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I was talking to a Principal recently who bought a practice just 2 years ago and is having a very tough time of it.
Like many others of her generation:
She paid handsomely for the goodwill with bank borrowing;
Discovered an ageing patient database who were the beneficiaries of a full capitation plan;
Revealed plenty of supervised neglect that she is still attempting to rectify, without much compensation;
Inherited a team somewhat resistant to change.
Then along came 2020 and Covid-19.
The numbers have just surfaced for her second trading year, showing drawings of over £80,000 (about the same as she was earning as an associate) but - oops - taxable net profit of £40,000 - essentially she is overdrawn in her own business, funded by short-term debt.
Did I mention that she is a single mum, trying to balance the needs of young children with the responsibility of running a business and "being a dentist"?
Her exhausted questions to me:
Do you think I can convert to a simpler dental plan that will cover preventative maintenance but allow me to get paid for the fee per item work I'm doing - especially in the current climate?
Do you think I should just give up, cut my losses and go back to associateship, so that I can spend more time at home?
My answers:
Although a plan conversion would be beneficial, the timing could be better, when we are bombarded by the news media with negative and misleading information about the economy;
A better priority would be to energetically engage in the internal marketing activities I constantly suggest, so that the existing patients can be enrolled as advocates - recommending the practice to family, friends and colleagues. We know that new patient numbers in private dentistry are at an all-time high - and that people are investing in indulgences and improvements as an alternative to experiences - dentistry is booming;
Over the years I have worked with dozens of clients in her situation and I find that, on average, it can take 3 to 4 years to turn the business into a genuine profit centre. Covid-19 may well add another 2 years to that timescale. Measuring the success of the business after 2 years of trading accounts is insufficient time to have the "good news" that she seeks.
I asked her to grit her teeth, get her head down and push through the pain - on the basis that she can have a successful business - eventually - if she does the right things right.
If I had known her when she bought the practice, I might have had some words of warning about the challenges ahead. Maybe strong enough to put her off.
I wasn't around and, like so many others, she didn't do adequate due diligence because she didn't know what she didn't know.
Two and a half years in, in the middle of Covid-19, is not the time to walk away.
Nobody ever said that owning a business was going to be easy and 2020 will be seen, I hope, as our greatest challenge.
There will come a time, however, when we look back at the (probably) two years that Covid disrupted our lives and see that we survived, learned a lot and moved forward.
Don't give up.