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Dr James:
Excellent, welcome everybody to myself and Andrews practice extravaganas. These are becoming a little bit of a thing, aren’t they? On dentistry invest, and they aren’t they?
Andrew:
I think they are. Yeah, I enjoy them. They’re good fun. They’re good fun. I’ll go forward to the chat tonight, absolutely. Nice to have you back in the UK as well, James, you international jet sessor.
Dr James:
I know. Well, not quite, not quite, maybe someday, maybe someday. But yeah, definitely I’m going to be there sometime in Nashville and New York. Yes, I was out there for a dental conference, which was interesting. Those guys in Nashville, they know how to party. It’s like a flipping throwback to the Wild West out there. It’s absolutely. You don’t kind of believe it until you see it with your own eyes. And then, yeah, onto New York for a few business meets. And yeah, whilst I was there, I was always going to make a little bit of a holiday out of it. I think it would be. It’s only sensible, you know, not going to come straight back, am I? It’s flipping Manhattan, you know.
Andrew:
So yeah, when you’re there. When you’re there, you make sense. But honestly, james, before we start, thank you for the group and the work you do, the amount you put into this and the stuff you’re working on behind the scenes for everybody, and the amount that you push out through the group, which is all free, honestly, it’s fabulous and I know a lot of people on the group and you get those thanks but honestly, for everybody who’s part of the group, the stuff you do, it really is so useful. You learn so much about not just finance, but how to think and how to have long term prosperity. So now, thank you. Thank you for the group, thank you for all you do.
Dr James:
Thank you for the kind words and you know it’s a privilege. You know the thanks goes both ways, because it’s really special to be able to create something like this and have so many people be involved in it. And you know, for me, when I started at the very beginning, it’s interesting because you tend to forget how much you’ve learned. And my journey just started out by reading books and I thought everybody knew this stuff how to create wealth versus how to build wealth, how, if you want to put wealth in your hands, it’s actually not via investing, that’s more a long term thing. What are the things that you should do to be actually able to create wealth and put them right there? Then, how do we tailor that specifically towards dentists? And through watching conversations and interactions on the group, I had no idea how far I’d come along and how far I’d went down that road. And yeah, like I say, what is more important than freedom? The purpose of money is not to have money. The purpose of money is to buy back your freedom. It’s a tool to do that. And, yeah, it’s special to be able to share that information. So, thank you, my friend. No talk, no talk. Very grateful, anyway. So, as I was saying, tonight we’re here to talk about dental practices and specifically this time we’re going to talk about how that journey looks for the individual the entrepreneur, the person who sets up a squat, the person who buys into dental practice, whatever that specific relationship is. We’re going to talk about that journey. We’re going to talk about when they enter, how it evolves as time goes on, because it does change, of course. And then how does that exit typically look? Because we’re going to signpost that for people out there who are maybe I don’t know their finger is kind of itchy and it’s on the trigger and they’re about to pull the trigger on selling their practice, maybe this information will help them to decide, first of all, when and how they’re going to do it. So, andrew, yourself, you’re obviously a regular face on the group, shall we say, but there’ll be some people in the audience tonight who don’t know you, so it might be nice to do a little bit of an intro.
Andrew:
Yes, sure, so my name is Andy Acton. I’m one of the owners of Frank Taylor Associates. That’s part of the FTA group, which includes a commercial finance brokerage, a regulation of financial services company for insurance and protection, got a video marketing business, fta media and FTA law, which is a law firm, but we’re best known as the valluers and brokers for dental practices and we cover England and Wales. So yeah, I kind of known as the dental broker.
Dr James:
That’s awesome, my man. So, yeah, people will know, andrew, from the group and from the other podcasts that we’ve done together, and the lives, of course. So let’s jump straight into the matter at hand. We’re here to talk about entering your first dental practice and my question, I suppose, is let’s put ourselves in the shoes of that individual who’s thinking to themselves hmm, I’ve been an associate for a few years, I want to take it to the next level. I want to purchase my own dental practice. What is the profile of that individual who typically buys a dental practice? Is it what we might think the paradigm is, or the preexisting archetype is of that young, full-hardy, bags of energy dentist who’s just ready to jump in with two feet at the deep end, yeah, or is that slightly different? If I got that wrong, what do you typically say?
Andrew:
Yes, lots of them get carried away, lots of them get characterised as you know, the young, hungry, go-get type type characters. The classic avatar of the first-time buyer would probably be late 20s, late 20s, early 30s somebody who probably has not always, but quite often there’s either dental or business background in the family which perhaps gives them that confidence to move in that direction themselves. Again, not always, but quite often there’s support from the family to get on that path of ownership, and that support doesn’t always just come in the shape and form of money, which is an important part of it, but just encouragement. And I think that I think encouragement is a really important word because I think motivation is great. But motivation can sometimes be a bit like a dopamine here and it kind of comes and goes quite quickly. But I think encouragement is something that you want to do yourself and there’s some drive and it should be fostered. People should be encouraged to do things. So I think where people have that ambition to own a dental practice, that should be encouraged, which is different from being motivated. So, yes, late 20s, early 30s, that kind of the typical person that would be looking to buy a dental practice. But what I would say is. You don’t have to rush into this. Before we came live we were talking about Gary Vee and Gary Vee talks a lot about. You know, you’re only 35, you’re only 40, you’re only 50, you’ve got loads of time and I think someone that does apply across the dentistry and I think we see a number of people who get itchy and feel that they’re behind the pack when they’re 27, 28, 29, and you’re not. You know, you’re still learning your craft, you’re still mastering your skills. So there’s no great urgency to own a dental practice and in many ways you really want to get so comfortable with the dental bit before you move into the business ownership arena anyway, because the dental bit is a bit that you spend minimum five years at dental school learning. So you’re naturally quite comfortable with that and by nature of training dentist-style technicians, that’s not the key skill set required to run a successful business. So if you can spend a period of time getting really good at the dental bit, you can then do that. You know, I think the phrase is do it with your eyes closed, but I’m not recommending you do it densely with your eyes closed. You get the gist. So if you get comfortable on the dental side of things. It then frees you up in your mind to then focus on the business side of things, because when you first buy a business you’re probably gonna need to still to work clinically three, three and a half, four days a week, just to make the numbers work. So that’s not a lot of time left over for the business side of things. And remember that’s not an area that you’re qualified in. So I would say don’t rush too much, but be prepared that you’re gonna be moving into a world that you’re not that prepared for based on your basic training. You’re training at the beginning.
