Your Associate Can Be Your Business Partner Too
So, now you’re a practice owner. Did you notice how your perspective changed? On Friday morning an associate, convinced that your principal was getting fat on taking a large proportion of the income you were generating. Then, after a few anxious phone calls to and from your solicitor during the afternoon and the deal completes, you’re a principal.
A month later it’s a Monday morning and the newly minted practice owner has a reality check. Is the associate really taking that much home? Don’t they realise how much it costs to run this place? They can’t possibly keep taking a half-day a week off and leave their nurse unoccupied. Don’t they understand profit and loss?
The truth as ever is somewhere in between the two points of view. Taking over a practice with a sitting associate or introducing one is a big challenge that has changed significantly over the past decade. Here are a few ideas to make the process work for both parties. I would really like to shine some financial light into the associate’s world. Because your associate can be your business partner too.
Share the financials of the business, not only with the associates but also with the rest of the team. I will never understand why some principals are reluctant to do this. When everybody realises where the money is going, and in what amounts, they can start to appreciate the need to generate income.
An associate is self-employed. That carries both privileges and responsibilities, the main one being risk. If there is no risk to their income then they are not truly independent. If they have never been a principal then they can’t truly understand the risk, they don’t have the 3am financial wake up with the millstone of both personal and business debt.
For the associate to understand what you want, you need to walk a mile in their shoes. If you are dealing with someone who is 20 years on from graduation, works part-time and has family commitments then it is understandable that their professional focus and ambitions are different from yours. Take the time to get to know them. Don’t just lay down dictates via your practice manager but listen to their concerns.
You have paid a lot of money for the practice goodwill especially if there are a lot of patients on a “plan”. The income from those patients should come to and be retained by the practice. With associates (and hygienists) being paid for what they do. Don’t take the red herring of the associate saying they are being paid for the responsibility of “having” the patients, that’s what the privilege of a BDS or BChD gives a dentist automatically.
Be crystal clear financially.
Let’s get one thing absolutely straight. The days of the fixed percentage for associates are passed. A relic of the days of FP17s, Admor fee guides and a safe, secure NHS.
Use spread sheets or other ways of setting budgets and predicting cash flow. Look at different ways of paying your associates to provide them with incentives. So consider rental agreements, sliding scales and extending payment periods to take in quarterly fluctuations to avoid good and bad months.
No matter how much I write, one thing I know that will never change is that whether principal or associate the grass is always greener in the other’s field.