Today, I’m exploring one of the most intriguing business challenges that every dental business leader must face at one time or another: Economic downturn.
With talk of a pending recession dominating many news bulletins over the past year or two, it would be odd if you didn’t have recession prep on your mind.
On call after call with incredible dental entrepreneurs, I hear people talking about how their business is turning in a negative direction quickly.
Some of them are already in the red, others see themselves going into the red, and almost everybody is starting to think that their 2023 plans may have just gone out the window.
So, should you really be worried about the threat of an oncoming economic downturn? How can you prepare your dental business for a period of financial uncertainty? What are my proven recession-preparedness tips to make sure you don’t just survive, but thrive?
Let’s get to it!
Understanding the nature of recession cycles
Uncertainty is a fact of life. We just don’t like it. But it’s something we all came face to face with during the pandemic.
Most of the dental businesses that I work with have had a couple of their best years ever in the latest portion of the pandemic, despite being shut down for so long. Do you really think that this boom is going to last forever? If it’s going to shift, when? Is the tide finally starting to go out?
Like it or not, uncertainty has been the name of the game. And the signs are now leading us to believe that the next year (or more) may be more difficult and more complicated than what we’ve been experiencing in our dental businesses.
But don’t let financial fear take over.
Remember: contraction cycles are normal. Recession cycles are normal. It’s history, folks. It’s the way the economic system works. And really, it has to happen. Because if it doesn’t happen we’d really be missing out on some of the true power of the economic system’s design.
Let’s learn more about that below.
The opportunities and risks of the recession for dental businesses
Did you know: Some of the greatest businesses that you’re enjoying right now were born in recessionary environments. AirBnB, Uber, and WhatsApp were all established during the 2008 recession!
When recessions hit, sure, bad dental companies often disappear. But think of it like pruning the rosebush, it’s a necessary thing. Good dental businesses, however, have the chance to become great during recessionary environments.
Those businesses are the ones that know what to do in a recession. They see it as a chance to make changes, improvements, and innovations. Not a time to sit back and let the chips fall where they may.
And great businesses? Well, during a recession, they often become iconic! The truth is; you get a choice on what’s going to happen. It’s all about recession preparedness and knowing what to do. Here are the actions I recommend you take to prepare for a recession.
Why you should get back to basics during a recession
When times are good, and a lot of cash is coming in, it looks like everything’s great. So you might choose to do something new, even though it’s not in alignment with your core business model.
But when you’re preparing for a recession, it’s vital that you get back to basics and focus on the fundamentals – the core services you offer that [should] make you the most profit.
You must be aware of your business’s fundamentals, how they generate profitability, and the right levers to pull when a financial crisis is on the horizon. So, what does focusing on the fundamentals look like?
How to focus on the fundamental of your dental business
Here are some examples of how you can get back to basics with your dental business to prepare you for a recession.
Optimize patient flow
Figure out how you can effectively and efficiently get people into, through, and back into your dental business. What protocols do you need to put in place? What works and what doesn’t? How do we make sure that every phone call turns into an appointment? How do we optimize our schedule?
Offer finance plans to increase case acceptance
Helping your patients move forward with the treatment they desire while fitting their budget will be critical during times of economic downturn. Think about your patient finance plans and how you can leverage them over the next year. Or even better, simply improve your communication and follow through. Small changes make a big difference.
Improve patient experiences
Don’t let patients walk out the back door because you’re not doing a good job of communicating and don’t have tight systems that deliver a first-class patient experience. Happy patients refer friends and family. Happy patients leave 5-star reviews. And…any time you allow a patient to leave your practice because of a lapse in the experience, you’ve simply flushed dollars down the drain.
Refine collections systems
You’d be amazed at how often dental organizations have upwards of $500,000 in accounts receivable that theoretically should be in their bank account; they’re just not doing a good job of managing it. So when preparing for a recession, don’t let collections systems slip. Are you sending statements? Is your team collecting 100% of the dollars due at the time of service? Are you following up immediately, quickly, and regularly on unpaid balances?
Invest in your team
During a recession, we’re often not hiring. That means you have to take great care of your people, support them, and ensure your culture is really strong. If your team loves working for you, they’ll want the business to survive just as much as you do and will put in the effort to keep it going. Recessions also put pressure on our people, so it’s the right time to implement exceptional review processes that ensure team health.
Get some of my expert tips on improving your dental culture in my other article, “The Impact Of A Dental Pseudo-Culture & How To Fix It.”
Redefining what growth means to your dental business
Business growth does not only happen by adding revenue, adding locations, and growing EBITDA. Sometimes, you need to grow wider in order to grow taller, so think about growing your foundation now to allow you to expand to new heights in the future.
This foundational growth might look like refining your dental business systems to make sure that they’re better, tighter, and more effective and measuring results.
By ensuring you have great key performance indicators for every single team member and every single day, you’ll know what results you need to be operating profitably.
In my own journey as a CEO of a dental group, I went through these recession cycles twice.
To get through them, I had to say we’re not adding locations for at least the next nine to 12 months. But we’re not going to stop growing. We’re just going to grow in different ways so that we can be stronger as a company to grow taller.
These recession cycles can actually be really fulfilling depending on how you tackle them. And I’ll be honest, they were some of the most fun times inside of my company.
The ultimate protection in times of economic uncertainty
There’s a high likelihood that we’re going to have some measure of economic downturn over the next year. But whether we do or not, you need to be prepared.
And being prepared for a recession means knowing your fundamentals, getting great at those fundamentals, getting rid of anything that doesn’t play into your core business model.
Follow these recession-preparedness tips I’ve outlined, and you can continue growing by getting wider, so that when this environment shifts and capital is free again, you’ll be better prepared to grow taller.
Sometimes winning is simply about surviving. And I want you to survive so that you can be ready to thrive again a couple years, months, or whenever the time is right.
So if you need expert advice and support for your business, I’m here to help you make it through the storm and come out the other side stronger.
I’m Dr. Eric J Roman, your heart-centered mentor inspiring change and manifesting impact to help you create a better future for your dental practice and the dental industry at large.