The three highest expenses in any dental practice are staff wages, laboratory fees and dental supplies. Do you have a thorough understanding of your dental suppliers’ services and skills? Do you know what they are most suited to help you with? And what areas of your practice are they not fully trained to advise upon? In other words, know your specialization and don’t attempt to be a master of all trades.
In the 1960s, my father, Roy Brown, was the president of a dental supply company at a time when companies were fighting a fierce price war and developing new services. My father’s directive was to capture a greater market share of the dental market and to preserve company profit margins. It became necessary for the owners and managers of dental supply companies to supervise the sales people and direct them to focus on their strengths related to their core business, namely supplies and equipment.
In an effort to discourage his sales people from providing advice to dentists in areas they knew little about, a list of “what we do and don’t do” was prepared and circulated at the Associated Dentists Cooperative (the ADC). This trend continues today. Like most other dealers at the time, Roy discovered that the sales people where extending themselves into areas of the dental practice in which they had limited experience.
Commissions on dental equipment and supplies were dwindling due to the extensive competition of the day and sales forces were concerned about losing regular clients if they did not appear to have complete knowledge of dental practices. And this was cause for concern for sales managers because legal action could result from business advice being administered by unqualified or untrained sales people.
Let’s consider the climate in the dental industry today. Many developments in training and product support have increased the ability of a supplier to advise you and assist your practice. The best advances have been made in those aspects that are closely related to the “core” products of the supplier. The same observations can be made of dental practice. Those general dentists who focus on strengthening their core business, preventative and restorative, seem to gain more competency and prosper. Research indicates that dentists who switch from one new procedure to another, trying to be all things to their patients, lose focus and may “drop the ball” on the fundamentals.
In the cycle of any business, including dentistry, the business will occasionally enter a downturn and the owner will attempt new procedures to increase business and income. We continually uncover these cycles when gathering the data that is necessary to appraise general dental practices. Specifically, we ask dentists to identify which services they perform in their practice and which services generate the highest income. And we’ve found that sub-specialty services are growing as a percentage of total income because more dentists are taking extensive continuing education. The effect of this emerging trend is that dentists now refer out fewer cases, doing work in-house that was typically sent to a specialist in the past.
This is the same trend that is now occurring in the dental supply industry, namely the expanding of services to increase income. Sometimes, the expansion is more than the business can handle, and the dental suppliers find themselves spread too thin.
This is not a direct criticism of progressive suppliers who expand their services to meet client needs. Appraisal companies have developed new services in the last five years while still maintaining the high quality and standards clients expect. New developments can be a great addition to any business, yet the most success is achieved by those companies whose strategy is to focus on a core business and then design new services that are centred on that product.
A successful business model can be derived from specialization. It’s a time proven method for owning and operating a profitable business, including a dental practice. My advice to the general dentist: focus on your core business, preventative and restorative.
Once we learn to manage our core business, we can learn to manage our suppliers.
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