Dr James:
Well, this is no, I think, totally 100%. I mean, imagine, right, you’ve only got a limited amount of bandwidth. Imagine fretting and not knowing what you’re doing clinically and signing up a dental practice. Holy moly because not knowing what you’re doing clinically. Let’s be real, everybody’s got a lot to learn, especially at the very start. And the only way the thing about it is right if you wanna get better at football, you wanna get better at sport, you can just go and play it right, you can go and practice in your spare time Dentistry you have to physically be in that room and be in that patient’s moist to actually get better. There’s only set times that you can improve, particularly at the practical side. Yeah, and to do that, to do so a few years under your belt. I 100% think so. I was looking back, like looking back on my journey. Yeah, I’m really glad I didn’t jump head first into something like that. While I said a little lot to learn, I recall once upon a time you and I were having a life on the group and somebody asked a question and it was something along the lines of hey, andy, I’m thinking about buying my first practice. Should I think about it? Should I get some experience. Should I go for it? And I don’t know if you recall this or not, but I was like, what’s the big deal? Just go for it, just do it. You know what I mean? Yeah, and then you were like you threw a little bit of cold water on the whole situation. You were like, no, but James, you’re looking at it with a different pair of eyes. You’re looking at it from the pair of eyes of somebody who’s like a high energy entrepreneur, someone where in your world it’s advantageous to be like that. Okay, and in lots of the business world it is yeah, but what we have to consider with the dental practices, you take on a flipping load of debt to actually get this thing. You know what I mean. And if you’re 50, 50 in dentistry, if you’re not even fully decided, if you like it, number one, or your technical skills aren’t quite there yet, that’s a lot on your shoulders. That’s a lot it is. It’s amazing.
Andrew:
And also I think there’s things that people can do before they buy a business to see whether they feel comfortable in that world, because it’s not as binary as I’m an associate or I’m a practice owner, because they’re massive ends of the spectrum. What you could do is, if you’re unsure about whether practice ownership’s for you, you could continue to operate as an associate but you might be able to speak to your principal, like getting involved in some business elements or the practice, so when the principal goes on holiday, you could be the point of contact for the team. You may be able to put your hand up and say well, could I get involved with some of the marketing activities? I’ve got an idea for a social media campaign. Do you mind if I create some content and post it and put some rules on Instagram or whatever it might be, so you can start to get involved in marketing and managing people? Or you may say well, can I take on some of the HR events? I think we need a social events program. Could I organize that so you can get yourself involved in the business side of dentistry without needing to go straight from being an associate to a practice owner? It’s just making sure that you’re involved and if you did those things, then when you moved into the world where you are the practice owner, you’re going to feel more comfortable. And if, through that process, you find actually you don’t particularly like managing people or you can’t cope with the variety and the multi-tasking, you can still be an associate, and don’t say just an associate. You can still be an awesome associate. You can still change lives. You do not have to own a business to be worthy you. It’s still an incredible job and there’s lots of people that kind of see it as being that kind of stepping stone to greatness. And it’s not. It’s just a different role within dentistry and some people do it because they really want to have their own tribe, their own team to deliver their own vision. And if it’s for a reason like that, then that’s great. But don’t do it because all your mates are just buying practices and well, I suppose I better get one, because that’s what everybody else is doing. I think there are things you can do before you buy practice to give you an insight into what practice ownership might look like. It’s not going to completely prepare you for it, because when you own a business it’s on you, everything is on you, but it will give you a little insight as to what it’s like.
Dr James:
Yeah, like owning a practice, like and you know what’s interesting, someone actually said this to me the other day and someone has asked a question in the chat and normally I’d leave the questions until the end. But this is actually relevant to what we’re talking about, which is when to enter into a dental practice. Got some questions? Point in here, shout out to Jane and Adrienne. We’ll get to your guys questions momentarily. But Kishan has actually asked something super relevant at this point and that is and I’ve heard of this as well and you’ll have no doubt heard of it and then you’ll have the Norman Clatcher in the technical terms and all of these things. But I’m aware that there are certain corporates out there that when you to go back to what I was just saying, which was owning a practice like you go into the practice 50-50 with the corporate, they supply all the materials and the advertising and the background stuff you know, and then you’re the front end effectively. Yeah, so this is super relevant to people who are entering a dental practice. When do those work and when do they not work or do they always work? Are they a good idea?
Andrew:
So they’re a good idea. There’s a number of people that operate on that model and I think they work in situations where perhaps you either don’t have the financial resources to do that yourself because effectively you’re partnering with somebody, which means typically it would be a lower entry level because you’d have a partner and in that situation you would share the investment. But also it helps in situations where perhaps you are keen to get into practice ownership but you’re concerned about the skills and the abilities that you have and you’re going to be able to make it a success of it on your own, and so having a partner means that they will look after quite often lots of the infrastructure side of the business to enable you to focus on the clinical side but then also get involved at the business at a local level. So I think those structures work well. If you need perhaps some financial support or you’re looking to work in a partnership where you’re going to get support beyond it all, beyond your shoulders, the potential downside to it is that you perhaps don’t get to deliver your vision because it’s not solely your business, so you’re not the person that kind of sets the rhythm, sets the pace, sets the terms as to how that business is going to be, because there’s already going to be an entity of sorts that’s established, so you’re going to need to fit within that. So it is a bit horses for courses and if people are looking to get into ownership, it’s definitely something they should explore, if only to explore it, to discount it.
Dr James:
It should be something that people look at.
