6 STAGES OF GROWTH
STAGE 6: LEADERSHIP AND VISION ( 40+ OFFICES)
In the final stage, you continue to build out your executive team by
hiring, for example, a chief marketing officer (CMO). You also bring
most third-party outsourced services in-house, such as IT, legal, compliance, and other services that make the most economic sense for
your business model. To date, you may have operated in one geographic
region, but now you are evaluating or have expanded into markets in
new states, and you focus on developing techniques to maintain consistent communication and culture across states. If you didn’t receive
third-party financing in Stage 5, you may need it now, depending on
the speed of your growth. At this point, the addition of a new office will
barely impact your day-to-day operations. From this point on, it’s a
matter of repeating your proven systems. By Stage 6, the primary limit
is your vision for growth.
By understanding what lies ahead, you can spot opportunities, avoid
pitfalls, and maintain your sanity, which often feels like the first thing
to go when you start growing beyond a solo practice. You’ll make
mistakes along the way, of course, perhaps growing a department too
fast or missing a training opportunity. But if you have patience, stay
committed, and learn from the trials and errors of those who walked
before you, you’re far more likely to succeed.
Welcome to the path of building your own multisite dental group.
See you next month as we dive into Stage 1.
VINCENT CARDILLO, MBA, has more than 20 years of
experience owning, leading, and partnering with DSOs, the
latest of which was No. 14 on the 2014 Inc. 500 List. He is the
founder of Dental Management Innovations LLC. DMI
positions clients for growth by strengthening their operational
systems and infrastructure. Mr. Cardillo also provides his
expertise to private equity firms and institutional investors.
His book on the six stages of growth will be published later
this year. Contact him at firstname.lastname@example.org.
Whatever stage you’re in, it’s critical that you have easy access to your
data so you can measure your progress and recognize potential areas for
improvement. This requires having practice management software that
allows you to pull key data to determine what’s working, what isn’t, and
what you need to change to get stronger. Practices in Stages 1 and 2 have
a variety of options for practice management software because their data
isn’t distributed across many locations. But as your organization expands,
keep in mind that you’ll need better capabilities to centralize your data.
As you feel the growing pains, it’s time to move up to a strong enterprise
software that can support multiple locations and allow you to manage
data across your offices.
*Spotlight is sponsored by Henry Schein’s Dentrix Enterprise.
STAGE 2: ENTREPRENEURIAL (TWO TO THREE OFFICES)
One of the more challenging of the six stages, this is where you build
significant parts of the foundation on which all future practices will be
built, including officewide systems and policies and procedures. You
put clinical mentoring in place and identify and track essential metrics.
You are the biggest producer for the practice and, you must run between
offices in order for each to be profitable. You take on various duties,
including launching marketing campaigns and paying your own bills,
but you struggle to be a good manager, and you fall into the trap of
micromanaging. However, you figure out ways to foster a strong culture,
and you encourage your team with regular team meetings and an incentive plan.
STAGE 3: FOUNDATION DEVELOPMENT
(FOUR TO NINE OFFICES)
With a few practices under your belt, you start to define your business
model, in particular—whether you’ll centralize or decentralize certain
functions of the business, and whether you’ll deploy an acquisition or
de novo strategy. In addition, you choose between a branded or nonbranded model. There is no right path, but you need to understand the
pros and cons of each because it will affect how you build your team
and where you focus your resources. You begin to run your business
off of clinical and financial metrics rather than your bank account
balance and instincts. You evaluate how to leverage your resources by
using outsourced vendors. You become better at hiring the right people
and putting them in the best roles possible. You develop a mentoring
program for your dentists and take the crucial step of investing in your
training program to ensure that your team provides consistent care
and customer service for your patients in all offices. You learn how to
become a better leader and how to delegate, and you’ve likely realized
that your practices run fine when you don’t visit each one every day.
In fact, they may work better.
STAGE 4: PLATFORM FOR GROWTH ( 10 TO 20 OFFICES)
With more offices coming on board, you will need a designated team
to integrate acquired offices or to launch de novo offices. If bringing
on partners is a part of your platform for growth, you may want to
establish a “path to partnership.” In this stage, financing for growth
often becomes more difficult. You further define your role in the company. Are you a chief executive officer (CEO) or chief dental/clinical
officer (CDO)? Once you decide, you need to actively search and hire
for the other position.
STAGE 5: ORGANIZATIONAL EVOLUTION
( 21 TO 40 OFFICES)
You evolve your clinical and operational systems and continue to build
your practice support team. This includes increasing your focus on your
business development team and investing in the highest level of leadership, including a CEO, chief operations officer (COO), chief financial officer
(CFO), and CDO. You may receive third-party investment or you may
have negotiated with your lending institution to increase your borrowing
capacity, and you may even be able to remove personal liability.