Dr. John Meis: There we go. Alright, very good. So, always a technology problem when you try to do things live, and how exciting does that make it for all of us? (Laughs) So, I’m Dr. John Meis and I’m here with Dr. Jason Howell for this episode of The Strategic Thinker, how are you doing Jason?

Dr. Jason Howell: I’m doing great, John. It’s great to be here and thank you for having me.

Dr. John Meis: Glad to be with you too. So, we’re going to be talking today about strategic planning. And so, I want to start out with just saying that what Spark does is we help group practices drive their enterprise value. So, there’s multiple ways that we can increase the value of our operations, and we just focus on those things. So, we’ve broken down all the things that drive enterprise value, they fall into 4 quadrants and these are the 4. And today, we’re going to be focusing on the Culture quadrant and specifically strategic planning. As we come into the 4th quarter now, it’s time for us to really put our planning caps on, be prepared for 2021, and I’m sure everyone met their plan for 2020, right? (Laughs) It was an interesting year, and we have plenty of turbulence yet to go in 2021. And so, how do we think about strategic planning? So, one of the tools that we use is we use what we call The Three-Year View. And, The Three-Year View is... to use the principle that is discussed in the book The Seven Habits of Highly Effective People and that is, “Begin with an end in mind.” So, we like to go out and look at what 3 years looks like. Now, many organization plan much further than that, and I don’t think there’s anything wrong with that, but beyond 3 years the picture gets much fuzzier. And so, we like to at least have locked in a solid 3-year plan. So Jason, what are some of the things that you think makes the 3-year the right time frame and why a 25-year plan doesn’t make sense for most group dental practices?

Dr. Jason Howell: Well John, I think the 3-year plan is such a great way to focus this. As we as dentists, and we as businesses, and we as entrepreneurs, we form these companies with a vision and a goal and it’s so easy to see that vision and goal so far out and know where we are today and then lose the focus of what is going to get us to success in that future. And so, a lot of companies tend to focus on a 10-year or a 5-year plan, and that’s okay, but what we really find is that we know what we’re doing today and we can learn from the experiences of yesterday, or last year so to speak. And so, a 3-year plan for us, it’s just much easier to know where we are now, what could we do in 3 years. If we take 5 or 10 years, we kind of lose the focus on how do we get there? What’s the vehicle that’s going to get us from here to that point? So, 3 years is such a great time frame because you can really anticipate a little bit more clearly on how you can use what happened yesterday or last year to really make a big difference in the next 24 or 36 months.

Dr. John Meis: You know, it’s the year after the year after next, so it’s really close and one of the reasons why I think it’s a valuable time frame is because most of your team members - and remember, they are the ones who are going to be doing the heavy lifting on accomplishing this vision, they’re the ones that we need to stay engaged and the farther we go out I think the harder it is to engage our on-the-ground, in-the-trenches folks.

Dr. Jason Howell: Yeah, you’re exactly right. And, if we think about our team members and a lot of the experiences they have, and age groups within the dental community, a lot of younger people that really respond well with setting goals that are achievable and they can see a result in a timely manner. And so, as you said, 3 years is really not that far out and so I think it helps keep the team engaged and it helps everyone keep that focus on a monthly basis to be able to see that vision occur.

Dr. John Meis: So our process, The Three-Year View, it really lays out some of the key things that we need to be thinking about and we need to decide in order to create the rest of the plan. So, it’s a simple document, it’s one single page with some brainstorming ideas on the back. It’s a very simple tool, and it starts by asking, “What’s our current revenue and what’s our Year 3 revenue?” When we know those 2 numbers, now we’re going to figure out what is the delta? What is the revenue growth that’s going to happen over that time? I like to, from that point, once we know what growth is needed to happen, I want to figure out how much of that is going to come from same-store sales, so to say, same-practice, increase in the collections in the practices you already have, versus what’s going to come from the business-development growth. So Jason, when you think about practices, what’s a reasonable expectation of same-practice growth year-after-year, what does that look like?

Dr. Jason Howell: Well, you know, it depends a lot on the type of practice. Are we talking about a practice that has been established, a 5-year or 10-year-old practice? Or, are we talking about a practice that is within the first 2 or 3 years. So, when we start looking at this we want to understand what type of practice and what expectations are within reason so to speak? So, with a well-established practice, having year-over-year growth of 3-5% can be understandable. If we have a year 2 practice that started as a de novo, hopefully we’re seeing larger growth. So, I think in this Three-Year View, it’s important to understand what type of practices make up your organization and what type of practices you may be looking at opening or starting, and it’s always important, just like with the stock market or things like that, to have some diversification. So, really looking at what you have in place, and what it is that’s going to get you to that 2 and 3 year mark, and being able to balance that out.

