back-to-top
X

CONTACT US







hamburger-menu-icon

Articles

Volume 80: The Value of a Good Team

Download the PDF version now!

There are many value drivers that contribute to the sale price of a dental practice. There is an uber focus on gross revenue as the main value driver. Regular readers of The Professional Advisory will remember that gross revenue, while important, is certainly not a good yardstick of a practice’s value, particularly when taken in isolation. One of the lesser discussed, but very important value drivers is the value of a Good Team.

Dental offices usually employ very small teams of people. 80 per cent of dental offices run with between two and six team members. This small size makes it extremely important that people work together harmoniously and with a common purpose.

A client of ours was very fortunate to have recently spent some time with billionaire Sir Richard Branson – founder of the Virgin Group. One of the takeaways from that experience was that for any business (practice) to be successful, they must hire well, pay well, cultivate a culture of trust and respect, and then get out of the way! 

This sounds easy but it is difficult to execute. Most dentists hire based on their gut feeling about a candidate. While this is fine, it creates a large margin for error. You were not trained in interview skills, you don’t know how to uncover people’s true strengths and weaknesses, and most importantly how can you ensure this person will fit on your team? As I write this, the Toronto Maple Leafs, whose roster has 11 players under 24 with 6 of those being rookies, have made the playoffs for the first time since 2004 and are doing well against the league leading Washington Capitals. Clearly, that organization has hired very well! How can you hire a successful team like the Leafs have done? You don’t have scouts, a back office that will support you, or a budget like they have. There are tools that are reasonably priced and can significantly lower the margin of error for you. Check out the Kolbe Index System at Kolbe.com or the DiSC Profile at discprofile.com. Both of these offer valuable insights into personality traits and compatibility that are very hard to determine by using your gut. I have seen these tools used very effectively in businesses from two team members to huge corporations with thousands of employees.

The next nugget is to pay well. This is also important but must be taken in context. A dental office already runs with fairly high overhead, so be fair or perhaps generous to the stars, but it must be within market range or you risk negatively impacting the value of the practice. Branson says to “train people well enough so they can leave, and then treat them well enough so they don’t want to.” Studies show that most people do not leave their current job for more money; they leave because of an attitude of indifference from their employer. You can develop a great team by creating a culture of trust, respect and empowerment. These people will stay with you for the long term and you do not need to pay them above the normal pay level for their job.

Lastly, how to cultivate a culture of trust and respect. You see examples of these businesses everywhere. Starbucks does it. Apple does it. My dentist’s office does it. This is where leadership and shared vision come in. If you are reading this and thinking, “I’m a dentist, I just need to do a good job with my patients and good things will happen,” please read on. It is assumed by your patients that you are a good dentist and you can take care of their dental health needs. Today’s dental consumers are savvy customers and they want more than that. In fact, they expect more than that and if you don’t give it to them, somebody else will. Work with your team to come up with your practice’s core value and value proposition. Have a shared vision and embrace this vision and these values. Your team will be engaged, won’t want to leave and most importantly, will champion that message repeatedly to your patients. This will help your practice flourish. A quick word about the “bad apple” on the team: if you have one and they are not willing to get on board with your vision, you must terminate them. They will hold everybody else back, including you from reaching your potential.

How does all of this translate into value for your practice? Beyond the obvious improved financial, growth and profitability numbers that enhance the value, there is also the intangible value. A practice that functions harmoniously will achieve better market value because the buyers will be able to discern that your practice is special. It will show up in the notes in the charts, the smiling faces in the pictures in the staff room, the length of employment, the neatness in the office and the quotes on the wall. These are all things we see in “those” offices. We won’t see instructions in the sterilization area to the staff from “management,” or patients with outstanding treatment that have slipped through the cracks. The office won’t be messy and disorganized. 

Your team has great value to you, your patients and the future owner of your practice. Make it a great one!

