business decisions Tag Archive

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Eat what you kill

Now I am not much of a hunter however the saying “Eat what you kill” is a great business strategy to follow to ensure your financial success in dentistry and any other kind of business.

“Eat what you kill” translates to running your practice on a cash flow basis as an astute business owner and entrepreneur. This approach also works extremely well with your personal finances, and ultimately can be the key to avoiding the pit falls of personal and professional bankruptcy. And is so easy to manage. You do not need an accounting degree to follow this strategy. Anyone with the desire manage their business or personal finances extremely well can do this.

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This Tango Takes Three!

This tango takes 3!

This month’s article is an attempt to change the conversation with a non-performing employee from one of blame to one of collective responsibility. We are happy to point out that, in keeping with the provocative nature of these articles, there is probably plenty here with which you might take issue. We welcome your critical review.

We start with our definition of Stewardship, as offered by our friend Glenn Mangurian: the responsibility to protect, preserve and enhance assets that do not belong to you but have been temporarily entrusted to you.

As an employer and a manager, you have been entrusted with the human capital asset of your employees. You have a responsibility to protect, preserve and enhance that asset. You must leave behind a richer set of assets at the end of the year than what you inherited at the beginning of the year. We discussed this in recent articles on performance reviews (Employee Performance is not just about Results and Put an End to the Annual Performance Review).

In this article, we discuss the implications of this stewardship responsibility. When you hire an employee, you are making a commitment that you will grow this employee to be a richer person each year – not just financially richer, but richer in their craft, in their profession and as a human being. You, as an employer, are accepting this obligation, knowing everything you know about this employee you just hired. So, in a job interview with this potential employee, not only should you ask if the individual can perform the duties of that job, you must also ask if you have the skills to enrich the individual, if your company has the capacity to enrich the individual, and if the individual has the potential and willingness to be enriched. It takes the combined efforts of the employee, the manager and the company for the individual to be enriched. In other words, it takes three to tango.

Does every employee have to grow each year? What is wrong with Joe, the welder in the machine shop who just wants to be a welder? Joe is a darn good welder. That is what he wants to be, he doesn’t want to do anything else, and I want to keep him. Joe is happy. He gets a good paycheck. He has a good life. Joe has been with me for a decade and I want to keep him for a couple more until he retires. What is the problem with that approach? Why shouldn’t I just let Joe be?

Well, there are actually two problems: The first is an economics issue and the second is a philosophical issue. Your company is expected to grow and improve each year. Not only is your revenue expected to grow, but you are expected to generate at least as much profit per dollar of revenue in spite of your expenses growing with inflation. How do you do that? By doing what you used to do even better and more of it. This economic reality requires each individual in your company to do more and do it better each year. So, you can’t just let Joe be. Joe has to become a better welder each year, weld more per unit of time, weld it for a lower cost, etc. But, wait a minute. Is it possible to do that forever? Don’t you reach a point where Joe is performing at maximum capacity and it cannot be done any better? When you and your employees peak, your company peaks as well.

The second problem is philosophical. An attitude of “let Joe be” instills a level of complacency that will permeate the entire organization. If you let Joe be content with doing what he did last year, you have to let the entire company be content with what they did last year. Will that be acceptable to you? Your organization’s excellent performance this year must become the benchmark of mediocrity for tomorrow. So, as a company philosophy you must require each employee to grow each year.

Now for a bit of reconciliation. Growing each year does not mean that Joe has to become a supervisor. Each employee has to constantly grow in his or her craft and profession. Even better, each employee should constantly expand their skills, knowledge and interest into related disciplines – neighboring disciplines to their craft and profession, neighboring disciplines of interest to the employee, and neighboring disciplines of relevance to the company. This growth responsibility falls on all three parties: the employee, the manager and the company. Although, in this day and age, no company guarantees lifetime employment, collectively, the three parties should guarantee lifetime employability.