Dr. John Meis: Yep, and the important thing here for everybody to realize is that there is no cookie-cutter approach. You can’t just say, “Okay, everybody’s going to do this,” it really is an individual thing. We know that for some years now the dental market as a whole has been growing at about a 3% clip. So, dental spending, consumer dental spending, has been growing at about a 3% clip. So, the way I look at that, I think, “Okay, well that means that 3% growth in the practice means you haven’t grown at all.” Right? You’ve stayed steady. And, for a mature, highly-profitable practice, if you can continue that, you know, that may be all you need. You may want to set a higher standard than that saying, “Well, everybody should be smarter, everybody should be better at doing their jobs, we should have improved over that year.” So maybe for that type of practice, an established practice bumping up against their capacity limits, maybe for that practice a 3 or 4% makes sense. But, like you said, a year 2 de novo, maybe the growth is 70%. So, it really just depends, but having a thoughtful figuring out of what that is first allows you to determine what your business development growth is, so that’s what you’re going out and getting new. And, that’s the next step in the process, is how much do we need to go out and get. And so, having that number squarely in your mind is so helpful because sometimes it feels overwhelming when you’re thinking about, “Oh, I want to grow as fast as I can, I’ve got to get this done, this done, this done...” You know, no you don’t really need to do that, you need to have thoughtful growth and you need to figure out exactly how much of that growth is coming from outside the organization that you already have.

Dr. Jason Howell: Yeah, you’re exactly right. And, it’s so important to be able to see that vision and set reasonable, achievable goals to help keep everyone motivated and encouraged. So, what we see sometimes is people, they don’t think about what they have and what ultimately what they’re going to add to, they just think about the number that they want to reach, right? And so, they may put our revenue this year as X, and we want to be 5 times X in 3 years. Well, what is X today? And, what would it take to get there, so that we are creating achievable goals to help everyone realize their potential. What that means is that we want to make sure that we don’t under-anticipate, we want to be pretty accurate, but it is involved and how do we get to the place we want to be? And, what components, what team members, and what type of growth do we want?

Dr. John Meis: Yeah, and that’s exactly where I was headed next is, “What does that growth look like?” So, the amount of that growth of the entire enterprise, what percentage of that is development growth? Alright so, what does that class look like? And so, we always talk about the 5 different ways of having business development growth, one being acquisitions, mergers, de novos, skeletons, and foldings. So, there’s 5 different ones, and having an idea of what of those that you are looking for. So, some of those come with ongoing cash flow, some of them come with no cash flow, right? So, a de novo and a skeleton, neither one of those have any cash flow that comes with them, so really understanding your capital structure, where the money’s going to come from, how dependent are you on that cash flow will make a big difference on how you look at that growth, won’t it?

Dr. Jason Howell: That’s exactly right, and one other thing that really is dependent on that is - and I’ve been lucky enough to be apart of several of those, I’ve done de novos, I’ve done acquisitions, I’ve done expansions, and the thing I always like to remind some of our leaders as we do these things is each one of those comes with their own upside and their own challenges, right? And so, what I always like to remember is: as I’m growing as a leader and an entrepreneur in this group, how much time do I have to dedicate to that growth? Because each one of those 5 that you mentioned, they have a different amount of time that is involved with the leadership. So, as we take an acquisition with a well-developed practice and a good group of team leaders, I may not personally have to be as time-involved at that practice vs. if we’re going to open up a de novo or have a young doctor or a new graduate, I’m going to want to make sure that I’m available to really help develop that team, or have a leadership team available. So, each one of those has great potential, but each one of those comes with some different, I wouldn’t say, let’s just say, challenges that are very easily dealt with, but you have to have the right type of infrastructure in place.

Dr. John Meis: Right. So, you bring up a good point. It’s not only your capital structure that’ll decide that, it’s your capacity of the management team. So, who do we have that’s available, and what are we going to need? And, the wear and tear on the management team is very different in those 5 different options. So, that’s a really good point. The next thing we go through is we start looking at what are the people needs that we’re going to have. How many GP’s are going to create this growth? How many specialists? How many hygienists? We go through how many non-clinical, office team members are we going to need? Then our process goes through who are the central support team that you need to make this happen? And, that’s really what you were talking about is do we have what we need? And if we don’t, how do we go and get that? So, by doing this, we get a very clear picture of really the physical space that we need as well as the people that we need. And, once we have that in place, now we can start fitting in all of the pieces. And, the back of our Three-Year View gives about 11 different things to brainstorm on, and it’s just a very, very valuable thing for people to be thinking about. So, one of the things on there, it’s very commonly discussed and debated in the DSO and group practice space, is what should you centralize? What services should be centralized, and what should be kept in the office? And so, having a clear strategy on that, having a clear understanding of where you are, where you’re going to be during this 3-year picture, and really it may be helpful to understand where you’re going to be beyond that 3-year picture so that you are constantly getting closer to what it is as your end goal. So, that’s the Three-Year View, and that is one of the 2 tools that we use on our Discovery Calls. A Discovery Call is just a chance for DSOs and group practices to have a chance to sit down with me and visit about some of the opportunities that are in their practice. We also have the Enterprise Scaling Scorecard that we use during this call. That is really a nice view for people to be able to self-assess where they are on their capability growth, and both of those are tools used during the Discovery Call. So, if you’re interested in one of those, you can go to SparkDentalNetwork.com/join or you can call the office at 866-277-2758 and we’ll get a time lined up for us to get together and discuss all these things. So Jason, I want to thank you for being on The Strategic Thinker this week.

Dr. Jason Howell: You’re very welcome, I’m always happy to join you. A great discussion, and I’m excited for all those out there that are looking to grow. And, I would always encourage everyone that the potential and what you can do within your organization is always more than you can realize, and we’re here to help you anytime and would love to meet some of you.

Dr. John Meis: Awesome. Thanks everybody, and we’ll see you on the next episode of The Strategic Thinker.

Dr. Jason Howell: Thank you.

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