Optimization and the Investment Grade Practice (E.146)

“That sense that you’ve plateaued but know that there is more…that’s what tells so many of us our practices aren’t optimized.” ~Dr. Victoria Peterson

My most recent guest Dr. Nikki Green knew her practice wasn’t optimized because of her feeling that there was more she could accomplish in her business. There was a drive for the next level, but as so many dentists find, she didn’t know how to take that next step.

The truth is you may be resting on a plateau. This is very normal. You’ve won the race to revenue, and you can be tired and ready for a break. This is totally fine. But as so many business owners find, you may have a nagging sensation that there is something more you could be doing in your practice. Your next level is waiting…but how do you get there?

Join me today as I drive deeper into the thought processes Dr. Nikki used to optimize her practice so you can use those same strategies as you create your Investment Grade Practice:

• Get super clear on your career goals
• Learn what optimization means for you
• Traps many smart entrepreneurs fall in to (and how to avoid them)

Want to have a conversation about your Investment Grade Practice? Contact Brent at brent@productivedentist.com.
Never miss an episode! Subscribe to Investment Grade Practices Podcast on iTunes & Spotify.

EPISODE TRANSCRIPT

[00:00:00] Announcer: The Productive Dentist Academy Podcast Network.

[00:00:02] Dr. Victoria Peterson: Understanding where you’re optimized before you sell is the key to sometimes doubling or tripling your wealth in retirement.

[00:00:13] Announcer: Welcome to Investment Grade Practices Podcast. Where we believe private practice dentists deserve to get the lifestyle today while building an asset for tomorrow.

Join your host, Victoria Peterson, to design the practice of your dreams and secure your financial independence. Let’s get started.

[00:00:34] Regan Robertson: Doctor, did you know that PDA coaching doctors grew 219, 000 on average in just the last 10 months? If your revenue goals fell short this year and you suspect that patient communication and inefficient systems are holding you back, Productive Dentist Academy can help. But you have to take action.

Register today for the PDA conference March 13th through the 15th in Frisco, Texas. Go to ProductiveDentist. com to snap up your seat. It is the nation’s leading course for growing your practice and your team. Plus while you’re there, you can set up a free 60 minute session to identify your own unique opportunities for growth.

And if you act fast, you could score a one on one with PDA’s co founder, Dr. Bruce Baird. That’s right. We’re only offering 10 and then his calendar is full. Don’t wait. Go to ProductiveDentist. com right now and have a great 2025. We’ll see you in Texas.

[00:01:24] Dr. Victoria Peterson: What an amazing conversation with Dr. Nikki green. She had so many golden pearls from the takeaway.

I’m not even sure where to begin. I think the piece that caught my ear the most was the concept of optimization. And for many of us as business owners, we’re so in the weeds of day to day, surviving the day we’re looking at our P and L’s. Month to month, maybe we’re looking at the bank accounts and the cashflow.

And if cashflow feels good, we feel good. If cashflow is down, we feel down, but how often do you stop and ask the question, am I optimized? And I love that where Nikki was at 2. 5 million for a solo practitioner. I think she had one associate in the practice as well. That is a highly functioning, highly productive dental practice.

And most would not even stop and say, I’m at a plateau. So how do you know that you’ve plateaued in your practice, whether that’s a million dollars, 2 million, or 8 million? I think it comes down to this internal sense of challenge and what we believe we’re capable of. So businesses expect Our vision, they expand to our capacity to lead.

They also shrink by lack of vision and the lack of capacity to lead or proper management pieces in place. So the topic of optimization, particularly before you sell your practice. Now, at the time that Nikki began working 2016, she was. In her mid to late thirties, not thinking about selling at all. And I know many of you are in that boat, mid thirties, early forties, maybe late forties.

I’ll tell you, this is the prime target for private equity and dentistry right now. Doctors who are in their prime, who are cash flowing well are investible, and you’re getting a lot of unsolicited offers. It’s really interesting. In my decades in dentistry, there’s always unsolicited offers. That will never change what you’re being solicited for is what’s changing.

So before this, it was SEO. Your website needs to be optimized. Your web presence needs to be optimized. Prior to that, it was software. Are you still scheduling on paper? We need to update and upgrade your software. So. There are always market forces that come knocking on your door because dentistry is a target rich environment because the profits are consistent and the margins are large compared to other things like retail that might have a 3 percent margin.

Understanding where you’re optimized before you sell is the key to sometimes doubling or tripling your wealth in retirement. It’s not a step that savvy business owners take. They ask the question, am I doing what I’m doing because it’s what I’m comfortable with because it pays the bills because I have the lifestyle I want or have I fully optimize my practice in spite of myself.

So if you’re working three and a half days a week and the practice is closed two days a week, then no, you’re not optimized. If you’re working six hours a day instead of eight to 10 to 12, then no, you’re not optimized. Do you as a practitioner have to work all those hours? Absolutely not. But. Should you as a business owner be thinking about how to optimize your facility without a doubt?

