With coronavirus filling newsfeeds and screens, it has led most dental practice owners to consider the future of their businesses. With so many serious worldwide issues at the moment, it’s important to look into recession proofing your practice and being prepared for any possibilities. An October 2019 Bankrate survey found that two out of five Americans, or 40%, are not prepared for a recession.
Look back over a decade ago to the recession of 2008 with the stock market, the hype of the swine flu, and what those similar times did to businesses. It’s better to be safe than sorry and have some plans in place that can be easily implemented.
Here is a comparison of the drop of 2008 to now.
Focus on team building and systems
One item that is often difficult to find time to do is train staff, especially when the economic climate is booming. This is a great time to invest in courses or on-the-job training with your assistants. When the economy picks back up you have a better trained staff that feels more empowered to take on more difficult tasks. This is the perfect opportunity to look at all of the technology that your practice uses and compare it to that of new systems to make sure your practice is up to date.
Pay down debt and focus on savings
It’s crucial that you pay down any outstanding debt, more specifically, high-cost debt such as your credit card balances, to create some breathing room in your budget. Often, economic downturns lead to job loss or downsizing. If you’re worried about job security, paying off your obligations might bring you more peace of mind.
Prioritize credit card debt, then turn to other types of loans, such as mortgages or auto loans. Boost emergency savings. A high-yield savings account can help you earn more on the money to stash away. Shop around for the best account that suits your needs and lifestyle. Go through your monthly expenses and live within your means so you’re not overspending in your practice.
Cut out PPOs and start a membership program
A dental membership program allows you to create your own plan as an alternative to insurance. Patients pay your office a monthly or yearly subscription in exchange for benefits and discounts. Individuals leave dental practices for various reasons, but more often than not it is because of insurance coverage (money issues) and not poor customer service. Dental membership plans can make services more realistic for a lot of your patients who otherwise could not afford dental work, and it’s also a win for your practice for creating recurring revenue. When the last recession hit, a majority of patients lost their dental benefits and believed they could not afford to see the dentist. With a membership program, you can let patients know they will be able to receive quality dental care from you whether or not they have insurance.
Here is an example of a practice with a successful membership program.
In the chart, you will see that this practice is generating just under $40K per month in predictable recurring revenue from their uninsured patients. Imagine the game changer for your practice! This practice is also helping over 1,800 uninsured patients receive quality dental care while being able to cut out the middleman.
John Warrillow, author of The Automatic Customer, discusses implementing subscription revenue in businesses. “When you create a steady flow of recurring revenue you insulate yourself from the worst of a potential recession.” This is the main reason why creating a membership program can be the smartest thing you can to do prepare for a recession.
Look at your marketing. Do you even have marketing?
How do you market your practice to new clients and stay connected to the ones you have? Greatly increase profit margins in your practice by using social media, Facebook Ads, email campaigns, external marketing, and direct marketing. Marketing is one of the best investments in both a good and bad economy.
Continue educating yourself and building skills and relationships
To recession-proof your life, one of the best investments you can make is in the latest education, trends, and networking. Keep a connection with those in your field.
It’s hard to predict the future when you’re using the past as a guide. Our economy is changing dramatically. There are many different sources that can lead to a recession, and often when we look out for the next one, we look at the same things that caused the recession rather than recognizing there may be a new source. We don’t have that crystal ball to be able to look toward the future.
I have just written a book on how to recession-proof your business. I recommend you download this resource, or you might regret not building your own membership program. It's a quick read designed to help you take action. Download it at boomcloudapps.com/recession-proof/
Jordon Comstock is the founder of BoomCloud Apps, a software company that allows dental offices to easily create, organize, track, and automate an in-house membership program. You can download a free e-book about membership programs or watch a free demo. Contact him at (801) 753-8586 or [email protected].