So this podcast is sponsored by a company that I have personally used in my own dental practices for quite a while. This podcast is sponsored by dentalmarketing.com and they have agreed to give the listeners of this podcast a free competitive marketing analysis. This analysis is going to show you very clearly how your practice is doing compared to your competitors. It's going to give you the health of your SEO, it's going to give you a website, health grade, a reviews grade, and you'll also see what your competitors are up to. And this helps you know what ad strategy you should have to how clean and effective is your marketing Right now find out by getting this free and detailed analysis, text the word marketing to 4 8, 6, 5 9. That's texting the word marketing to 4 8, 6, 5, 9, and you'll receive this detailed competitive analysis from our sponsor, dentalmarketing.com, the right way and the wrong way to go from one dentist in one location to associates to multiple locations.

There is a specific path that for whatever reason no one has been teaching us in dentistry. This specific path helps us dramatically reduce the risks, reduce the stress, and maximize profits as we expand, as we scale what was a single doctor practice to what will hopefully become for some of us a multi-location operation that has freed us from the dental chair if that's what we choose to do. This path is unconventional, it is unusual, it is not talked about as I said, but it is the most logical and safe and profitable way I know how to do this. And that is exactly what I'm going to start talking about in this next episode of the dental CEO. If you like what you're hearing on the dental CEO podcast, please take a few moments to leave us a review on your favorite podcast platform.

All right, so we got to dive into this because I am just seeing way too many successful dentists pile on layers of shitty stress and eroded profits when they go from one dentist to having associates to having multiple locations. So many dentists are disappointed in kind of the profitability of the result of adding associates. And if we were honest with ourselves after we've added associates or after we've added another location, are we really more free? Are we getting that kind of freedom that we sought to take time off or to not work as many days? Do we have the freedom we were hoping to find and maybe the comradery we're hoping to get when we add dentists so that they are also carrying part of the load or the weight of our organization? Are we that free? Did we make more money? I think a lot of us, again, if we're honest with ourselves, a lot of us would say, you know what, that was what I was trying to do.

But where I'm at now is I've struggled. I've struggled finding an associate dentist. I've struggled having ones that were good leaders, that were mature, that were maybe delivering great clinical care to patients. I've struggled finding ones that patients want, that employees want to work for, or maybe I've found someone like that, but I struggled to keep them and in order to bring on this dentist, I've had to increase my costs. And when I lose this dentist, I have to increase my working hours until I can find the next one. And gosh, if I added another location, I've also gone into debt more. I've now had to manage across multiple places, even though I can only be at one, maybe I've had to manage now more dentists that I've had to find and had to retain and maybe had to replace. And all of this can kind of spin out of control from the outside looking in.

You look at these dentists that have gone from one to multiple and it looks successful, it looks like they're on top of it. It looks like they've got this clean well operating organization that has kind of expanded and now they don't have to be the dentist every day and they're just bringing in the excess profits that have given them a whole new lifestyle that they've always achieved. And we admire that and we say, wow, that is the life. But I think if you were to pull back the curtain and look at what's actually happening, what's actually happening is these organizations are struggling with profitability. They're struggling to just keep a clean set of business systems, they're struggling to find enough employees to expand and then they're struggling to retain them. And at the end of the day, when the problems come, the owner dentist who is trying to get free, that owner dentist is actually more handcuffed to the business because the owner has to put in the extra work and fill in the gaps and lift the weight to kind of keep this bigger heavier operation going.

And that is because they've taken a path to go to multiple. That doesn't make a lot of sense in my opinion. I want to go into what makes sense, and this probably needs to be a whole series of episodes because this is a really big topic and it's something that I do talk about in several of my courses. I teach one course on how to have multiple locations and I teach a whole different course on how to be a really powerful and effective CEO. And in both of those courses, we go into the depths of this, but I definitely want to start going into some of those depths today on this episode. So let's back way up and say, okay, what is a smart way to expand? And I'd like to start off by saying we don't want to expand on a broken foundation and you know that we shouldn't expand if what we have isn't healthy.

