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Breaking news: if you’re a dentist, you’re smart. When the rest of us sit in your chair, it’s nice to know your supercharged brain got you through all those science classes, entrance exams, and the rigors of dental school. But does that mean you should tackle every business and financial decision on your own? The most successful dentists build a team of experts to advise them regularly on matters of business and finance. In this episode of Dentist Money™, Reese & Ryan provide a list of the most important people a dentist should have on his/her advisory board.
Reese Harper: Welcome to the Dentist Money™ Show, where we help dentists make smart financial decisions. I’m your host, Reese Harper, here with my co-host, Sir Ryan Isaac.
Ryan Isaac: Hey Reese! How are you doing?
Reese Harper: Good. I’m kind of wishing I had a title like Sir.
Ryan Isaac: Well, we’ll give you one eventually.
Reese Harper: But we’re just going to go with regular old Reese Harper.
Ryan Isaac: You have host! Okay. Well, you are correct; we’re on a mission, okay? We help dentists make smart financial decisions, but we’re also on a mission to help dentists make wise financial decisions, and there is a difference. So, that is what today’s show is all about.
Reese Harper: Yeah, I think we all know there’s a difference between being smart and being wise, and it’s probably a conversation most of us have had at one point or another. So, I’m interested in how you’re going to explain this to us today.
Ryan Isaac: I’m going to explain it, and it’s going to get pretty serious here. I’m going to reference the most reliable and credible source I could find on the internet. Because any time— as you know, as everyone knows— when you go looking for an authoritative voice on matters of philosophy, there is only one place to go. Any guesses?
Reese Harper: We all know where this is.
Ryan Isaac: You know where this is leading. The Dungeons & Dragons message board.
Reese Harper: Of course! The old D&D. The source of all truth.
Ryan Isaac: All truth. And if you’re lucky enough, you’ll find a discussion that answers your exact question like it did mine. In this case, lordofdragons24— who you know well— he started by asking about the difference between intelligence and wisdom, to which another user replied” “Intelligence tells you that tomatoes are a fruit, but wisdom tells you that they wouldn’t be very good in a fruit salad.”
Reese Harper: Well done! I need to clarify that I don’t know lordofdragons24, and this is not my favorite message board. Ryan was using sarcasm in that reference (laughs).
Ryan Isaac: Heavy sarcasm, but I like the fruit salad quote.
Reese Harper: But that’s very poetic, and I do like these guys. What else did you find in this D&D message board?
Ryan Isaac: Well, since you’re asking, there was a guy or gal named Hamlet that said, “intelligence is figuring out if you could do it, and wisdom is figuring out if you should do it.”
Reese Harper: Yeah, that’s a good one, too. I think I could go along with that.
Ryan Isaac: So, what do you think? Is that a good starting point from D&D?
Reese Harper: It’s an excellent starting point. I always appreciate it when you really dive in and do your research to come prepared for the show.
Ryan Isaac: You’re welcome. So, how about you, Reese? How would you explain the difference between being smart and being wise?
Reese Harper: Well there are probably a few ways to frame it up, and I don’t disagree with our friends in the D&D forum, but I would say that someone who is smart has the ability to figure things out, and then someone who is wise has the ability to make good decisions.
Ryan Isaac: That’s a good transition, because we know that dentists are obviously smart people, and all you dentists and specialists out there, you went through a lot to get to where you’re at right now.
Reese Harper: This is the part of the show where Ryan panders to all of the dentists out there (laughs).
Ryan Isaac: No, it’s true though! I mean, clearly, it takes a smart person to get through all of those science classes and score well on all of the testing, and then go through dental school, and in some cases, specialty school as well. Reese, I’m going to turn it over to you now, though. Tell us what this has to do with today’s topic, which is about building an advisory board for a dentist.
Reese Harper: Yeah, I had a good reminder of this, and it kind of stirred the podcast topic a bit ago when I was on a flight with a friend of mine. He’s a really down-to-earth entrepreneur with a really impressive track record, and he was telling me about his most recent startup and about all the work he had to do to put together an informal and formal board of directors. He went on to talk a lot about the people on his advisory board and the central role that each one was playing to help his company succeed. It was really eye-opening for me, because he is one of the smartest guys I know, and he has proven multiple times that he can build successful companies. He has an MBA from Wharton, and he has a master’s degree in international studies from the Lauder Institute, and a ton of business experience. But one of the first things he thinks about when he starts building his new venture is how he builds an advisory board to fill in the gaps in his knowledge and skill set where he doesn’t have all the strengths. It kind of made me think, why don’t dentists do this more often? When every business in the world is putting together an advisory board; even the smartest people I know are putting together advisory boards. Sometimes, dentists try to go at it on their own, and they don’t really have a board to reference.
