This is the second installment of the “C-Suite Mistakes” series. Read the first part here.
Most dentist-entrepreneurs find that being successful at their second location is not a “leap of faith.” The senior staff is fully accountable; performance levels throughout the organization are strong; the practices are meeting their KPIs. At two practices, the dentist-entrepreneur’s management duties and ownership responsibilities are not all-consuming. The senior staff is handling the HR issues, and local operations are going just fine. The marketing is working, with new patient numbers and case-closure numbers slightly above target. All is well.
Bills are getting paid on time. There’s bonus money available for the staff. The associates’ production and case acceptance are working — they’re hitting their target numbers. For the dentist-entrepreneur, the stress is there, but it’s under control at the two locations.
Now the dentist-entrepreneur thinks: if they can succeed with two locations, why not three or four? He or she then quickly starts envisioning seven or eight. The dentist-entrepreneur has been to the meetings, and understands the strategy for raising the “multiple.” They contact their lender and tell them their intention to open a third location, and they’re smart enough to “grease the slide.” The dentist-entrepreneur thinks they have the team, the IT, and the systems in place to make the third location succeed — with less effort than the second required.
Expanding to more locations
It doesn’t matter whether the dentist-entrepreneur’s strategy is de novo or acquisition: Whatever they did in the second practice, they firmly believe the same plan will work for the third location without a hitch.
Cut to a few months down the road: the third practice opens. It doesn’t work nearly as well as projected. If the practice has been acquired, the culture, the staff, and the doctor just aren’t getting onboard. If a de novo, it is moving at a glacial speed, and not covering its costs. The top senior staff performers — those who shone within the two-location structure — are now struggling to balance their time and skills among the three locations.
The senior staff’s ability to manage and communicate with the staff is cut in half because the third location demands so much attention. Now, staff issues at all locations begin to pop up more frequently and are threatening to bubble up over the top. Turnover, not only at the new location but at the first two locations, is beginning to become an issue. Patient flow, timeliness, new-patient acquisition, case acceptance, and scheduling are not working nearly as well as anticipated. Anxiety and signs of stress start to surface at each location.
The dentist-entrepreneur finds he or she has to go back to the chair to sustain revenue and make payroll and expenses. More problems are reaching their desk. Associate performance is not increasing enough, but the dentist-entrepreneur doesn’t have any time to spend coaching the associates. The dentist-entrepreneur, working as the former, has much less time to lead the team, cultivate the vision, develop the mission, convey a core set values, and outline the future. The dentist-entrepreneur has far less time to be an entrepreneur.
The Boiling Frog
The dentist-entrepreneur begins to feel like the proverbial frog in a pot of water: If the frog is placed suddenly into boiling water, it will jump out. But if the frog is placed in tepid water which is then brought slowly to a boil, it will not perceive the danger — and will be cooked to death.
Read the next installment of “Avoiding the C-Suite Mistakes” here.