Posted 01-20-16

Dental Business Institute: Wealth Insights
by Garrett Gunderson, Chief Wealth Architect at Wealth Factory

A "multiple" is a number that people use to judge the value of your business--it decides whether your business sells for half gross annual revenue, four times that amount, or even more. Here are a handful of ways to grow your practice "multiple" and build equity in the business:

  1. Have a practical mission statement that leads towards clarity in action. That means your mission statement should live in the hearts of your team and your customers, rather than just a forgettable statement hanging on the wall.
  2. Build a production based economy and mindset with a compensation program that gives incentives for hitting goals, such as more money or other bonuses (iPads, Disney trip, time off, etc.). This is much more effective than an "entitlement economy" where employees are only interested in getting paid for showing up.
  3. Build one-page project plans on any new idea, new position to be filled, or any other action idea. This creates a framework so that the knowledge is not just stuck in your head and allows the team to assist you in building the idea."
  4. Apply "Division of Labor" principles articulated by Adam Smith in his 1776 work, The Wealth of Nations, by creating depth of talent and skills within the business and your team. For example, when I started my company I was the customer service, fulfillment, marketer, manager, and almost everything else. Now we have a marketing division, a sales division, a fulfillment division, an administrative division etc.
  5. Create a 3-year revenue growth plan. Plan ways to grow your top line and build equity in your business as revenue grows each year.
  6. Create weekly pulse reports on the key statistics in your business. This will allow you to make course corrections and adjustments before being forced to correct reactively due to cash flow constraints.

The higher your multiple, the more profitable your practice will be today and the more you can sell it for in the future. To learn more about building wealth in your business and the other topics taught at the Dental Business Institute, visit www.HenryScheinDental.com/DentalBusinessInstitute.