Andrew:
But those are typically the reasons that people get into it because it’s a quicker way into ownership for some people who either don’t have the skills or perhaps don’t have the resources.
Dr James:
Horses for courses is the key phrase. Yeah, I wasn’t even aware of these until I think about four weeks ago. I was chatting with one of my friends who set up his own practice and I was like, where’d you get the capital from? And he was like, oh, I did this, this, this. And then his actual term terminology was practice ownership light, which was why, when I said that, it just popped into my head so, yeah, there you go, interesting.
Andrew:
But also some people go into that environment and I know a number of people who start off going to that environment and buy the practice and then, through that partnership, they then get involved in their second and third practice. So it’s a modern way. It’s a hybrid of only practices. It didn’t really exist that long ago. It’s a new way of working and, like I say, it suits certain people. But what I would say is it’s worth exploring and understanding the pluses and minuses so you can then look at that against just owning a practice on your own.
Dr James:
Do you know what I’m just gonna say. One quick thing on purchasing a dental practice before we move on, and I think that people think it’s their only route to increase in their wealth, which it’s totally not. Okay. There’s so many. It’s a bit like this Now, when I use the term received wisdom, it’s almost like a term that’s pejorative as a negative, but I don’t mean that in a negative sense. I only mean that it’s kind of like hand me down knowledge, and it’s basically the perceived only way that you can grow past a certain point as a dentist, and that’s fine. For lots of people, it is the best way. Having a business is one of the quickest ways that you can create wealth. Okay, take it from me, right, forget about trading and investing in all of those things. That’s more how you build your wealth, and it takes time, maybe decades. All right, when you go to your FA, when you get that advice from them, they’re talking about time frames of 20, 30 years. Okay, what’s actually gonna put money in your hand? Business is one of the best ways to do that. Therefore, on the dental practice, okay, but it’s not the only way. All right, and just be aware of that. All right, whereas people tend to think that if you wanna get from A to Z, that’s your only method. That’s all I think.
Andrew:
if you and I think if you’re, if you’re a high grossing associate actually buying a business from a Money in your pocket point of view, it could be a backward step for the first year or two. You could actually step backwards if you’re, if you’re an associate grossing let’s be generous and say associates grossing 300,000 pounds a year, you know they could be. Their cut from that would be in the could be in the 120 to 140 range. As a, as a business owner, you may be paying handsomely for the goodwill goodwill values very high at the moment. You’re gonna have a significant bank loan in the majority of cases. So you’ve got your cost to cover, you’ve got your bank loan to pay and then the bit the left over is yours and in lots of cases I said a bit the stuff, though for the principle being in the the 80 to 90, 70 to 90 range to start with. Yeah, so it, like you say, it’s not an immediate way to get to get rich, but what it does to, as it gives you an asset which then gives you a platform to build wealth. But this is not, this is not a short-term get rich quick scheme. This is a five, ten year decision that you’re making. It’s not something that’s gonna happen overnight.
Dr James:
There’s a really interesting concept as well, called your true hourly wage, right? Have you heard of this? Yeah, what you’ve got to do is you don’t just take the hours that you’re at work and divide however much you grow or I have a much in net in a year by how many hours you’re actually in work. What you have to do is you have to add on everything that is in that is related to your work into that equation. Okay, so that includes commute, right? That includes managing the staff. That includes bits and balls on your practice. You know, when you’re a practice owner, you might find yourself doing some DIY things like that. You know, ringing patients, blah, blah, blah, dealing with complaints. Okay, add all that extra time in. Okay, take the 80 90 K, which is perhaps less than you would have been netting anyway, and Divide it by how much extra you’re spending in the practice and tell me what your true hourly wage is. And I’m not all Certain, I’m certain, I’m certain, I’m certain. It doesn’t always compare favorably. But like you say, listen, it’s not all about money. And I don’t want to go through life like this with a pair of blinkers on and Just say that’s all it’s about. Because it’s not, it could be a passion project. For a lot of people it’s a passion, it’s what you want to do and in that case, absolutely that’s a factor in your decision. Or well, and you know, it’s not always the case that you’re necessarily going to be earning less. Just be aware that that can happen and it’s not the flipping Goose that say the golden egg that everybody thinks it is and also things going cycles as well.
Andrew:
So at the moment, country-wide there’s a there’s a crush on recruitment. Yeah, people are struggling to find people, wages are going up, people are demanding, you know, higher percentage, higher day rates, but that cycle changes so it depending on where you are. It may actually be beneficial to continue to work on as an associate for a period of time if money’s your main motivator. However, I also remember times when you know a Associate weren’t able to get all the days working that they wanted. So these things do go in cycles. But I know, I know from my own experience coming through COVID. The owning businesses meant that you do have an asset to return to as a self-employed individual. It leaves you vulnerable and I know that that dentist were particularly poorly looked after through the pandemic anyway and there were no grants available and and, yeah, practically had to shut and then some of them slow to reopen and I think that that shocked a lot of associates Into what it felt like to be self-employed and not have an asset. So the long-term security of having a business behind you is Comforting and don’t get me wrong, it wasn’t fun in any shape or form, but at least there was an asset to return to and you had, you had something that you could work with, whereas as a self-employed person you don’t necessarily have that. Equally as as a dentist, I don’t think you’re ever gonna be out of work, just by nature of the size of the population, the size of the iron and then a number of people that are here, so there’s never not gonna be work. But then it’s all about the conditions that you want to work in, isn’t it? It’s about where do you want to work and what those conditions to be like.
Dr James:
Let me tell you an absolutely bang-on. What you’ve just said is the counterbalance to what I’ve said. And let me also throw in another thing on top of what you said. What’s one of the best inflation busting assets? Let me just clean my camera there. We are just lost focus there for a second. What is one of the best inflation busting assets? You can ever have Business? Because, guess what? You just put the prices up, don’t you? You know, and you can do that indefinitely. And when you pay off that loan, you’ve got something you can, depending on how you’ve configured your business, you can step back and it can run itself. Yeah, yeah, weak, you know. So that’s what you, should you?
