Key Elements of a Successful Dental Practice Business Plan
“I don’t have one” was the Dr. J’s response when I asked to see his business plan for his Dental Practice.
You may think this is normal for a first time entrepreneurial adventure. But what if I told you that Dr. J has started many dental practices in his 30-year tenure as an entrepreneur?
And with all the dental practices started none of them have ever exceeded revenues of a million dollars. Many of them failed and Dr. J was forced to shut them down within the first year of business.
Does this mean Dr. J is a terrible businessman?
What it means is Dr. J did not understand the purpose and the value in creating a business plan. And unfortunately this is pretty typical of many entrepreneur dentists.
They think flying by the seat of their pants and relying on their street smarts and intuition is the spirit behind entrepreneurship. This could not be further from the truth.
If you don’t plan for growth…If you don’t plan the work, you can never work the plan.
Now, I know what you are thinking. You are thinking that you and other entrepreneur dentists you know have never developed a business plan and you are doing “ok” – right?
Well here is the big secret – you can always do better. I know for me – “ok” simply is not good enough!
If you don’t plan for growth you may grow but chances are good you will not be able to sustain it. Planning for growth is essential. According to PricewaterhouseCoopers, two thirds of CEO’s of fast growth organizations develop some type of business plan.
It is actually the exercise of drafting the business plan that is important – sometimes more important than the plan itself.
Writing a business plans forces you to focus on the important and essential elements of your business. It makes you think through your next steps and specific strategies and tactics.
But most importantly, it forces you to face the facts. Because the most important element in success is this:
A good entrepreneur/executive has the ability to face the facts!
This does not mean when the facts suit you – it means all the facts all the time.
I know so many entrepreneur dental practice owners who make excuses for all the failures within their business. Sadly so many of those failures could have been avoided with the construction of a business plan.
The Key Elements Of A Business Plan
1) Executive Summary: Within the overall outline of the business plan, the executive summary will follow the title page. The summary should tell the reader what you want. This is very important. Clearly state what you’re asking for in the summary.
The statement should be kept short and businesslike. It should be kept to a ½ of a page to 1 full page depending on how complicated the use of funds may be. Within that space, you’ll need to provide a synopsis of your entire business plan.
2) Market Analysis: This section should illustrate your knowledge about the particular local area your dental practice is in.
A market analysis forces the entrepreneur dentist to become familiar with all aspects of the market so that the target market can be defined and the company can be positioned in order to collect its share of sales.
A market analysis also enables the entrepreneur dentist to establish pricing, distribution and marketing strategies that will allow the dental practice to become profitable within a competitive environment.
In addition, it gives one an indication of the growth potential within the industry, and this will allow you to develop your own estimates for the future.
Begin your market analysis by defining the market in terms of size, structure, growth prospects, trends and sales potential.
3) Dental Practice Description: This section should include a high level look at how all of the different elements of your dental practice fit together. The dental practice description should include information about the nature of your dental practice as well as the crucial factors that you believe will make your dental practice a success.
4) Dental Practice Organization and Management: This section includes your dental practice’s organizational structure, details about the ownership of your dental practice, descriptions of your management team and qualifications of your panel of experts or board of directors.
5) Dental Practice Marketing and Sales Strategies: This is the lifeblood of your business. Dental Practice Marketing creates new potential customers and converting customers through your Sales Process generate sales. In this section, define your dental practice marketing strategies. Start with strategies, tactics and channels that you have used to create your greatest successes. Next, branch out to others that may be working for your competitors. Remember that this section will be constantly updated based on your results.
6) Dental Practice Service Areas, Treatment Lines and/or Product Lines: In this section describe your dental services and any dental-related products you offer. What is it that you are actually selling? Make sure to emphasize the benefits (not the features). Establish your unique selling proposition. This means you have to show not only how your dental solutions are different but also why they are better.
7) Dental Practice Funding Requirements: In this section state the amount of funding you will need to start or expand your dental practice. Include best and worst case scenarios. Be realistic.
Financials: Develop the financials AFTER you have analyzed the market and set clear objectives. You should include three to five years of historical data.
A good dental practice business plan is never meant to be written once. And a good business person understands that this plan evolves as your dental practice evolves and as your environment changes, as marketing campaigns exceed expectations or fail to meet your assumptions.
Re-visit your plan at least quarterly, monthly is best.
And remember you do not have to go it alone. Bring your plan to lunch with a mentor or colleague. Ask questions and present data accurately.
Once you start this process you will find yourself looking forward to reviewing and updating your plan.
We are always available to assist in the development of your WorldClass Dental Practice Business Plan!