“How do I respond to the rumours running around the building that the staff are expecting a pay rise in January?”
That is becoming a “frequently asked question” right now.
Then add to the list…….
“Cash flow has been down since I returned from holiday at the end of August.
The books are getting gappy.
The overdraft is going up.
New patient numbers are down.”
In the last three weeks I have been in conversation with many practices who are slowly watching income fall and expenditure rise.
The recession is HERE NOW.
On 1st October I wrote in the ezine about “half-full” versus “half-empty” – a theme that has popped up elsewhere, much to my amusement – pure co-incidence.
The thought leaders in dentistry are supposed to rally the troops, create a battle cry, instil inspiration.
But there does actually come a point in time where a “positive mental attitude” won’t pay the bills.
Yesterday, Phillippa and I looked at income versus expenditure in my own business over the next three months.
Here’s a conundrum.
Income is £23,000 less then expenditure between now and New Years Eve.
All the billable days in the diary are fully booked – we have a waiting list for new clients that now extends into March of next year.
So, if I want to “survive” the next few months I have some options:
- increase my fees to existing clients (you must be joking)
- borrow (from a bank, from Greece?)
- sell more billable days (I’m not ready to die, burn out or become a bachelor right now)
- invent some ways of generating time-free income (they all want Elvis live and uncut)
- cull unprofitable activities and clients and cultivate more profitable versions of both (nice idea but I have no time)
- sell assets (anybody want an M3 with 132,000 on the clock?)
- cut expenses (ouch)
We concluded that it has to be the last option – and so there will be some painful conversations ahead with suppliers and family (starving teenagers and all).
Over the next week I’m going to go through my personal and professional cash flows with a SCALPEL and with the objective of cutting 20% off my expenses.
Phillippa and I also made a further decision yesterday – a big one.
From 1st January I am going to reduce my fees to existing and new long-term clients by 20%.
I feel it is necessary to appreciate the difficulties that everyone is experiencing right now and make a gesture that says
“I get it – I’m committed to helping you and I want to make a direct contribution to making your business better able to prosper over the 2/3 year recession ahead.”
You may ask how that helps me- I am going to have to redesign my service offer to cope and we are working on that over the weeks ahead as well.
There are tough times ahead.
Politicians have diluted the effectiveness of the phrase “we are in this together” but I want to restore the authenticity of that statement.
In the weeks ahead, associates, therapists, hygienists, nurses, receptionists, managers, TCO’s are going to be laid off by practice owners who take the initiative, look at the numbers and realise that an old coachbarrow adage is re-appearing in an unattractive format:
- Team A – the Principal and his/her family
- Team B – the self-employed sub-contractors
- Team C – the staff
- Team D – the patients
- Team E – the suppliers
Somebody has to pay – the only choice is who.
Hiding with your head in a bucket and hoping that the current economy will go away can ONLY result in Team A paying the bill.
Pay rises? You must be joking.
Time to have a serious sit down with the team and explain just what is going on out there.
Time to get the SCALPEL out.
Cut your expenses by 20% NOW.
A good time to work with your business coach on making the right decisions.