Andrew:
we said it before that we’re talking a lot about money, which is right, because you know we’re going out on the dentist who invest channels. That kind of makes sense. But there’s a there’s a whole nother dimension to business, isn’t there? There’s that. What does it feel like to deliver your vision? Yeah, what’s it like to manage a team? Have your own tribe? Yeah, you can develop those services if you want to create the brand and the design and the look and the feel. You get to do all those things as a business owner and you know the money is always a byproduct of doing those things. Well, yeah, that’s just kind of the the way of kind of keeping score the money side of things. But those are the, for me, those are the things about business that are really exciting.
Dr James:
It’s fun. It’s fun as an act. You know you’re always one idea away from it, making a million points. You know, yeah, that that’s the fuel that keeps up and that can happen in business. It can’t happen so much when you are, you know you’ve got a job or you’re an associate. Yeah, it’s less well as likely to happen when you go to business. It’s about the. A business is effectively delivery of value via a system. Right, and is these tiny little tweaks. You tweak like one or two little cogs and all of a sudden the whole system becomes so much More effective. You know, and that’s something to bear in mind, because if that stuff really excites you, maybe it is for you, maybe a practice being a practice owner is for you and forget the numbers and stuff like that, because you’ll make it work. Yeah, because you’ve got that CEO mindset. Ceos make decisions, then they make it right later. Yeah. Also one tiny thing we’ve realized we’ve dwelled on entering a practice for a long time, so we should probably move on soon. One tiny thing I’m gonna say before we do how many dentists are there right there that I’ve met that become a principal? Realize they actually like the business side of things more than the flipping dentistry right. And then they become a practice owner you know, sequential practice owner because they just love that right and maybe they do like one or two days Just to keep your fingers wet. And then the rest of it is just about growing their dental practice, seeing how much they can, how efficient they can make it and how much they can leverage themselves. That’s also a thing, oh.
Andrew:
And and yeah, and I think those people are. They’ve got some kind of core business entrepreneurial skills and I happen to qualify dentistry. They could have been accountants, engineers, doctors, vets because they’ve got that core business skill within them. The reality is that the majority of dentists still tend to be quite technical and technician based, so they don’t naturally find business easy. I see lots of comments on your Facebook group and others where people are asking business related questions and they find it quite stressful and challenging because the bit that’s been five years learning to do, which is a dentistry kind of, comes quite naturally. But managing people and dealing with a disgruntled team member or I’ve done a marketing campaign it’s not works and I’m not quite sure what to do. But those are the more challenging areas and a lifeline, isn’t it? We feel uncomfortable with the things that we’re not particularly skilled at. Those are the bits where we get exposed and I think, as a general guide, the more you can invest in yourself, in developing your business skills, either before you buy a practice or even as a practice owner, it really is a good investment of time and I think for many dentists the challenge is that you can go on a clinical course and you can learn I don’t know how to do ICON or whatever it might be and you spend 700 quid and on Monday morning you can get an immediate return on that investment by treating a patient. If you go on a course and learn about strategic marketing or how to manage your team better or whatever it might be, the ROI on that isn’t so obvious, but the long-term ROI on that is massive because if you know how to motivate your team and how to get their interests aligned with your business or whatever it might be within business, those things just get those. We talked about greasing wheels and getting cogs-turning. That just means your business just moves at a beautiful pace. But it does require some long-term thinking to invest in yourself and your team on things that might not provide an immediate return.
Dr James:
Totally. We’ve had some questions coming in here. I see Jane in the comments box. Jane, you’ve asked some absolutely tremendous questions and these fit in with what Andrew and I will discuss at the end, which is exiting your dental practice. There’s one here about valuations. I’m going to say one teeny tiny thing on what you’ve just said, Andrew. I’m going to paint with really broad strokes here, okay, but you know the way, what I’ve noticed personal, it’s totally anecdotal. There’s probably no science in this whatsoever. I don’t think there ever can be science on what I’m about to say. But totally broad strokes, okay. People who do best in business are actually like the really outgoing flipping, extroverted, entrepreneurial people, generally Not always, okay, Not always, but broad strokes, like I said, yeah, Whereas dentists Sorry to keep you waiting, Jane, Jane’s having to go at us in the comments box. We should probably move on. It’s me who’s the land thing, but anyway. So back to what I was saying broad strokes, those are the entrepreneurs, the dentists who succeed the most clinically are the really technical, detail-focused people, right, those people are quite often poorer opposites on the people spectrum. You know what I mean. And that’s not listen, that’s not to say, that’s clear cut, like out of all and I don’t want to say anything controversial, you know, and I’m not, but, like I say, painting with broad strokes, the people who succeed clinically are not always the people. You have that skill set to be the business person or the entrepreneur or whatever. You know what I mean and it’s just interesting, the two don’t always mix and, like I say, that’s a total generalization and there’ll be people out there who are living proof of the opposite of that. It definitely proved me wrong. Proved me wrong.
Andrew:
I think people can change every time. I came across the phrase a while ago which is like the synthetic entrepreneur sorry, the synthetic extrovert. And they’re not people who are lying about being an extrovert, but effectively, over a period of time, they’ve come out of their shell because they need to, because of their leadership position, because they want to drive themselves forward. It’s not their natural state. Their natural state is a bit more reserved and a bit more introverted. But they have to force themselves to be more of an extrovert to make sure that they can lead a team and make sure they get heard and make sure their ideas get pushed forward. And I think that probably applies to a lot of us. I don’t think that many people genuinely are truly extroverted. I think sometimes we get very passionate about something and we want to push the idea forward, and so we kind of get very noisy about it, but it’s through passion. So I think that I think lots of people can learn that skill. But, like you say, I get what you’re saying that there’s lots of dentists who, clinically and technically, it is a more introverted approach to life.
Dr James:
Yeah, totally, and you know what you said. I totally caveat everything with what I’ve said, with what you’ve just said, in that people can learn and people can change. I like broad strokes right there, broad strokes, total generalization. So yeah, anyway, cool, right, well, evolving and people changing actually links really nicely into what we’re about to say next. So those individuals, they jump in, they buy their practice, they’re enjoying it, let’s say it’s going well. How does their relationship with their practice evolve over time?
