People and Profit

You can’t do it all by yourself. At £600,000 in sales you need a full-time practice manager. You handle:

1. Overall business strategy

2. Dentistry

Your practice manager handles:

1. Finance

2. Marketing

3. The patient experience

4. Treatment co-ordination and sales

5. Operational issues

6. Teamwork

At £1.2 million in sales you need a full-time business manager and a full-time clinic manager. They split 1-6 above. At £2.4 million in sales you need:

1. a part-time financial manager

2. a full-time marketing manager

3. a part-time social media manager

4. a full-time clinic manager

They split 1-6 above. As a result, the bigger you get, the lower your profit margin – because “people” are your biggest expense. “People” includes more payroll as well as more self-employed sub-contractors. At £600,000, run it well and you will hit 30-35% net profit before tax (and before your drawings). At £1.2 million, run it well and you will hit 25-30%. At £2.4 million, run it well and you will hit 20-25%. Above £3 million you will hit 15-20%. Bigger doesn’t necessarily mean better – sometimes it just means bigger. Becoming bigger is only possible if you embrace two important skills into your armoury:

1. Leadership

2. Management

Understanding the difference between these two – and grasping the essentials of becoming a good leader to good managers – that’s a key skill that will differentiate the winners and losers. If you are doing 1-6 (or any part of them) – you need a coach to help you recruit and train a great manager(s). If you aren’t hitting those profit margins – you need a coach to help you get there.