Business plan 101

Dr. Michael Gradeless

Bobby Knight once said (before he got fired) that there was no shortage of players with a will to win. What is rare is the player with the will to prepare to win.

The best way to prepare to win in your dental business is by having a business plan. The time to begin to write your business plan is before you have purchased your practice. Most people underestimate the importance of timing this step.

As soon as you begin looking at practices to purchase or at locations and equipment, you will begin dealing with salespeople. These people earn their living by leasing office space, selling equipment, or selling dental practices. They have had training, experience, and they are good at their jobs! They will show you many practices and locations with multiple financing options that all look wonderful. However, it's surprising that most of these options will not support your vision. That's why it's important to write your business plan before you become distracted by too many options.

Writing a business plan may seem daunting at first. The secret is that it doesn't have to be perfect. Seeking perfection leads to procrastination and then finally making decisions just to have the decision made. Relax — Your business plan is a fluid document that can be revised as you incorporate new ideas.

The business plan outline above was adapted from the Small Business Administration recommendations. It does not need to be written in order from beginning to end — just start with the area that feels comfortable. Usually, the executive summary, which comes near the beginning, is written last. This month's action item is to begin writing your business plan.

Cover page: First impressions count! Bind the entire plan for a well-finished, professional look. Your cover page should clearly state your business name and include your logo and a tag line (such as "Creating Beautiful Smiles") if possible.

Executive summary: Generally written last, an executive summary provides a concise overview of the business. It should summarize the plan and should include a description of the services you will offer and what will make your practice distinctive. It is important that you discuss your target market, marketing plans, and financial projections. If you can say it in 25 words instead of 50, do it.

Industry analysis: This is for the lenders, but new dentists also can use the data for motivation should their business get off to a slow start. Remember, a 55 billion-dollar service industry that is experiencing significant growth while the number of providers is declining is an industry with plenty of room at the top.

Competitive advantage: Describes the services your business will provide and why they will be better than what is currently available. Since you are a new graduate, you've learned the latest technology and techniques! Describe the areas where you will continue your education and preserve your advantage. If you are adding new procedures to an existing practice, highlight them.

Marketing plan: All lenders will insist that potential borrowers present a marketing plan. It is vital to communicate how you will grow your business, how you will identify and contact your target market, and how much this will cost.

Competitive analysis: This section will be written after you have identified where you will practice. It will include demographic information such as average income, population figures, and information about your competitors in the area. While you are not trying to denigrate other businesses, you should be prepared to describe how you could improve on the services offered in the area.

Financial plan: Show them the money. How much do you need? Include your current balance sheet, projected profit and loss statement, and projected cash flow. No matter how brilliant you are, if the numbers don't add up, your business will not succeed. That's why it is called the bottom line.

Dr. Michael Gradeless, a 1980 graduate of Indiana University, practices preventive dentistry in Indianapolis with an emphasis on cosmetics and implants. He is an adjunct faculty member at Indiana University where he teaches the Pride Institute university curriculum of dental management. He is also the editor for the Indiana Dental Association. Contact him at (317) 841-3130 or email: [email protected].