THINKING BUSINESS
a blog by Chris Barrow

Ee-I-ADY-O!

ADY Average Daily Yield. That’s a 30, 60 or 90-day rolling average, measuring the gross sales of all products and services by one dentist, hygienist or therapist in one surgery. I’m further realising that it’s the “mother of all key performance indicators”. Because the more I measure the ADY for and with my clients, the more I understand that:

  1. on a 50% contract

  2. an associate with an ADY of £800 or below is likely to be costing the principal

  3. between £800 and £1000 is likely to be generating a break-even or small profit

  4. between £1000 and £1250 is likely to be creating a small to medium profit and

  5. over £1250, everyone is making some sensible money

In fact, at my client meeting yesterday, we separately interviewed 3 existing associates and discussed their own ADY’s alongside the operating costs for the practice. The result of that conversation was that we were able to INCREASE the % paid to all three of them – in return for an agreement to aim at higher ADY targets. The associates will increase their take-home pay. The principal will increase his profit. The team in the practice will see the benefit in better pay and a nicer working environment (the extra profit will be reinvested in the practice). The patients will enjoy better customer service, a better environment and clinicians working to their strengths. Win-Win-Win-Win. All because we measured something accurately. What’s that Michael Gerber quote?

There is no performance without accountability – no accountability without measurement.

I love my associate profitability spreadsheet – it’s one of the best tools we have developed in the 11 years of The Dental Business School. So… A lovely hard-working day with my client and 7 of his senior team in the conference centre at Doncaster College – then over to Leeds centre for dinner last night and a preliminary discussion with another client who is proposing to open a brand new practice. Needless to say, the client is a visionary (like myself) and wanted to wax lyrical about what his business will look like in 10 years from now when he has 500 franchise branches covering the nation. So when I asked how he was intending to find the first patient, he was somewhat taken aback – perhaps by the realisation that he didn’t really know the answer. Back to the drawing board – spreadsheet please, demographic analysis please, marketing funnel please. I felt such a moaning old sod – but it’s necessary – and that’s why I’m there. He’s Luke and I’m Obe Wan. Oh dear – I’m getting old..

“Teach you I will”
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