How well do most companies fare on this score? Most companies will philosophically accept this position at the point of hiring an employee, but they quickly back pedal within a few years. Let’s point out four typical scenarios that companies and employees face.

First, a non-controversial and positive scenario is the performing employee with a growth trajectory. This is the case of an individual that performs exceedingly well. The individual grows in their job, takes on new and expanding assignments, assumes greater responsibilities and is generally successful. The employee, the manager and the company all discharge their stewardship responsibility. Well, that was the easy scenario where the dance and the music make for a beautiful tango.

The second scenario, still positive but uncomfortably so, is the performing employee for whom the company cannot offer the needed growth opportunity. This employee performs very well. He or she grows in their job. The individual is critical to the company. The boss depends on this individual. After a few years, the employee needs new assignments or additional responsibilities in order to grow. But, in your small company, there are limited growth opportunities. You just don’t have that next position for this employee. They are ready for it, but you are not. What should you do? What is your stewardship responsibility? The company has a responsibility to act selflessly and work with such individuals to position them for their next career growth opportunity, which will likely happen elsewhere (see Small Companies Must Turnover Good People). The employee, the manager and the company are usually hesitant to face this situation. And, in that hesitancy, all three fail to be a steward. In this tango, the music stops but the dancing continues without the gusto.

The third scenario represents the performing employee whose personal growth does not keep up with the market and environmental growth. This is where many companies get stuck with a “used-to-be-performing” employee who hasn’t kept up with the fact that you don’t use a calculator anymore but have to make an Excel spreadsheet. As in the case of Joe, the welder, this is an employee whose consistent excellent performance many years ago has slowly but surely become below mediocre by today’s standards. Who is at fault? All three: the employee, the manager and the company have been complicit in allowing the employee not to grow. In this tango the manager and the company have moved on to the new song but the employee is still dancing to the old song.

Finally, the fourth scenario involves a non-performing employee. The company and the manager often ignore the non-performance as an act of kindness when, in fact, it is gross negligence of their stewardship responsibility. When you hired that individual, you accepted a stewardship obligation to grow that individual. You have two options: either to discharge that stewardship responsibility or absolve yourself of that obligation. You do not have the choice to ignore it. If you approach the conversation with the attitude, “I (the manager) am unable to find ways, and create an environment in which, you can grow as an individual,” then the conversation becomes less about blame or judgment and more about stewardship. Both the music and the dancing stops in this tango.

You, as a manager, have an obligation called stewardship and a privilege called management authority. The former requires you to care for your assets. The latter allows you to acquire and dispose of your assets. The more diligently you discharge your stewardship responsibility, the more impenitently you can exercise your management authority. But, remember, this tango takes three.

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From Dentist to Small-Business Owner: Tips and Options

grand-opening

You learn how to fill cavities and keep teeth clean and healthy in dentistry school. What you don’t learn is how to raise capital and manage business debt.

“That can make life after dentistry school challenging,” says Genaro Romo, who started his career in Chicago in the 1990s. He quickly realized that being a successful dentist meant being a successful small-business owner.

“We were trained to be dentists,” Romo tells NerdWallet. But “you need to know how to run a business.”

Choose your path: group practice or solo

After graduating from school, dentists essentially have three options. One is to join a practice as an associate and “work your way up,” Romo says. That’s what he did, and it was a successful strategy. He eventually struck out on his own, setting up his own practice; today, he has a 20-person office in Chicago.

There are two other major options:

  1. Build your practice from scratch. This can be exciting, but it’s expensive. A dentist launching a startup practice typically requests a loan in the range of $350,000 to $500,000, says Gavin Shea, a senior director of sales and marketing at Wells Fargo, where he’s worked with hundreds of dentists.

    Between 50% and 60% of the funds goes toward building out an office, which usually involves big investments related to specialized plumbing and electrical needs, he tells NerdWallet.The basic dentistry workspace is called an operatory. A fully equipped setup, which includes cabinetry, dental chair, lighting and digital X-ray equipment, can cost “anywhere from $25,000 to $50,000 for each operatory,” Shea says.