Andrew:
So normally the first year is a bit like if you’ve driven down a country lane and a rabbit jumps out from the head row and it looks at your car. That’s what your typical practice only looks like for the first year, yeah.
Dr James:
Rabbit in the headlights.
Andrew:
Everything’s new. You don’t know which way to turn. You don’t know what answers to give that you need to work clinically to pay the bank loan. There’s so many questions. Guaranteed things that you weren’t expecting are gonna happen early on in your entrepreneurial, your business life. Someone’s gonna leave, someone’s gonna go long-term sick, you’re gonna have maternity to deal with. Whatever it’s gonna be that all those things are gonna happen within the first 100 days, because that’s just life. That’s just the way things work.
Dr James:
And then what?
Andrew:
happens is very slowly you start to realize that you can breathe, your chest isn’t quite so tight and it all just gets a bit easier. And for some that comes very naturally. It happens very quickly. But for many it can take a year or 18 months before people relax into ownership People. Then a few things happen. Either people just continue to run the practice like it’s been run before and they get some marginal growth. So they buy practice at turns over 400,000 and they might add five, six, seven percent each year and it kicks over instead of a very good business it’s still doing really well. Then you get other people who want to kind of go for the moon and they wanna add surgeries and add services and they might see some growth. So you get people on different paths. You get some people who have some serious growth and they kind of hit a plateau and they’re not quite sure what to do next. And others find they go kind of for the slow and steady wins. The race approach. But typically people continue to go through that for about 10 to 12 years. That’s the typical period that people are in dental practice for and in my experience of doing this for 22 years is, I think people just suffer fatigue. I think the majority of dental practice in this country are owned by sole principles and I think just the dripping tap, the grind of owning and running a business tends to wear people out after about 10 to 12 years. And it’s not often the patient in the chair that causes them the anxiety and the grief, it’s the managing, the people CQC, gdc, property issues, rising costs, da-da-da it’s all the stuff that sits around. So I see a lot of people that are 10, 12 years in and I’m just done when I ask people how long they’ve owned the business, for I’m always staggered at how often they’ve fallen in that 10 to 12 year window. But interestingly, quite often what happens is they’ll sell but then they might come back and have another go. So if you think, going into the scenario where perhaps you might buy practice at 30, that means that people are getting out of ownership in their early mid 40s, which actually is still very young, and that’s why people often come back mid-late 40s and use all that experience and richness and the wisdom that they’ve taken from that first experience and then go on and buy and set up another practice. But that’s kind of the typical profile of what people like to run through it, but for the most part people really enjoy it. They find it a really fulfilling, enriching experience of owning a business. But you should be prepared that the first year could be a bit hairy.
Dr James:
Well, I think certainly one of my biggest misconceptions was that I just don’t really think that I realize at the start how my paradigm or concept of what my relationship with work was suddenly influenced and defined in ways that I didn’t even realize. So what do I mean by that? So I thought that even when you start your own business is 9 to 5. I just thought, yeah, you get some time off.
Andrew:
Oh, no, no, no. Did you say 95? Was that the hours you’d work a week?
Dr James:
Probably, dude. That’s a week off Like come on, yeah, but seriously no, I thought it was 95. I always thought it would be that way. And what I didn’t realize, here’s the biggest gem. When you own a business, it’s actually more of a lifestyle. It’s no longer a job. It’s a lifestyle, for me anyway. Right, because it’s something that you have. There’s days that you work less and there’s days that you work more, but you’re always doing something. But the good thing is that you’re inadvertent. You don’t even realize you’re doing something half the time because you’re just messaging someone and you’re like, oh crap, I just did some work. You know what I mean. But what that means is because you’re doing it and you’re not even realizing. Then what that also means is it can’t be that strenuous, right? You know what I mean. Yeah, are you with me? Just pick it up and do it, right? I think it’s how we define work. Well, ah, and there’s a pure, and you know what that’s really interesting. Right, because there’s actually three ways that you can be retired and not work right. One is where you have loads of money, right? The second is where you become a hermit, so you don’t need any money. You with me. And the third one is well, you don’t actually work because you love what you’re doing so much, because then retirement is exchange and present on happiness for future happiness. That’s just another way of thinking about retiring. Yeah, but if you love what you do, you’re happy in the moment. That’s the sweet spot. That’s very important that you said that.
Andrew:
But also I think if you’re going to move into business ownership, you need to understand that work is beyond treating a patient. Quite often the amount of conversations I’ll have with dentists and I say what are you up to today? And they say I’m not working. And I say what does that mean? So what are you doing? What they actually mean, what they meant to say, was I’m not seeing patients, but what they said was I’m not working. And then you say so what are you doing today? And they say I’ve got to go and see my accountant. Or oh, I’ve got to do the budget. I’m speaking to my practice manager about improving our recall system, but you clearly are working. So when you say I’m not working, you’ve been conditioned to believe that working is clinically treating patients and anything that isn’t treating patients is not working. But as a business owner, as a practice owner, you need to understand that there’s a lot of other things you’ll do that will work, that fall within the bracket of work, but they don’t involve holding a handpiece, and I think the sooner people can understand that the work isn’t just seeing patients, I think you start to get slightly better balance in your week Because psychologically I think it’s unhealthy to think that the only time you’re working is when you’re seeing patients, because actually you’re doing a lot of work outside of that. But you also need to find time when you’re truly not working. You’ve got to like you say we’ll go to you. We all jump on our phone and pretend that it was just a quick message, but actually having that time when you’re truly disconnected I swim most days and those 45 minutes in the pool I’m truly disconnected Because the only thing around is water. So in that moment I’m truly and utterly not working. But to find those moments when you’re not working, as in doing anything, I think as a business owner, is really important.