But I want to change the benchmark of what we call health. When I look at a healthy foundation on the business side in dentistry, first and foremost, healthy to me means really large profit margins. And that's of course assuming we're always going to assume that patient care needs to be great. So as I talk about the business side on this episode, lemme just be very, very clear. I'm never going to expect or accept any sort of dramatic dip in patient care. So patient care has to be healthy no matter what. If it's not healthy, it's not going to work. It's not the right thing to do, but I'm going to assume for this episode, patient care is going to be healthy as we expand. So when is the right time to expand? What should we expand? What business models should we expand? And I'm going to say it needs to be a model that has very high profit margins.

Well, but the reason for that is as we expand, we add risk, we actually add downward pressure to our profit margin. You'll see that really well run solo practices with one dentist owner can have huge profit margins, and you compare that to DSOs that have hundreds of locations and those profit margins are not nearly as big as we expand, we start adding risk on the profit because in a dental associate, they don't produce as much on the same patient base, they don't produce as much with the same amount of staffing and the same amount of marketing and the same amount of rent. And so as we add more and more associates, we start having margin erosion because with the same costs from the new location, we have less production coming in. Of course, that's a really big generalization I just made because obviously there's situations where we add a dentist and all of our costs aren't going up, and even mediocre production could help increase our profit margin.

We're going to get there, but right now I just want to have this kind of general concept that says as we expand, we will have added risks to our profit margin. So because of that, we want to make sure that we have a really big fat profit margin before we take on the risks of expansion. So what does that look like? A big profit margin? It probably does not look like a solo dentist that is taking every insurance plan under the sun and has low fees. It probably does not look like a solo dentist that is spending more than 25% on staff costs and spending more than 4% on equipment, or excuse me, supplies more than 5% on lab. It probably does not look like a solo dentist that is having more than 60% overhead. And ideally we'd be more like the 50% or less overhead mark.

So how does that change our strategy? Well, if you think now where you're at and you're thinking to yourself, I'm thinking about adding an associate, why is that? Why are you thinking about that? Probably because you're really full, your schedule's full, your time is full, your mental ability or capacity to keep up with the company's full, you're full and you're wanting to expand because that fullness is adding pressure to your life and there's the opportunity maybe to get bigger and hopefully get more profitable and more free. So you have this full schedule potentially, and you're saying to yourself, okay, I think I want to add an associate. I would like you to pause and say, well, that's not the only option in front of you. Yes, of course adding an associate expands your capacity and your schedule. Now you're open more chair time per week or more days more ops.

You've got another dentist in there, another provider. Of course, now you can see more patients and that would be one solution to a full schedule. But there's a whole nother solution that says, okay, instead of expanding when we're full, should we raise our fees in essence, not see all of those same low fee in network patients that have caused us to be full like the restaurant that has modest prices on their food and now they're booked out a month, should they open another restaurant or should they raise the prices of their food so they're only booked out a week instead of a month? I would like you to think about what it's like to raise your prices instead of opening another location or expanding with another dentist. If we said in the beginning preparation phases of bringing on another dentist, we are going to drop the lowest paying plans first.

What'll happen is instead of being booked out a month, now we're booked out maybe a week and all of our fees of being fully booked out are higher, significantly higher maybe. So we were booked out the old way with low fees. Now we're booked out the new way with high fees. So our margin, our profit margin has dramatically increased. Another analogy is like, okay, let's say I own a barbershop and I, I've got two or three chairs in there, but I'm the only barber in there and I charge a modest amount for haircuts and man, I'm booked out. Should I bring on another barber? Well, if I do, I can't raise my own fees because the volume of customers coming in, I need to have enough customers coming in to go to the new barber. And now that new barber may not cut hair as good, they may not treat people as well, they may not even stay.