    The startup route can also be tricky; Romo notes the importance of having a clear business plan. Overspending based on a fuzzy growth strategy is a common mistake, he says, though he adds: “Make sure you have room for growth.”

    Some dentists are overly cautious with investment only to find that, as their business grows, “you have nowhere to go,” Romo says. “They maximize their space and they have to start over in a new location.”

    And just as with buying a home, location is key, Romo says. “You really need to do research,” he says. The key question: “Is there a need for a dentist in that location?”

  2. Buy an existing practice. Acquiring an existing practice, such as one owned by a dentist who’s about to retire, is a common route taken by new dentists. As with buying a house, it’s important to accurately appraise the value of the practice.It’s easy to make a mistake. For example, Romo says, “You could be buying an office that may not be as busy and the equipment is very outdated.”

    “Most independently owned dental practices will sell [for] between $500,000 and $750,000,” Shea says. A dentist requesting a loan usually also factors in “some short-term working capital to cover the first few months of ownership.”

Choose your financing: bank vs. alternative lender

While Wells Fargo declined to disclose interest rates related to dentistry practice financing, the financing it offers includes SBA-guaranteed loans, which typically carry low interest rates. An SBA loan is usually based on the current prime rate plus an additional markup rate, known as the spread, of 2.25% to 2.75%. At the current prime rate of 3.25%, a typical loan would charge 5.5% to 6% interest.

Bear in mind that the SBA has strict requirements and the application process can take months. But a traditional bank is not your only option; alternative lenders tout the speed of their application and approval processes, which may range from a few hours to a few days.

Some alternative lenders now also offer financing specifically for new dentists. However, interest rates are higher than those offered by banks. Check out the different small-business loans options on the NerdWallet Best Business Loans page.

At DealStruck, for example, a borrower could get a three- to four-year term loan to finance dental equipment at interest rates ranging from 12% to 18%, says Steve Freshour, the lender’s director of credit.

“These are fully amortizing term loans,” he says. “A standard 4% origination fee would be charged and netted from the loan proceeds.”

When making financial plans for a dental practice, “Everybody’s situation is different,” Romo says. But, he stresses, “You have to remember you’re investing in your practice.

“If you’re investing in technology, it builds stronger patient relationships,” he says. “It’s not a luxury. If everything works out, it’s probably paying for itself.”

Get help from the experts

Whether you start a brand-new dental practice or buy an existing business, Romo offers two key tips:

Find a financial advisor who specializes in dental practices

Some professionals specialize in giving dentists financing advice for starting or expanding a practice. “There are CPAs who specialize in dental offices,” Romo says. “There are dentists who also have accounting degrees” or other kinds of training that qualify them to offer guidance.

And the best way to find an advisor is through professional organizations of dentists. Which leads to tip No. 2:

Join professional associations

Romo urges new dentists to reach out to other dentists from the beginning. He did so by joining the Illinois Dental Society and the American Dental Association, and was so impressed with the ADA’s work that he became one of the organization’s spokespeople.

The ADA’s Center for Professional Success website offers information and tips for dentists, including a calculator for managing business debt. The California Dental Association has a practice support page with information and tips related to the business side of a dental practice.

Some dental associations also have relationships with banks. The ADA, for example, works with Wells Fargo, which has a practice finance page dedicated to serving the financing needs of dentists, optometrists, doctors and veterinarians. It offers information on key aspects of starting and growing a dental practice, including opening a new location and buying new equipment.

Source article: From Dentist to Small-Business Owner: Tips and Options 

 

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What are you waiting for?

Change: Realize Your Greatest Potential

It’s pretty clear the world is changing at a remarkable pace. And this pace, as overwhelming as it feels today, is poised to steadily increase – many say it will continue to double every five years. So if you thought the last 20 years were something, the next 20 will be something else.