Dr James:
And you know why that’s also clever, because, even though I bet you’re not technically working, you’re still. Ideas are popping into your head, and that time is gold dust. You actually have to have thinking time as well, and one way that you can ring fence thinking time is if you exercise every day, and that time I swear that time pays for itself, not only just in terms of your health, but actually in remuneration, because you’ve had some time to think. James just said something in the chat Spit your week. Oh wait, hang on, it’s gone. You work 80 hours a week to avoid working for someone else for 40 hours a week.
Andrew:
Yeah.
Dr James:
Interesting. It’s the life of someone who’s self-employed. It’s the best bit. The best bit is that you’re your own boss and that’s the price you pay, I guess. But yeah, Anyway, Jen, you’ve actually asked some wonderful questions here in the chat. We’re 100% going to come to those. As we said at the end, let’s move on. We could probably talk on this one all day and I’m just scared that we’re going to keep ping ponging on the middle part. That’s what we did in the first part, so let’s just sidestep it and let’s move on to the next bit, which is accident your practice. How does that typically transpire for most dentists? Do they jump in for a few years, decide it’s not for them? Are they the hard cores that have been going at it for many, many years? What does that really?
Andrew:
look like. So some people and I think they’re really brave people get into ownership, realizing a year or two is not for them, and get out and having the self-awareness and the confidence to do that. I take my hat off to those people Because quite often when we make big decisions we kind of dig our heels in and say I’m going to make it work. Whatever cost, I’m going to make it work. And sometimes the smart thing is to say it’s not for me and I’m getting out, and we’ve had a few people over the last couple of years that have made that bold decision and I think that shouldn’t be underestimated, how important it is to change core. You were saying about that kind of the life of a CEO is make a decision, you get more information, change direction, make another decision, and if you make a decision to buy a practice, no matter how big that decision is, you can get out of it, you can unwind it, but it’s unusual.
Dr James:
And can I just say one tiny thing on that? Here’s a really nice analogy. Think about it like this Imagine there’s a restaurant just outside your window, just outside where you live. You keep looking out your window and you keep thinking to yourself I’m going to try that restaurant, I’m going to try that restaurant. I’m not going to go to any restaurants until I try that restaurant. That’s out the window. Now the thing about it is you keep going out of your house, you walk and pass the restaurant, but you have other places to go. You go to the shop, you go to see your friends, you go to do this, you go to do that. And next thing you know you’ve put off going to that restaurant for five years because you’ve just not prioritized it, because it slipped somewhere down the ranking list of importance to you. But you know you’re going to try it and you know that you’re not going to go anywhere else. Five years later you walk into that restaurant, you sit down, you look around. You Looks beautiful, you’re really hyped up, it’s gourmet, the waiter looks good, they’re really polite, all of those things. You order the meal, you take the first bite and it’s the worst meal or the best meal that you’ve ever tried. It’s either one, it doesn’t actually really matter. Let’s say it’s the worst meal, let’s say you don’t enjoy it. Can you see how you’ve? Actually, because you’ve delayed that decision, because you’ve put it off for five years, you could have had five years of having amazing meals in other restaurants if you just would have made that decision to go to it in the first place. Yeah, but the thing is you never would have known until you tried it. Right, and it actually works both ways. It actually works whether it’s the worst meal or the best meal. Ok, because if it’s the best meal, you could have had five years of fun. You could have had five years of amazing experiences in that restaurant. But the point is that you don’t actually flipping, no, until you do it and it comes back. The parallel in that is flipping practice ownership right Now. I know I get what you’re saying. Ok, yeah, there’s a few more things to consider. It’s not quite as flipping as just sitting down in a restaurant and going for a meal, but there’s something in there somewhere. You see what I mean. It’s just a way to start it and I think procrastination.
Andrew:
I think pain comes with procrastination. The longer you dwell on something, the longer you think about something, the longer you chew it over. It becomes painful. And once you take action, whatever the action is in light, you say you go into the restaurant. You have a crap meal. It was just a crap meal. You can go to another restaurant now because you’ve made that decision. But I think if you make the decision, at least you can do something about it. So, yes, some people would get out of ownership quickly. Most stay in ownership for that 10, 12, sometimes 15, 20 year period. But when it comes to exiting in life, typically it takes us between two and five years to make big decisions. We don’t necessarily consciously start the timer, but that’s the way it tends to work. And big decisions in life might be changing job, moving house, proposing to a partner having children, the big chunky stuff in life. We will often dwell and let those things permeate in our minds for between two and five years before we actually make that commitment and that move. So that applies to setting your dental practice. So by the time I get to talk to people, quite often one of the questions I ask people is why are you doing me today? Why today? What is it about today that made you ring me? And if it’s because they’re compressible, up the day before I’m probably going to try and talk them out of setting their dental practice, because that’s just a knee-jerk reaction. They probably don’t really want to sell their practice. We need to understand what else is going on. But quite often the story comes out that they’ve been thinking about it. They’ve been talking to their partner, their wife or their husband, and they may have explored it with their accountant and this kind of permeation has been filtering through the gray matter for a long period of time. So whilst people quite often sell after a 10, 12-year period, those embers start a couple of years. People talk to me and then they need to prepare themselves that they’re exiting your business. Sending your dental practice it’s not like going shopping at Sainsbury’s and coming out of the shawty for the food. You can do that within 45 minutes. It’s not even like buying a car that you can perhaps get done in a few days. Sending a house you can probably settle by house. These days sit at about three or four months. The truth with sending a dental practice is it does take about eight or nine months, and there’s people that will give you sales pictures and say, well, we can get it sold in three or four months. In extreme cases that does happen, but typically they can take seven, eight, nine months. It’s a long, drawn out process. So it’s really important for me to make sure that people are sure they want to go through this process, because they’re going to have to go through it at some point. But they need to be committed because they’re going to have to continue doing hard work. But the other thing that’s so important when you’re sending a dental practice is it’s still your practice Until the day of completion. It’s still your practice. So you need to keep your team motivated. You need to deliver excellent patient care. You need to do all the things you would do if we weren’t having a conversation about sending your dental practice, because you want to make sure it’s in the best possible shape when you pass over to the person who buys your practice, because, well, I think you’ve got a duty of care, but also that’s how you’re going to get best value as well. So, yeah, it’s quite a drawn out process, but I think people think about it way before. They’re actively and consciously aware that they’re going to take action.