And if they do all of that, I still got to pay them. Had I just cut the hair, I get to pay me. So what I'm saying is, okay, instead of adding another barber, now let's raise the fees for our haircuts first so that our margin's really, really big so that we can take on the added risk in the future of the second barber. So in dentistry, let's drop the lowest paying plans. Let's have a really healthy margin. Let's not have more than 50% overhead. That'd be great if we had that kind of a practice with high margin, high take home pay. Now when we get too far booked out, then we add a dentist and we have higher fees when we add that dentist. So our risks are lower, that dentist is going to produce more. We have more margin to protect ourselves against the added risk of expansion.

When I say more margin, the dentist that I coach, almost all of them after implementing things like this are well below 50% overhead. They're in the 40. And what's interesting is that these are typically smaller setups, smaller practices, they have just gotten good at filling their schedule so that they can drop the plans. Well, let's go off on a little tangent here. What does it mean to be good at filling a schedule? Where does the dentistry that lands in our schedule come from? It obviously comes from how many people we bring in, but those aren't just new patients, those are also retained patients. And it also comes from how much do we diagnose? And it comes from how often people say yes to what they need. So patient flow and diagnosis and case acceptance, but each one of those things have ingredients that make them even better.

What makes patient flow better? Well, how much we spend on marketing makes it better or how effective our marketing is, or are we answering more calls and missing less calls that makes it better? Or do we have policies in the practice that encourage patients on the phone to schedule more or do our words cause people to schedule more? All of those things mean more dentistry gets on the schedule. And so as we become masters of the operation side of a practice, we end up with more dentistry falling onto the schedule, which fills the schedule harder and farther, which allows us to drop insurances so that our fees are higher so that our margins are higher. So now our overhead is below 50%. Okay, well if our overhead's below 50% and we're still getting too full because we become masters at the things that fill our schedule.

Now let's bring on that associate. That associate gets the benefit of higher fees. Our practice has fatter margins, so we're protected against any sort of unexpected fluctuations of our profit. By adding that associate and adding the one or two dental assistants and the one front office person and eventually the one hygienist we have to add, and all the supplies that associate uses in the lab fees, all those costs the associate brings to the table we're protected against because we've got that higher margin. Now, what if we keep adding more associates, we're adding another location. How do we make sure that the owners take home pay remains high and that there comes a point, a trigger point where the owner is free like you to think about a strategy that says our owner is going to do bigger cases and more of them as we add dentists and locations.

So what we don't want is the owner to still be a regular general dentist as we add more dentists to more locations. We don't want the owner doing fillings and crowns all day and hygiene exams all day. While of course it's possible to do that, that's not a smart financial strategy. What we want to do is we want to have it to where the more dentists that are in this organization, whether it's one location or more locations, the more dentists, the more associates we have, the more the owner becomes like a specialist so that the owner's production comes from procedures that the associate dentists aren't competing for and that the owner is able to do a lot of dollars with less hours working compared to if they were a general dentist. So what this might look like is when I have two or three dentists, only the owners placing the implants, only the owner is doing the Invisalign cases, only the owner is doing Botox and sleep apnea therapy cases.

I'm just making a list up. But all of these things I'm listing are higher dollar procedures, higher dollar per hour that are not in the regular scope of being a general dentist or an associate general dentist. If we can funnel those procedures to the owner, the owner is able to go from working full-time to less than that to part-time to maybe only one day a week and their production should not go down. So maybe they were producing four or $500 an hour as a general dentist working 30 hours a week, and if we can get them to just work 10 hours a week but they are doing 1500 an hour, then the production stays the same and that production that they're doing is another protection against the risks of expansion. And not only that, I want to kind of plant a little seed here.

