You work hard to have a productive dental team that provides outstanding service in a cost-effective, sustainable, and environmentally friendly way. These goals are important, but the key driver for business success, in both good and bad economic times, is profitability.
Many misguided people who have not led or owned an organization may criticize you for prioritizing profits. However, any company living beyond its means with poor financial models will face tough choices that will negatively affect the business. If you fail to reach or maintain profitability, you won’t be around long.
Be strategic and intentional
We are in challenging times with repercussions from the Great Resignation and low unemployment rates. Many workers became used to staying at home with special unemployment benefits during COVID-19, and some may have been reluctant to return to work. Much of this was brought on by a highly unusual economy due to the pandemic, and this caused the Federal Reserve to stimulate trillions of dollars in the marketplace where there was no productivity.1
We’re now facing inflation and a recession that may lead to downsizing and layoffs of your team members. You may also need to choose which patients to treat relative to your stress levels and profit margins. This requires introspection and clarity about how much you want to work, as well as financial models with the least amount of friction and risk. Only then can you determine staff changes.
Unfortunately, very few owners know how to make these changes or are willing to make the effort to get the information. As my friend and business mentor Dan Kennedy said, “To do successful financial engineering in and for a business, we need all the relevant information we can use as fast and as cheaply as we can get it. We can’t afford distractions and detours, meandering into the gathering of information we can’t or won’t use. We can’t let people obfuscate vital truths with gigantic fog banks of information. We must get to the essence. The essence is sales.”2
You might also be interested in: Dealing with the inflation factor
Be more profitable in a difficult marketplace
In January, Microsoft announced they were laying off 10,000 employees. CNN Business reported, “Multiple tech companies have made deep cuts to their workforces since the start of the year, as inflation weighs on consumer spending and rising interest rates squeeze funding. The demand for digital services during the pandemic has also waned as people return to their offline lives.”3
Tech companies around the world laid off 144,544 employees in late 2022 in preparation for an upcoming recession. Meta laid off 11,000 people, Amazon laid off 10,000, Twitter laid of 3,700 (50% of their staff), Booking.com laid off 4,375, and the list goes on.4
“Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads loss have caused our revenue to be much lower than I expected,” Meta Platforms cofounder Mark Zuckerberg announced on November 9, 2022, regarding the layoffs. “This will give us the ability to control our cost structure in the event of a continued economic downturn. It will also put us on a path to achieve a more efficient cost structure than we outlined to investors recently.”5
Amazon CEO Andy Jassy commented, “We were seeing things that were different from what we’ve seen before, and we just felt like we needed to streamline our costs.”6
These companies downsized to remain resilient and profitable in the economic marketplace that is disruptive, volatile, and possibly going into a more severe recession this year. But with all the layoffs, these platforms didn’t change. They’ve been able to maintain productivity with fewer employees and provide products and services to customers without interruption.
What do they know that we don’t?
That bigger isn't always better? That there is a season for everything and the season for expansion may not be right now?
These companies’ key to success lies in their ability to attract and keep top talent. Although these are large companies, their success isn't all based on compensation and benefits. It's about the environment and culture. Amazon touted “Resources to improve health and well-being,”7 Meta offered “Company social events, a pet-friendly workplace, and a travel concierge,”8 and Twitter9 employees had gourmet meals, a video game area, laundry facilities, and other amenities.10
No one will have longevity in an environment that is stressful and negative. People who are considering a job change are leaving something they don't like and searching for a better environment.
What is your office culture?
Take a hard look at the culture you’ve created, rate yourself (or get outside eyes to review your office environment), and be honest. Are your staff members generally happy, optimistic, and energetic, or the opposite? Start with them before chasing new people with the lure of higher compensation.
Getting more from fewer and less has many benefits in that you may end up compensating more overall for higher quality individuals. Those who have high standards can do more and take the place of one or two people that you might pay a lower rate. At this level, you’ll attract employees who are hopefully long-term, career-oriented, and not just job hopping to the next highest wage.
Review your leadership style
Do you empower your team members to make smart choices? Many dentists try to control all aspects of a business and micromanage rather than lead. If this sounds familiar, learn to be a better leader. Life is filled with changes that you can’t control. Instead of getting angry, expect these events and treat them as opportunities to learn and build character.
Don’t try to get through something on your own. It’s hard to be a good leader when you’re down in a hole alone trying to dig your way out. Instead, surround yourself with people you trust to give you objective advice and perspective. Then use this information as a lesson and go forward and share that leadership.
You don’t have to be perfect. You just have to show that you’re willing to step back up and figure out a new way to do something. People want to be led by others who acknowledge weakness, failure, or mistakes and put those lessons to good use. That is the mark of a true leader. With the right people and culture in place, you can create what my friend Dr. Mike Abernathy calls, “a staff-led practice" versus a "doctor-led practice."
Get more for less
No matter what’s going on with the economy, profitability takes precedence. Clarify your objectives, take a close look at your business, and implement tactics relative to your goals. Create a positive culture to attract top talent and learn to be a great leader. These principles will help you increase productivity with less and provide profitability and sustainability in the face of a recession and beyond.
Editor's note: This article appeared in the August 2023 print edition of Dental Economics magazine. Dentists in North America are eligible for a complimentary print subscription. Sign up here.
- White M. Why did the Federal Reserve inject half a trillion dollars into the financial system?” NBC News. March 12, 2020. https://www.nbcnews.com/business/economy/why-did-federal-reserve-inject-half-trillion-dollars-financial-system-n1157166
- Kennedy DS. Almost Alchemy, Make Any Business of Any Size Produce More with Fewer and Less. Forbes Books. 2019. https://www.amazon.com/Almost-Alchemy-Business-Produce-Fewer/dp/1950863239/ref=sr_1_1?crid=1SC1DE0TPC8HZ&keywords=almost+alchemy+by+dan+kennedy&qid=1670264715&sprefix=almost+alchemy%2Caps%2C100&sr=8-1
- Thorbecke C. Microsoft is laying off 10,000 employees. CNN Business. January 18, 2023. https://www.cnn.com/2023/01/18/tech/microsoft-layoffs/index.html
- Tech companies with layoffs. Layoffs.fyi Tracker. December 2022. https://airtable.com/shrqYt5kSqMzHV9R5/tbl8c8kanuNB6bPYr?backgroundColor=green&viewControls=on
- Mark Zuckerberg’s message to Meta employees.” Meta. November 9, 2022. https://about.fb.com/news/2022/11/mark-zuckerberg-layoff-message-to-employees/
- Palmer A. Amazon CEO Andy Jassy says cost-cutting review revealed the economy is ‘more uncertain’ than previously thought. CNBC. Published November 30, 2022. https://www.cnbc.com/2022/11/30/amazon-ceo-cost-cutting-review-revealed-economy-is-more-uncertain-than-thought.html
- Employee enefits. Amazon.com. https://www.aboutamazon.com/workplace/employee-benefits
- Which benefits does Meta provide? Glassdoor.com. https://www.glassdoor.com/Benefits/Meta-US-Benefits-EI_IE40772.0,4_IL.5,7_IN1.htm
- Reuben M. Elon Musk slashes employee benefits at Twitter, gets rid of several perks in a bid to increase profits. FirstPost.com. November 23, 2022. https://www.firstpost.com/tech/news-analysis/elon-musk-slashes-employee-benefits-at-twitter-gets-rid-of-several-perks-in-a-bid-to-increase-profits-11681401.html
- Tang J. Twitter employee benefits demystyfied. Candor. August 30, 2021. https://candor.co/articles/tech-careers/twitter-benefits-what-you-re-getting-as-an-employee-at-the-social-media-giant