Dr James:
Do you think most people go into it? Here’s something I see a lot, and it applies to financial planning as well. I think that most people, when they’re saving and when they’re investing, they’re not really doing it with an end goal in mind. They’re just saving and investing because they feel like they should. But it’s actually way more powerful if you have an end goal. And here’s why From my friends and people that I know who are IFAs, they tell me that the most common problem with dentists is that they were tired too late, with too much money and they could have retired much sooner. Because, think about it, if you only need like 20, 30k to live on, why have you got this huge, flipping 10 million chunk in the bank? Why have you worked all those extra hours to get that money that you’re never going to spend unless you’re doing it for your kids? That you’ve got some sort of ulterior motive, and I actually I’m going to take a while stab in the dark and I’m going to say something similar with dental practice. Like, if your end goal is to retire, seal off in the sunset and do all of these things, then wouldn’t it be best to start with the end in mind?
Andrew:
Oh, completely, and I attended an event with Mideo Joe, who lots of people will know. He’s got a Facebook group, a startup Facebook group, and he did a live event recently that I attended and spoke at. And one of the other guys that spoke there at the same event was Adarsh Stanky, and Adarsh was saying that he always has the end in mind when he gets into a business relationship with his bio practice or another venture, because that gives him that end goal to work towards and then that provides him with the exit. But the important thing, I think, in terms of planning your exit is it doesn’t mean you have to do it. In his case he’s exited a number of businesses and done phenomenally well. He’s usually an impressive guy. But if you prepare your business for sale and you have an exit plan, whether you execute that or not is your choice, but at least you have a plan to follow. And if you decide to stay in the game for a bit longer because you’re enjoying it or you perhaps haven’t quite met your financial goals, that’s fine, but at least you know whether you’ve hit or missed that target. If you’re just doing it ongoing, then your exit will probably come when you feel necked. Yeah, definitely, and that’s not a great reason to be doing it. But your point about what? Do you need to retire, I think, from an exit point of view, I think one people do not get financial advice. They do not speak to financial advisors early enough to understand what they actually need to sell their practice and still live in the life they were accustomed to. The second thing they don’t do is they don’t speak to an advisor and understand the benefits and the relief and the allowances of other words, why they continue to own a business, to make sure that they maximize it, why they still own that business. And the third thing is people aren’t necessarily that aware of what the values of dental practices are. So if their practices performed particularly well over the last few years and many have many have had terrific growth coming out of the pandemic, which is brilliant All it means is that their profitability has gone up, which means that they might be able to sell their practice and take it out next to a couple of years profit that they didn’t think they were going to get. So that might mean that if someone’s a bit disenfranchised with the profession and doesn’t particularly want to stay they’re living dangerously anymore. They might actually be able to retire one, two, three years earlier than they thought, because the value they’re going to get out of their business is going to be higher than they thought. And also, when you sell your business, you benefit from a different tax threshold than income tax. Therefore, the capital sum you get is a lower tax rate, so it’s not like earning income tax. So there’s a number of reasons to explore exiting earlier than you might think. Whether you take any action is a completely separate conversation, but I’m a massive fan of giving people information so they’ve got choices. Then you can make a decision in terms of what you want to do.
Dr James:
Yeah, you’re referring to entrepreneurs relief, right, yeah? Yeah, unless the thing like there’s entrepreneurs relief once upon a time was 10% up to 10 million, right yeah? Nowadays it’s 10% up to 1 million, yeah Right, I don’t like the direction that’s going. Okay, no, no, no.
Andrew:
Well, there’s talk about it coming down and down and down, and I will take the view that you have to look at the tax benefits that are available at the moment, trying to second guess where things again. The future just makes no sense, and I also for lots of people. If you’re a serial entrepreneur and you’re getting in and out of business all the time, then those percentages matter, but if this is your one and only business, you just have to work with the environment that you’re in. It’s just as it is and, like you said, I think, given the investments being made by the government, to get a pseudo pandemic tax generally isn’t going to be something that’s going to be coming down in any shape or form, because we need to make sure that we pay that pot. So anyone who’s looking at the tax regime at the moment, I think it’s going to get better. It probably isn’t.
Dr James:
Yeah, absolutely, and who’s to say what might happen? Let’s look beyond the tax. Let’s look at the person health, all of these things there. They’re unknowns. Let’s jump in with the questions. Jane was asked an absolute myriad of questions here, which is great because these are all fuel for brilliant conversations. Jane. Jane says James, are you saying that the people in Tennessee can party harder than the Irish? Yes, I am. They’re nuts out there. Jane says Andy, that’s a traditional. Oh, this is referring to something we said earlier. That might be lost in the conversation, but let me see here what was that question that Jane asked. I’m just looking for it here. Oh, yeah, that’s what it was. Jane wants to know when the best time to get your practice valued. When is the best time to get it valued If you’re thinking about it? Is it an ongoing thing or is there a point in time that you’d ideally like to get involved with these practices?
Andrew:
In a perfect world, I’d love to speak to people probably two or three years before they sell. What’s someone’s looking to buy Is they’re looking to buy consistency. And so if they speak to me two or three years before and there’s some things they could do to improve the performance of their practice in the next couple of years, there might just be fractional tweaks. It might just be increasing their chair occupancy, increasing their hygiene program, whatever it might be but there might be some things they can do to improve the business on a sustainable basis so that when somebody then wants to buy that practice in two or three years, they get a bit of exit. In reality, most people come to me and say can I get a valuation this month? I want to put it on the market next month. So I would say in a perfect world, a couple of years before they want to sell. But then there’s also a school of thought. Typically the people listening tonight may be homeowners and they’ve probably got a fairly good idea what their house is worth because they keep jumping on RightMove or Zoopla, because they’re keeping track of their house. Yet people check the value of their business when they come to sell. That kind of doesn’t make sense. Why wouldn’t you keep track of it through ownership? Because, whilst it’s delivering year on year profit, which is providing you with the money to have the holidays and the houses and that stuff, which is lovely, it’s also an asset that has value and keeping track of that isn’t a bad idea. So I think, in answer to James’ question, I think if I could talk to people two to three years before they were going to sell, that would be perfect. But aside from that, I still think it would make sense for people just to check in every now and then on what the value of their dental practice is, just to get for no other reason an EGO book. So you’ve got an asset that’s worth a decent amount of money.
