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Pathway to prosperity: A dentist’s guide to wealth creation - Part 2
By Dr Jesse Green
In this second in his article series, dentist coach Dr Jesse Green shifts gears and invites practice owners to consider the pathway to prosperity using their practice as the vehicle for the journey. With practical tips for dental business owners wanting to create real wealth, Dr Green takes you through the Savvy Dentist Value Model and the key elements needed to move beyond a profitability focus for your practice to a wealth creation mindset that underpins enduring prosperity.
There’s a certain predictable, reproducible growth journey every practice takes if the owner wants to achieve the pinnacle of the Savvy Dentist Value Model - wealth creation and freedom. But how do we get there when there is so much conflicting advice and we’re flat out running a practice. In the
Savvy Dentist Academy, we coach literally hundreds of dentists that the practice owner’s journey to prosperity starts with a business vision and working through the
Savvy Dentist Value Model, one level at a time, so let’s cover that first.
The first layer of the model is focused on creating a profitable practice and cash flow. The currency at this level is money and all efforts are directed at creating a repeatable, sustainable flow of cash into the business. When your practice operates at this level, efforts are focused on systems that generate revenue and manage cashflow. The key question: How do we ensure we’re addressing all the financial aspects of the business? Why? Well, cash flow is the oxygen that keeps the business alive. If cash flow is poor, things aren’t right and need to change.
A profitable business is a good thing, but at this level, a practice owner exerts
“A profitable business is a good thing, but at this level, a practice owner exerts enormous effort, yet has very little leverage. You’ll know if you’re here because you’ve basically created a job for yourself. Now, many practice owners stay at this level. They are comfortable with being the main source of revenue...”
enormous effort, yet has very little leverage. You’ll know if you’re here because you’ve basically created a job for yourself. Now, many practice owners stay at this level. They are comfortable with being the main source of revenue for their business and aren’t interested in moving up the value model. That’s okay, so long as you understand the limitations. For business owners interested in a pathway to prosperity, however, there is more to be done if less personal involvement and more leverage is what you’re after.
Ascalable business requires that we cross the leverage line and start implementing systems, developing a selfmanaging team and shift our mindset from owner-operator to now leading a business. When you achieve leverage through systems and a high performing team, your currency is time. Instead of choosing between money and time as you do in a profitable business, you enjoy the benefits of money and time.
But as a scalable business, we’re only part way along the pathway to prosperity. As we progress up the model, we cross another leverage line into new territory again. It’s where we can truly enjoy the return on our efforts and investment as our business becomes a valuable asset.
The third level in the Savvy Dentist Value Model involves creating a valuable business, an asset that has value. In that type of practice, we’re no longer thinking like an operator or owner. Instead, we’re thinking and acting like an investor. Getting to valuable means crossing another line; one I call the enterprise line. This means understanding the drivers of value in a dental practice.
One challenge I see for practice owners is not having embedded and consolidated the elements needed at the profitable level. Unfortunately, there isn’t a fast track that leapfrogs you from start up to super star.
In fact, it’s best you don’t miss the steps. I’ve found the pathway to prosperity will be a challenging road to hoe unless a practice articulates through each level. It could be my navy background, but I liken the process to earning your stripes. You need to work through each level. Not only will your business be more solid in its systems and people, there’s a better chance your business will maintain this level of operation too; a key factor in achieving genuine wealth. I’ve reminded more than one client not to despise the profitable level because it really is the foundation of your business.
Are you making these wealth creation mistakes?
Right up front in this article, I touched on the challenges facing dental business owners committed to creating wealth. If we think of the practice as the pathway to prosperity, then we’d better have some solid strategies in place for optimising our position, but knowing where to start is a challenge. Financial information overload is real and leaves even the most diligent researcher overwhelmed. Another common mistake I see high earning practice owners make is “investing” in lifestyle, rather than assets. This is shortsighted and reduces the capacity to build another revenue source with the potential to accelerate the pathway to prosperity. And of course, there’s the “hit an miss” approach; in effect, trying many things, hoping they’ll work, but not making any meaningful headway. You don’t need to be a financial advisor to know that hoping isn’t a wealth creation strategy, nor is the pathway to prosperity. An unlucky turn of the dice can leave you high, dry and in a financially vulnerable position. Thankfully, there is a better way and it starts with a key ingredient.
Desire: The key ingredient to wealth creation (and a handful of practical tips)
So what’s the way forward? It starts with desire. In his seminal book, Think and Grow Rich, author Napoleon Hill researched the habits of over 500 of the wealthiest people on the planet over a period of 25 years. After studying these people and how they created their significant wealth, he concluded the first step on the pathway to prosperity is desire. Although published in the first half of last century, Hill’s words ring as true today as they did in 1937. Desire is the starting point on the pathway to prosperity and must be closely backed by a clear plan consistently implemented.
With a clear desire and a plan, you’ll be well positioned to implement these 3 tips: • Invest regularly - An effective approach to wealth creation means investing regularly by putting money aside at consistent intervals (e.g. weekly or monthly), to allow funds to grow in value over time. Avoid the temptation of putting your hard-earned cash into lifestyle assets that depreciate quickly and aren’t income generating;
• Look for predictable outcomes - In so far as possible, we want to be sure we’re investing in assets that produce predictable returns. Of course, there are no guarantees, but prudent investment that generates a foreseeable return over time will keep you on the pathway to prosperity; and • Stay focused on freedom - Savvy
Dentist clients know we talk about the different types of freedom: Financial, time and choice. These freedoms come once we’ve mastered the levels of the
Savvy Dentist Value model and implement the steps that move us further along the trajectory to enduring prosperity.
It’s this final point that resonates most deeply with me and the clients who subscribe to the Savvy Dentist mission, which has at its heart an objective to help dentists transform their practice to create multigenerational wealth for their family and have a massive impact in the communities they serve.
In this article we’ve talked about profitability, scaling and leverage, with a handful of practical tips too, but as dentists, most of us are inspired by helping our patients enjoy better health and by enriching our families personally and financially.
Both these goals are imminently possible when we understand the pathway to prosperity and have a clear plan for getting there.
General Advice Warning
The information contained in this article is unsolicited general information only, without regard to the reader’s individual financial objectives, financial situation or needs. The information contained on this article is general in nature and you should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from an accountant or financial adviser. It is not specific advice for any particular individual and is not intended to be relied upon by any person. Before making any decision about the information provided, you should consider the appropriateness of the information in this article, having regard to your objectives, financial situation and needs and consult your professional adviser. Any indicative information and assumptions used here are summarised, are not a product illustration or quote and also may change without notice to you, particularly if based on past performance. This notice must not be removed from this article.
About the author
Dr Jesse Green is a leading business coach for dentists, author of Retention, a sought after speaker, and founder of the Savvy Dentist Academy. Jesse shares his knowledge, skills and experience as a practice owner through the Savvy Dentist Academy, a digital hub of training, events, courses and resources for dental practice owners who want to earn more and work less. Learn more when you book a Practice Growth call on 1300-668-384 with the Savvy Dentist team or visit savvydentist.com