What if a practice without the owner doing any dentistry was breaking even and maybe making a little bit of profit? So I have maybe one or two locations. I've got two or three associate dentists and the associate dentist doing general dentistry every day and hygiene exams, they're doing all the dentistry that we see. All of that is paying for the bills of the practice, all of the bills of the practice, the bills of the staff, the rent, the utilities, the loan payments, the supplies, everything. Everything is paid for by these associate dentists, including their own pay as well. In other words, without the owner working, the practices are at least breaking even because there's associates there doing dentistry. You understand that? I just want to be very clear what I'm describing here. So that's a situation we have. Alright, well what if in that situation there's a little bit of open chair time still left maybe on Mondays there's two chairs in practice one and on Wednesdays there's two chairs in practice number two and they're open Mondays and they're open Wednesdays. So we already have a receptionist, we already have a treatment coordinator, we already have all the staff there On those days there just happens to be a couple empty chairs. What happens financially when an owner uses those chairs, that owner doesn't see an increase in cost of rent. The rent was already paid for. The owner doesn't see an increase in cost of marketing that was already paid for. Utility is already paid for security services.

The owner's not hiring another office manager or another receptionist that was already paid for. In other words, the owner's micro practice that is using those empty chairs doesn't have that overhead. The only overhead associated with the owner's micro practice using the empty chairs would be materials costs, maybe the cost of a dental assistant if we're not already using the dental assistants that were employed, but typically we're already using those assistants. Typically the added cost of the owner's micropractice is purely in materials cost, which is maybe max 10% of what that owner's producing. So what I'm trying to describe on this kind of tangent here is if we can set up organization where we have some empty chair time and all of our bills are paid for by associate dentists, then that owner can come in, build a micropractice that only has like 10% overhead, 90% take home pay off of the dentistry they do, off of the dentistry they do.

So let's say that owner is working two days a week. I'm pulling out my calculator right now. The owner's working two days a week and they're doing just bigger cases. They're doing Invisalign case, they're doing some implant work, they're doing, like I said, sleep apnea therapy and Botox. And let's say they're going to only work, shoot, let's just say they're only going to work five hours both of those days, five hours both of those days. So that's 10 hours a week. How many $4,000 cases could they do in 10 hours a week? I might argue that in 10 hours a week they could do, let's just say four cases. They've got all these associates, all this big patient base having general dentistry done. The associates are going to refer them big cases, these different types of cases. I just said $4,000 cases. Let's say we do four in a week, and so we're doing, and that's hardly any honestly.

And that means we're doing 60 or $16,000 in a week, right? And that means that per year we're doing almost $800,000 in dentistry per year on just these handful of hours, two days a week, 800 grand in dentistry, 90% of that is going to be in our pocket. So about $700,000 of that is going to be take home pay for the dentist. The dentist is only working two partial days a week, 700 grand of their personal production is going to end up being take home pay for them. Plus then they get the profits or the distributions of their practices of all the associates dentistry, which is going to be hopefully in this kind of example, another three, four, $500,000. So what I've just described is going from one dentist to several. If the owner dentist is focused on specialty procedures, they can just work two half days a week and they can take home a million dollars or more.

Take home pay off of that. And remember, because they're not doing general dentistry, they no longer need to do recall exams, they are completely free. They are not handcuffed to the recall chair. That means that they can set their own schedule how they want. They can take a week off, they can take three weeks off, they can take a month and a half off. They're not having to cover any of the recall base. They are only coming in to be the surgeon they are or to be the facial aesthetics person they are whenever they decide to go in. This is for many of the people I coach, this is their end goal actually. Their end goal is to still be involved in dentistry on a very part-time basis and take home a lot of profit and grow a multi-location organization that they can one day, one day sell and get a lot of equity out of.

But between now and the day they sell, take home at least a million dollars, take home pay without having to be handcuffed to the recall chair. This sounds like a dream, but it's a reality and it also happens to be the path I think that makes complete logical sense for the entrepreneurial dentist that wants to go from one location to 10, that journey from one to 10, I want you to become a millionaire every year on a very part-time schedule doing specialty cases so that you can take that million and it's de-risking you from the cost of expansion. It's helping you get funding for buying the next practice. You can also have this part-time schedule so that the rest of your time that's not in the chair, you can focus on the growth of the organization. You see going from one to 10 would be really nice is if we're so profitable, take home pay wise that we can keep getting more loans and we can keep funding any sort of dips as we grow.

