every room is as warm as we want it to be. The junk rooms, of which there were many, were gutted and are now a state of the art decontamination suite of which our nursing staff have been known to gloat about. Non-public areas have been stripped and painted for the first time in 40 (yes, 40!) years by yours truly. There is now a maintenance system in place where things that need doing are reported and prioritised; simple and effective. Let’s not kid ourselves; there is a load more that needs to be done. My front bay windows needs under-pinning and all surgeries could do with being stripped, plastered and painted but we’re getting there.
It’s all about the money.
We have looked after our staff as best as we can. It has been tough and stressful and every one of them has been loyal and stuck by us – and goodness knows we have given them more opportunities than most to stick 2 fingers up at us and walk out the door! We have introduced appraisal systems and responsibilities and a recognised wage structure. Several of our staff have undergone various additional training ranging from Legionella courses to OHE courses. 2 are currently awaiting interviews for Therapist courses.
Our management team have been rewarded with their own office, computers and phones. It’s not rocket science...but they had previously been cramped in a small corner of reception. We have a lovely secluded garden at the back of the premises in which we have put a picnic table for the summer months and have carried on the summer tradition that (modestly) I introduced 20 years ago when I first joined the practice – a staff barbecue. It’s a rather riotous Friday afternoon that involves eating and drinking although not necessarily in that order and families are more than welcome. It’s a half day out of the office but a great bonding time.
However, my time is up as one of my colleagues is leaving the country on marriage and my youngest partner has offered me a nice handshake to buy me out. Luckily we have a Partnership Agreement that accounts for these happenings.
Blood, sweat and tears every inch of the way…..but I wouldn’t have missed it for the world.
I have been my own boss for 3 years and as I was in charge of personnel it was I who fired the first dentist and the second dentist and refused to hand back the notice of resignation from the third. I have helped hire an excellent and hardworking team who enjoy coming to work and are as committed to my practice as I am to them.
I have had to let staff go when times were tight and had the pleasure of re-hiring them when we became more liquid – and, yes, they really did want to come back and join us. And, yes I’ve had to sack staff who had been friends but had committed an unforgiveable sin and I’ve cut hours and wages where needed. But I can still manage to see everyone’s mortgage paid at the end of the month.
It has allowed me to become semi-retired and working just 3 days a week. Funnily, although my partner has offered me a continuance of 2 days a week I’m not sure that I want them as I would feel a bit like the old stalking horse so I’m still looking for something – a day or 2 here or there - to keep these old fingers out of mischief!
This is where the ‘Thought for our future’ post came into being with so much insecurity within our profession and some senior posters expressing their frustration, this idea had been bouncing around in my head for a while. I don’t think I can be the ‘driving force’ as I’m trying to slide gracefully towards retirement and I want the profession to rise above the apathy and pathos and be determinant of its own future.