When you start looking on the next horizon, the question of how do I grow? It’s a great Victoria. We agree with you. We want to optimize, but how? I think it really does come back to the fundamentals. And I remember when I was working with Tony Robbins, he would tell the story of coaching Andre Agassi and some elite athletes.

And he said, it always comes down to the basics. When you’re off your game, you don’t worry about. You know, slamming the net or dunking the ball, you come back to forehands and backhands and forehands and backhands, and you go to the golf course and you hit a hundred balls in a bucket before you play your round.

So the basics of business and optimization prior to selling is a systems audit. Where are your systems predictable? Where are they not? Where do you get mixed results? If they’re predictable, are they predictable because a particular person, perhaps a long term employee, is doing that job? Or are they predictable in almost anyone’s hands?

That’s what makes a system durable. When Nikki talked about having been at this crossroads of, I knew that I wanted to create a self directed team. I knew I wanted to be the leader of leaders. Not the manager of people. Those are clues of a visionary who’s really building durable systems. And that’s the key to optimizing everything you do.

So that’s a great takeaway is to go back. And if you don’t know how to audit your systems, reach out. Our coaches can do that for you, but get a checklist of your critical systems, like scheduling revenue cycle management, where are we leaking money? Where could we be more efficient? Where do we have redundancies or wasted time that could be tightened up?

That’s a great first step in optimizing. And Nikki said that I was at 2. 5 million. I threw everything at it. I threw coaching. I threw associates. I threw partnerships. I did marketing. I did everything. Couldn’t get off 2. 5 million came and learned how to reorganize schedule and massively improve productivity.

That one change took her from 2. 5 million to 3 million, that one change. So it doesn’t have to be a lot. To have a great big improvement. One of the things that Bruce and I have learned over 18 years of working with doctors is that your game is not anybody else’s game. So optimizing also has to do with life balance, particularly, you know, as you’re looking at seller readiness, is this the time why or why not?

Nikki’s 44 years old. And she said, I love running my practice. I love being in charge. And this is an opportunity to take some equity off the table. It’s the right time because of where I’m at in my marriage, my relationship, my husband’s a dentist, we work in two different towns. It would be nice to be together.

And so she had a very specific lifestyle choice that she made. She also chose a buyer that allowed her to stay in control of a lot of the management decisions, because that is high on her core values and her skillsets. Now you may be looking for a buyer persona that is quite different. You may say, I don’t like the management.

I want somebody to take this off my hands. So your buyer persona may have to include a younger doctor who wants to come in and buy you out. They want to build that same lifestyle that you have and they’ll take over the management or a private equity group that will bring in structured management or a private group that has structure and oversight in it.

So your buyer persona really does determine a lot of. When and to whom you’ll sell your practice to getting those in place now having multiple buyer personas that you would be willing to sell to helps broaden the scope of the sale and can really make a big difference in the end. The other piece. That Nikki really brought to light was value optimizing onto the top end.

We always think about optimizing systems or productivity collections, minimizing PPO write offs, those kinds of things. When we think about optimizing, the number one thing she did was she optimized the bottom line of her practice. She focused on the PNL. She paid attention to, are my hygienists fully booked?

Am I overstaffed? She paid attention to where my supply budget is going. She paid attention to the continuing education that she went to and made sure that whatever they invested in, they implemented. You’ll also note in her story that she grew a million dollars year over year during the pandemic. That was not the story of every practitioner.

So her team was poised to quickly pivot and say, Absolutely, we’re open for emergencies. If you’re in pain, come. And while you’re in the office, Boy, I don’t know when you can get out again if you want, we can do a quadrant or a whole mouth or a half mouth. So I know state by state regulations were different during the pandemic, but when you’re focused on how do I drive revenue and how do I drive revenue to the bottom line, here’s a formula that you can use.

And I know this would be a little difficult to visualize if you’re, if you’re a visual person and you’re listening to an audio, uh, podcast is a little difficult, but I want you to check this out. If you raised your revenues by 10%. You would automatically increase your take home pay by 20 percent. If you decreased your overhead by 10 percent, you would raise your take home pay.

If you do both, if you grew 10 percent on the top and you shrank 10 percent in your expenses, You would net, doctor, in your personal take home pay an additional 40%. To play that game, if you’re currently taking home 200, 000, you could easily take home 280, 000 just by pushing those two levers. How do I incrementally grow 10 percent while simultaneously decreasing my cost by 10%?

Small incremental changes. Over time are really what win the game when it comes to building an investment grade practice. Uh, Warren Buffett talks about this a lot in value investing. You want to become that company that is profitable in spite of the economic trends around you. You want systems that are durable and predictable.

People that are engaged and on your team. These are the things that build an investment grade practice. I’m so grateful to Dr. Nikki Green for coming on and sharing her story, vision, her story of enthusiasm for her team, for her patients and her business. She is passionate about what she does. And so I hope that you’re as inspired as I was to have her on the show.

If you’re looking to build your investment, Thank you so much for listening in. You can reach out to victoria at productive dentist. com. I would love to speak with you and help you build your investment grade practice.

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