And going from one to 10, it'd be so nice if we only did dentistry two half days a week so we can spend the other eight half days per week if we had to building this company, building this company that could someday have a life-changing financial event for us because we're going to let's just say 10 locations. So if I back up a bit and try to paint this picture for you in a little better way, well the wrong way, let's start with the wrong way. The wrong way says I'm a general dentist with one location. I'm the only dentist in there, I own it and I'm busy, I'm getting burned out. I'm too far booked out. I take a lot of insurances and now this is the wrong way. Remember I'm going to expand, I'm going to add an associate dentist. I'm going to add another one.

I'm going to hopefully add another location, another location, and what will happen is my margins will feel so much pressure that at some point I start losing money in one or more of the locations and I'm stretching myself so thin, I'm still having to be a general dentist three or four days a week to try to keep my money up enough where it's hopefully been, but now I don't have enough time to build this organization. The systems aren't clean, I can't retain the people. I'm not ahead of the problems and I get to this breaking point, which might be three locations. I'm not making more money and I might fantasize about the life I used to have when it was just me with a small team with good profit margins and I wasn't burnout so much. That's a bad way. Another way that I'm trying to make this episode about says, Hey, I'm this dentist.

I own my own practice and we're really booked out and I take all these insurances and I'm starting to get kind of burned out. I need to reset the path so that I end up with high take home pay and very little time. And the way I'm going to do it is I'm going to first get high margin by dropping the lowest paying plans and I'm going to become a master of the things that push dentistry into my schedule. I'm going to become a master of marketing and phones and retention and diagnosis and case acceptance. Once I've done that, I now have a high margin practice and I'm going to expand and I'm going to start adding a dentist or adding a location. But as I keep adding another dentist, I will do more and more specialty procedures and I will flip the switch in this journey and then only do these specialty procedures and I'm going to do 'em in a way where I am not having extra costs.

I'm building this micropractice that is using the overhead, the facility that's already been paid for by my general dentist. And now I end up in this situation with really, really, really high take home pay and very little time clinically that I have to dedicate to the organization that now puts me in a position of power high take home pay little time. Now I'm in a position of power. I'm going to use the rest of my time and that excess take home pay to now push into the growth of my organization. The take home pay is going to allow me to get more loan money to buy more locations. It's going to give me a buffer so that I'm protected and conservative financially as I expand. And all that extra time is going to allow me to focus on the foundational health of my organization as it grows, as it has extra weight, it's got to hold.

I'm going to make sure that foundation doesn't crack and break away because I have the time to be that CEO. This to me makes a whole lot of logical sense. Let's not expand until we have free time and free money. How do we get free time and free money by becoming a specialist in a way in a micro practice within our organization? Okay, well how do we get to that point? Well, we better do it with lower risk because to go from one to few is a really risky time period. So let's not take on that expansion until we've become masters of the things that bring dentistry into the schedule and we've got very healthy profit margins. And I think if you use this episode and this initial introduction that I'm giving you as a framework of how you might reverse engineer your career, what'll happen is you will get to a point where you don't have to add more people to have freedom.

You don't have to add more locations to achieve your life goals, but you can add more locations and not break your life. And that I think is a really big statement. If you do this the right way, you will have enough time and money that you won't feel the need to keep growing because you've solved problems differently. You'll also have enough time and money that if you do grow, it doesn't break you, it doesn't break your life. Compare that to again to the way most people do it. Most people do it where their organization better grow because they can't see a way to have more time and money without growth and the growth itself steals time from their life and it can break 'em financially. That doesn't make a lot of sense. That is why so many small businesses, including dentists, start failing at location two and three because the founder has just had to white knuckle the hell out of it, bleeding from the knuckles, trying to lift it all up and stretch themselves across all these locations and they're still the damn chef in the kitchen in all these locations having to cook the food while also having to be a CEO.

