Failing to Plan is Planning to Fail
Inside Dental Technology delivers updates on digital workflows, materials, lab techniques, and innovation in dental technology through expert articles and videos.
March 1, 2013
Volume 4, Issue 3, March 2013
Page(s):
The continuing paradigm shift and rapidly evolving business and technological environment in dentistry and dental laboratory technology make it paramount to strategize properly to obtain optimal outcomes for the business. Multiple variables alter the dynamics of the new business environment and must be carefully considered in terms of their impact on digital dentistry, offshore competition, and large domestic conglomerates, among other things. These major factors need to be balanced against the staples of the profession including quality, artistry, consistency, and customer service. Further transformations are occurring within the profession in the form of changing tax structures and increasing input prices. In order to properly consider and establish a strategy that will function best for your business, you must scrutinize and understand your core business and direction, then follow simple and proven strategies to plan successfully and reach those goals. The ability to properly analyze your core business and the current market environment and to properly plan accordingly could mean the difference between remaining in business and going under.
The size of the dental laboratory should have no impact on the need for proper business planning. In fact, a smaller one- to three-person laboratory must have the same amount of control as a larger laboratory. The owner/executive must understand the laboratory and its respective clientele’s desires and fulfill them in the most advantageous way for all concerned. That cannot be achieved without proper planning and implementation; otherwise, it is left to the forces of chaos and pure luck. A potential start-up must construct an appropriate business plan to ensure not to waste tight resources.
The business of dental laboratory technology blossoms with creativity, passion, and heart; however, equal attention needs to be placed on business management and organization. The first approach in strategizing is to scrutinize and propose a business plan that is tailor-made to fit the laboratory’s and owner’s final business outcome goals.1,5 Much thought must be put into preparing a business plan. What is the company’s mission statement? The mission statement will be a baseline of the business and the direction it will pursue in various decisions and should be composed of a few sentences to a paragraph.6 It should include an overview and projection of the company’s organization, philosophy, and management, together with a service and product line. This component of the business plan should be given heavy consideration, since it is the heartbeat of the business, something upon which all interested parties would reflect.
Different companies have different products and/or service offerings that suit their business and mission statements. Some dental laboratories choose to offer all products available including both removable and fixed dental prostheses, while others prefer to specialize and concentrate all their resources in order to compete in the market. A newer business model has come to consideration, facilitated by an even further specialization. These businesses focus on a niche market of products and services such as implants, dental radiography, and digital satellite suites. All modalities of business models are very much viable and can be extremely successful. It is increasingly important to understand which products and services your company is providing at the utmost benefit, and plan to optimize that offering to reap increased revenues and profits. A thorough cost basis analysis could be easily derived by using either specialized management/accounting software or an accounting/financial professional. The cost basis analysis report would quickly and easily illustrate the optimal product profitability and allow the business executives making decisions to narrow and concentrate their efforts on successful profit centers, rather than squandering stretched resources on offerings that are showing little to no growth.
Once the product offering is established, a dental laboratory should continue to investigate a thorough marketing and sales analysis. Here again, with the laboratory’s mission statement in mind, an in-depth analysis is required of the market and its needs and trends for the products and services the laboratory offers. When looking at marketing and sales strategies with the intent to increase revenues and profits, this analysis will aid in realizing the greatest return on investment. The bottom line, and something to take note of, is that not all customers can be served by all dental laboratories, nor does any one single laboratory want to serve them all. Therefore, it makes sense to concentrate on the customers that you do want to serve, and design your business model around those customers, rather than fighting and expensing unfruitful resources. Furthermore, emotional catalysts stemming from pseudo-competition only inhibit productivity. However, if proper business projections and analyses are used, a supervening sense of clarity and creativity will allow for greater results.
Figuring out the laboratory’s potential clientele and their needs within the market fortifies a specific knowledge and empowerment to proceed to the next level—how to appropriately market to these clients. A dental laboratory firm is furnished with multiple and growing avenues to engage with their potential customers.2 Among these avenues are traditional sales methods such as a sales force, print advertisements, direct mail, coupons, and referral credits. A growing sales method enlists the forces of e-commerce, social media, and blogging.3 These marketing methods are not to be used solely but as a repertoire or cumulative plan to engage the widest potential and appropriate customer base. Depending on the business model, an appropriate marketing and sales strategy should be established and then implemented. After a period of time designated by the laboratory’s management (monthly, quarterly, annually), a concise sales analysis and report should be used to assess the success of sales efforts and to determine changes needed to increase sales.
Also an important component to any sound business plan is an accurate financial projection. Here, separate financial projections are derived through mathematical and statistical determinations that would fit into the company mission and goal statements. With the help of a financial advisor or certified public accountant (CPA), financial projections should be established, taking into account projected sales and projected costs (both fixed and variable).4 These projections would help keep the dental laboratory’s executive’s “eye on the ball” and would further help in triggering certain responses with regard to shortfalls and whether further profitability may be gained. Secondly, when seeking funding from lenders to enhance the business, funding providers rely heavily on financial projections, source of revenues, and business plans to establish whether granting of funding is feasible.
Taking charge of your business enhances your ability to achieve further success and wealth in a controlled way. Business plans are organized documents or road maps to achieve an advantageous end result. In order to remain successful and viable in the new dental environment, learning how to control where your business is going and what it is doing are key. Inside your business it is paramount that you maintain complete control by establishing a business plan and strategy. Business plans are designed in a way to be flexible and organic, allowing the laboratory’s executives the ability to amend the plan, all while maintaining control of their ultimate destiny.5 A wealth of information and support is available and can be obtained on the subject of business plans through your local Small Business Association, financial advisors, consultants, and CPAs.
Daniel Alter, CDT, MDT is an assistant professor in the restorative dentistry department at the New York City College of Technology, the City University of New York. Daniel can be reached at dalter@CityTech.Cuny.Edu