For example, within three years there will 10 billion “things” connected to the internet, everything from your keys in case you lose them, to streetlights and garage doors so you can control them. Remote controlled air ambulances, cars that drive themselves and package-delivering drones were science fiction just a few years ago, but today they are real and tomorrow they will be commonplace.

The change is naturally spilling out everywhere, in culture, strategy, service, product development, communication, manufacturing and on and on. As evidenced by Kodak and Blockbuster and many more, those who fail to see to the change and course correct will find themselves at a distinct disadvantage – or even gone.

As Eric Shinseki said, “If you don’t like change, you are going to like irrelevance even less.”

Today’s world is often defined as VUCA – volatile, uncertain, complex and ambiguous. Volatile because challenges are unexpected and situations are unstable; uncertain due the lack of predictability and the likelihood of surprise; complex because situations have so many interconnected issues that chaos and confusion are often the norm; ambiguous because we have not been here before – precedents don’t exist for many of the opportunities and challenges staring us down today.

Yet in the midst of this appears to be the greatest panacea of opportunity the world has ever seen.

We take for granted how much is available to us now. We know where population is distributed and where it’s growing, we have unprecedented access to capital, knowledge, innovation and technology, and we have the ability to combine them to create value. The question is: will we?

Will we push to find new ways to create value, to connect with people and share ideas? Will we move away from what worked yesterday if it looks like it won’t work tomorrow? Will we push ourselves past what is in pursuit of what could be? Will we realize the potential that comes with change – in ourselves and in the organizations we serve – or will we settle for the status quo?

I am convinced that most of us are missing out. That far too often we become lulled into a false sense of security and the belief we should wait, accept the role, status or result we have been assigned.

That we should let things work themselves out as opposed to getting out there and making them work. That we should wait for permission or approval before taking action. The question, as David Lazarenko put it, is, “Are you a waiter or a creator?”

So, while many accept the notion that we should stand in line and patiently wait while someone else decides the next opportunity or right move, we know that day has come and gone. And it is no longer up to anyone else.

We have an opportunity to think differently and go beyond what “is” today to find the potential in people and organizations, and be intentional about making it a reality. We combine intentionality and potential and call it “potentionality.” It’s what drives us, and it is at the heart of why we go to work every. It is a made up word, but it’s apropos to the idea of seizing opportunity in change.

If you don’t see an opportunity, just create one!

Shift in Thinking is a monthly article from chief storyteller David Baker with a call to action for organizations and individuals. Using engaging narratives and probing questions, he seeks to provoke a new way of thinking around brand, culture and leadership, and to help readers intentionally realize their potential – Potentionality!

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Specific vs Diffuse: Part 2

specific-diffuse2

Two weeks ago David Baker, CEO of Think.Shift, wrote a provocative article challenging axioms – statements we believe to be self-evident truths. In this article I want to use him as an example of how to intentionally use both specific and diffuse forms of communication effectively.

In a previous article I noted that some people are specific in their communication with intent to bring forth clarity of thought and others are more diffuse in their communication with intent to bring forth commonality of thought.

Both styles have value, and the value is enhanced if you’re intentional about your natural style and the style appropriate for your audience. While my natural style is specific, David Baker is able to use either style based on what is appropriate for the audience. Let me provide two examples of David’s writing to illustrate this point and speak to the value of being intentional in your communication.

In the last Food for Thought article Caution: Falling Axioms, David wanted to respect the provocative nature of these articles.

To be provocative and controversial, you need to be specific in establishing your point of view and contrasting it with alternative points of view.

In analyzing the axiom, “If you are going to bring me a problem, make sure you bring with it a solution,” David points out that the traditional view contrasts an employee who is building with an employee who is throwing rocks. Having been specific in that contrast, he switches to the other side and provides concrete and convincing arguments as to why you should promote and encourage employees raising issues for which they have no solution. His style of specific communication is very effective.