Dr James:
Yeah, well, I mean, it’s part of your portfolio. Yeah, it’s part of your investment portfolio. You know there’s people who check their ICES and their crypto portfolios every day.
Andrew:
Yeah, exactly yeah. So why would you leave your business until the day when you’re going to sell it?
Dr James:
Yeah, yeah, yeah, yeah, yeah, yeah, cool. Another question from Jen Average time for sale and purchase and I six months, did you say earlier?
Andrew:
Yeah, I mean it’s probably around about seven to eight. Some push out to nine. We still do get some through in three to four months, but they’re rare. So I’d say the average is probably around six to seven months. But the critical thing that has the biggest bearing on the timeframe is the speed at which the seller does their due diligence. So if they can get, their paperwork lined up pre-going to the market. They could knock two months off their sale transaction time by being organized and prepared, because typically what happens is they get an offer accepted, they then speak to a solicitor and their solicitor then sends them the form of all the information they need to pull together and they grow and go. Oh, it’s going to take me forever, and it does. It takes them two to three months. If they did that at the point at which they committed to sell their dental practice, they can do that at their own leisure. They can go to the practice evenings and weekends. There’s no stress. That’s a wonderful way of doing it, but people tend to wait till they get an offer accepted and then start doing that, and that’s why deals take six, seven, eight months. The people who get really organized can get it done in three or four months. So I’d encourage people if anyone’s thinking of selling, get that paperwork sorted, do your due diligence early, because you’ll feel the benefit for it.
Dr James:
Gotcha Words of wisdom. Let’s have another question from John Mahoney. Shout out to John Mahoney how are you? My friend John Mahoney asks Andrew, in your opinion, are more practice owners attempted to create an associate-led practice as practice sales, sorry, become more skewed to corporates, in order to prevent being tied up as an associate for X years? Oh, good question.
Andrew:
So yeah, if you have a practice that you think is going to be attractive to a corpora and you don’t want to be tied in, getting that to an associate-led model doesn’t guarantee it, but it stacks the old in your favor that you wouldn’t be required to be tied in. So just a very quick description of the two models that we have. We have the independent interest that buys your practice. That deal typically looks like you want to get 100% of your money upfront on completion and you may have to stay around for a transition period, but you’re more than likely going to leave on the day of completion. On the corporate model, you will typically get something like 70% of your sale price on completion. 30% will be deferred over typically a three to five year period. You would continue to need to work in that business for that three to five year period to maintain the performance of the practice and possibly some other KPIs. If you have a practice where you’re not clinically producing income yourself and it’s all associate-led, there’s a very strong argument that says I don’t need to be tied into this business because I have not been delivering clinically. You’re going to receive all of the fees and the clinical team that have been delivering that on completion so I’m no longer required. So John’s point is yeah, if that’s your exit, then that works. The only thing to bear in mind with that as an approach is where you have a practice that is solely reliant on associates. The profitability of those practices is lower than if your principal working in your business because your associate costs are higher. So if you work as a principal-led practice on the accounts, I typically expect to see that profitability around about 25% of turnover. That’s quite typical and on a reconstituted net profit that could rise to 35%. If you’re solely reliant on associates, that net profit could drop to something like 12 to 14, 12 to 15%. So it’s not as profitable because you’ve got higher associate costs, but it may give you a better exit. So it’s a little bit kind of what you want, but what you might be able to do is you might be able to transition your business to be more associate-led in readiness for exit.
Dr James:
With that in mind. Yeah, absolutely so. Yeah, you basically start the process because you have a plan which comes back to what we were saying. Whereas if you’re selling at the drop of a hat, well, here’s the thing right, if you’re going to sell it, if you sell it at the drop of a hat, right. You just decide one day you’ve had enough, right. Then your worst nightmare is to spend another flip in three, four years in that practice. That’s not what you want to do, you know. Whereas, if you have the start date and the end date, or you might love dentistry, in which case you might want to stay on for three, five years, whichever, it’s just interesting to point these things out. That’s a great question, john. Thank you for that, andrew. We’re going to wrap up now. We’re coming up towards our mark. It’s nice to keep these things nice and tangible and accessible. Around 60 minutes Any part in words of wisdom.
Andrew:
No, I think I’d just say be the CEO of your own life. Don’t follow other people just because other people are getting into practice ownership. You don’t have to. If you really want to and it’s your thing, then go for it. Don’t hold back. Build your plan, understand what’s required, really commit to it, but make sure you’re doing it for the right reasons. Equally, at the other end of your career, manage that yourself as well. Don’t wait for a life event to happen before you take action. Don’t find yourself really fed up. Don’t find yourself on the edge of a health scare or whatever else it might be. Get your business ready for sale. Then you’ve got control of those timings and you can do it in a timeframe to suit you. A lot of this comes down to manage your own life and plan what you want, as opposed to what’s happening out there in the big bar world.
Dr James:
That was a sign bite right there. I really enjoyed that. If anybody didn’t listen to the whole podcast and they just heard that one sentence, andrew basically covered the whole thing. Thank you so much for your time this evening, andrew always a pleasure, my friend. If anybody wants to learn more about Andrew, you can find him on the group Andrew Acton. Feel free to reach out to him about anything and everything practice sales, andrew. As I say, it’s always a pleasure, my friend will catch up super soon.
Andrew:
Yeah, look out for yourself. Thanks a lot, cheers.