David Lind is a Principal and Broker of Record in Professional Practice Sales Ltd. (www.ppsales.com), which specializes in the valuation and sale of dental practices.  He can be reached at (905) 472-6000 or 1-888-777-8825 or e-mail at: david.lind@ppsales.com

 

The Professional Advisory

  1. Understanding Practice Valuations

  2. What To Expect When Selling Your Practice

  3. The Chart Sale

  4. One Year Later

  5. Dealing with Unsolicited Offers

  6. Covid-19 Practice Sales Update

  7. When is the Right Time to Sell Your Practice and Why?

  8. Partnership Pitfalls

  9. The Real Cost of a Dental Practice Set-up

  10. Smaller Practice Realities

  11. Dental Market Update - 2019

  12. Creating Your Own Most Valuable Practice (MVP)

  13. Small Practice Economics

  14. The Market is Very Efficient

  15. How Can Dental Practice Values be Rising and Declining?

  16. Hygiene as a Value Driver

  17. The Value of a Good Team

  18. Is it Time to Move?

  19. Staging A Dental Practice

  20. The High Cost of Dying

  21. Deal-Busters

  22. Patients - Attract and Retain

  23. Should I Stay or Should I Go?

  24. Is There a Buyer for Every Practice?

  25. Good, Better, Best - The Market has Spoken

  26. Smooth-Sale-ing

  27. Buying Time

  28. Patients, Patience, Patients

  29. A Real Patient

  30. Why Do a Practice Valuation? I'm not Selling

  31. Irrational Exuberance or The New Normal?

  32. Do dental equipment and dental technology affect a practice value?

  33. Finding and Being a Mentor

  34. Bigger is Better

  35. Dave's Top Ten List for Buyers (Vendors should read this too!)

  36. How Well Do You Know Your Practice?

  37. Dave's Top Ten List for Vendors

  38. What will happen to dental practice Values in the next 10 years?

  39. Your Premises Lease is an Important Asset

  40. What are Associates Thinking?

  41. There is Life Outside the GTA

  42. When Is the Right Time to Sell My Dental Practice?

  43. Mergers are a Viable Option

  44. Is Your Associate an Asset or a Liability?

  45. Has your Practice Facility Kept Up With Your Billings?

  46. The 100 per cent of Gross Myth

  47. The Past, The Present and The Future

  48. Caveat Emptor

  49. Overpaid Long Term Staff

  50. Selling your Practice in Stages

  51. A Potential Pitfall of Selling Shares

  52. Value in Your Practice Through Balance

  53. Only Trusted Staff Can Defraud You

  54. To Own or Not to Own Practice Real Estate? That is the Question.

  55. Coping With A Large Patient Base

  56. Successful Dental Practice Transitions

  57. Taking Care of Business

  58. The Investing Dentist Phenomenon

  59. Two areas to focus upon that could negatively impact the value of your practice

  60. Organize your Debt in Order to Sell your Practice

  61. Having a Better Team

  62. How Do I Prepare My Practice For Sale

  63. How Do I Prepare My Practice For Sale? Part 3

  64. How Do I Prepare My Practice For Sale? Part 2

  65. How Do I Prepare My Practice For Sale? Part 1

  66. Advice to My Son or Daughter Graduating from Dental School

  67. Transition - What to Expect

  68. Discussion on Digital X-Rays

  69. Partnerships and Shotguns

  70. Strategic Planning - How to Get Started

  71. Calling All Vendors - Practices have Gone Up in Value

  72. Purchasers: Expect to Pay More for a Practice because of Lower Professional Corporation Tax Rates

  73. Matrimonial Practice Valuations

  74. Purchaser's Guide to Affording a Practice

  75. Location Improvements Throughout Your Career

  76. Small Practice Valuations

  77. Partnerships – The Best and The Worst

  78. Changing Location When the Opportunity Comes Along

  79. Visual Presentation of Your Practice

  80. Presentation of Charts

  81. Your Premises Lease Can Be Your Worst Enemy

  82. How to Select an Appraiser for Your Practice

  83. How Are Your Billing Ratios?

  84. It Pays to Invest in Your Tangible Assets

  85. The Importance of Separate Financial Statements

  86. Five Time Frame Levels to Sell a Practice

  87. 12 Suggestions to Safeguard Computer Data

  88. How to Buy a Visible Practice

  89. Why is there a shortage of good practices today?

  90. The Importance of Equipment in the Purchase of a Practice

  91. The Balanced Practice

  92. Will My Practice Be Saleable in The Future?

  93. Buyer Be Aware

  94. Excess Profit - The Second Key

  95. Patients and Profits are the Keys

  96. Plan Ahead

celebrating-30-years
test
SUBSCRIBE TO OUR NEW LISTINGS SERVICE