A couple decades ago, I learned an interesting lesson. Trained as an engineer, with a background in math and a passion for logic, I have always been specific in my communication. But, while listening to my VP of marketing tell our sales force about a new series of products we were introducing, I learned that diffuse communication might achieve your results better than being specific. He drew an X-Y axes, labeled the horizontal axis with old products and new products, talked about how the old products had floundered, spoke about the amazing value of the new products and drew a sweeping graph that zig-zagged from the bottom left to the top right, proclaiming that our new products are going to take our business to new heights.

Questions came to my mind: What was the X-axis? Products? How were they arranged? By introduction date? What was the Y-axis? Units? Dollars? Was this a cumulative graph? If so, how did the graph go down with the current products? I was trying to figure it all out. Meanwhile, our sales force had heard the rallying cry. They were pumped. They cheered! Had my marketing VP not accomplished his goal? How does it matter if the graph didn’t make any sense? Being diffuse might have been the best way to communicate to that audience at that moment!

Let’s come back to David Baker. In his monthly blog, David wrote an interesting post titled “What is Normal?” He pointed out that, while most people try to fit in and be normal, it is the outliers that get noticed. To make his point he drew this picture.

by Think.Shift

by Think.Shift

Of course, I had a plethora of questions: What does the line mean? What is represented by a circle on the left side versus the right side? How about circles above and below? Are circles above and to the right better because that is the way we think? And what do the size of the circles mean? Are bigger circles better? Yet, in spite of all my questions, I understood what he was saying in the article. The picture communicated it. Was he being diffuse? Absolutely! Was he effective in his communication? Superbly! In a blog, where the intent typically is to connect with people rather than provoke them, diffuse communication allows for each reader to interpret as they choose and find common ground.

It’s important to understand both specific and diffuse communication.

Each has its value. Each is more effective in different circumstances. Each of us has a preference in our own individual style. Yet, it behooves us to be intentional about using the right style for the right situation.

On this topic, my good friend and colleague, Glenn Mangurian, pointed out that the appropriate style not only depends on the circumstance, but the speaker-listener chemistry. Glenn and I developed the following model for what might happen based on whether the speaker and the listener are specific or diffuse:

  • When the speaker and listener are both specific, they are likely to assert and evaluate. On the positive side, they might find clear agreement or find disagreement and extend their thought process. But the same conversation could turn into a debate, with each of them arguing and trying to prove that he or she is right.
  • When the speaker is specific and the listener is diffuse, they are likely to assert and consider. The listener respects the speaker’s point of view and learns. But the speaker could also be viewed as being arrogant and opinionated, with the listener agreeing in pretense.
  • When the speaker is diffuse and the listener is specific, they are likely to explore but evaluate. The listener is likely to ask for clarification and agree or offer a different point of view. Alternatively, the conversation could turn into an argument where the listener browbeats the speaker for specificity that the speaker either does not have or is not willing to offer.
  • When the speaker and the listener are both diffuse, the conversation is likely to explore and agree. Both the speaker and listener could become innovative and the conversation could become generative. Or the conversation could meander without reaching conclusion, with both the speaker and the listener agreeing without understanding.

by Think.Shift

by Think.Shift

In each case, conversation can take on a positive tone and create value or a negative tone and destroy value.

It is useful to acknowledge the natural tendency the speaker and listener and intentionally drive the conversation toward the positive, value-creating outcomes.

I want to end this article by recognizing David’s ability to switch modes when appropriate and thank him for letting me use his example to illustrate the value of being intentionally specific or diffuse. I encourage my readers to read David’s monthly blog.

We will be elaborating on these concepts in a webinar on
Wednesday, May 27th from 10:30 am – 11:30 am (PDT).

Two special guests will be at the webinar, David Baker and Glenn Mangurian, who will chime in with their thoughts on specific versus diffuse. We encourage you to sign up and attend; please visit the event registration page here for more details.

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