That's not a smart way of doing it in my opinion. So let's try to get on this model. I hope this has started to get your wheels turning a bit. If you can get to the point where your schedule's too full, then you have the power to raise fees and after you raise fees, your schedule lightens up. I mean all those Delta patients that you just dropped go away. So you end up with a bunch of holes in your schedule. So then, which is fine financially you're still making as much or more, but the way your schedule looks is it's more open. So now we got to fill that schedule. So that's where you become a master of the things that fill the schedule. And I want to review that again for you. What does it mean to be a master of the things that fill your schedule? It means are we doing the right kind of marketing with the right company? All of you know the company, I use dental marketing.com, but are you using the right company?

Are you doing the right kind of marketing? Then are you spending enough on that marketing then are answering the damn phones or are we like the national average where we miss about a third of our calls? No, we can't do that. We have to become a master of that. Are we answering our phones and just answering 'em isn't enough? Are we converting those calls? We answer into scheduled appointments? That's done with the right policies and the practice and the right words used on the phone. If we do all of that, we get the new patient, but just because we got the new patient doesn't mean we're done yet. We also have to retain that patient. Are we reappointing all of those people? That gets us patient flow. Alright, now we got these patients, they come in, now we got to do an exam. Are we diagnosing dentistry?

Are we diagnosing preventative? Are we diagnosing a full perio protocol? Are we diagnosing facial aesthetics? Are we diagnosing elective dentistry? Are we diagnosing of course restorative dentistry? Are we learning additional procedures to help us diagnose more dentistry? Are we diagnosing ortho endo implants, surgeries? Are we diagnosing everything we can? We need to become a master of that. That puts dentistry into our schedule. There's a whole list of courses maybe that we need to start focusing on clinically, not just courses that teach on occlusal, continuums and bonding agents. I mean sure there's a place for that, but for if I want to change your life financially, I would treatment plan for your career. Courses that add diagnosis, that add new procedures, they add things to your menu so that you can fill your schedule. Alright, well, just because we bring the people in and just because we diagnose all that dentistry doesn't mean they say yes.

So we have to become masters of the yes masters of case acceptance. Case acceptance happens in the operatory with the types of things we show patient and the words we say. Case acceptance happens financially as well with the way the form looks with the payment options we provide and with the words we say. And if they say yes, there better be a spot in our schedule to put 'em, which brings us to should we drop insurances? Should we expand? Alright, so this was an introductory episode. I wanted to just plant the seed here, get you thinking maybe now's not the right time to add an associate. Maybe right now is a time you should learn how to do implants or drop delta or get your overhead under control. Maybe your assumption of wanting to have lots of things in locations and dentists. Maybe that's maybe a right vision, but maybe now you are thinking about a new way of getting there.

Or maybe your goal is just to be that pseudo specialist and after you can just work two days a week or one day a week and take home a million dollars, take home pay. You don't want to expand any more than that. You just want to live out the rest of your career that way in that highly lucrative, pretty straightforward jog of a marathon that we call our career. I don't know, but this is all very interesting. It's insanely important when we think strategically about our career and about some of these decisions that I feel some of us are just recklessly making with assumptions that don't make a lot of sense. I hope this was informative to you on the dental CEO podcast. We are going to wrap up this episode. Please, if you haven't subscribed, please do so so that you constantly get notifications of every time we have a new episode.

Also post a review if you can spread word, if you can. I want to make this as valuable as possible. I want this to change your life, change your practice. I want others hearing this stuff as well. So please help me in this mission. Get the word out. There needs to be a new way. We talk about the business of dentistry that we don't hold back and we just say it like it is and we talk about the things that people aren't talking about. That is what I want to do with this and I want you if you can, to help me with that mission. Until next time on the dental CEO Podcast.