Ryan Isaac: Yeah, that’s really interesting. So, that’s what we’re going to talk about today: how a board of directors or advisors can actually help a dentist out, and what it would actually look like for a dentist to build one.
Reese Harper: Yeah, and the point I’m making is that involving other people in your business is a really good thing if you do it the right way. It doesn’t mean you’re not capable of making all the decisions on your own, it’s just that no matter who you are— an MBA or a dentist— it’s always helpful to bounce ideas off other people who have a lot of experience in a given area. It helps hold you accountable and it shapes a lot of the choices you wouldn’t make otherwise.
Ryan Isaac: Yeah. And it doesn’t mean they do it for you, you know? You still have the ultimate responsibility to sign or pass off on something, or to make the final decision on something.
Reese Harper: Yeah, not at all! It’s a good point to make that when we talk about building a board of directors, that’s not the same thing as outsourcing all of your decisions. At the end of the day, the buck has to stop with you, but you’re sort of putting yourself in a position to be the gatekeeper of all the good advice that you’re receiving. And I think that too often, dentists don’t set themselves up with a good advisory board, and they don’t have the right people on that advisory board, so they end up making decisions without as much information. Rather than being the gatekeeper of good advice, they are just the person who has all the ideas, you know?
Ryan Isaac: Yeah. And so with this board, essentially, you’re just compiling a group of really smart people with experience in various backgrounds who can give you their professional opinions, and then you’re the one who makes the decision of what gets implemented. So, from our perspective, that’s a good example of being wise.
Reese Harper: Yeah, and we have seen dentists do a good job of surrounding themselves with the right people, and we’ve seen other dentists try to go at it alone. You can make it work on your own, but from what we’ve seen, the road is a lot more difficult, and it’s a lot harder to reach your retirement goals that way. And you have to remember that compared to most people out there, you’re managing more income, more debt, and you’re being a practitioner, and running a business, all at once. I feel like the ability to construct a good board of directors really separates good businesses from average ones.
Ryan Isaac: Okay, so let’s start by describing what an advisory board for dentists might look like. Where do you want to start?
Reese Harper: Well, we won’t talk about the mechanics of how your should pay people, or whether they should have ownership, or— I mean, there are a lot of different ways that you can incentivize people. For today, let’s just say that in most entrepreneurs’ cases, there are a lot of people willing to serve as an informal-sounding board for you, but if you want to get results in entrepreneurship, they usually say cash or equity. So you have to give somebody a small piece of your building or pay them for their time. And that could just be on the level of involvement that they have. So, we won’t get too deep today into how to compensate your board or whether it should be an informal or a formal board, but that is something you should definitely get your advice on, depending on how big your practice is or what kind of direction you want to go. But I think today, what we want to do is try to go through a list of people that you should look at bringing on. Regardless of who you choose, the first person you bring on is really important, because this is someone who is going to help you decide on other board members, and so you want to get the first person or the first few people right. You generally want the original member of your board to be someone who has a lot of visibility into your practice and personal financial affairs; someone you can trust at a high level. That’s probably a good starting point.
Ryan Isaac: Okay, and the other thing we’ll talk about when we talk about when we discuss this is that you don’t just go put all your buddies and best friends on the board, right? Why not?
Reese Harper: Yeah, you need to keep it really professional.
Ryan Isaac: It sounds fun.
Reese Harper: Yeah. You and me, we’re on each other’s board, and we’re friends, and we’re professional. But if you want people who will give you pushback, it’s also good to have a group of people with very diverse backgrounds so you can get a variety of perspectives. And remember here, you’re looking for the best outcome, so don’t just create a group of yes people that will make you feel good. You want people that share different opinions. And make sure that all your board members have experience working with dentists. There are nuances about the industry that people will never understand unless they have really been immersed in it.
Ryan Isaac: Okay. Let’s start constructing this hypothetical dentist board of directors. Since this is our show entitled the Dentist Money™ Show, we’re going to start with putting a financial advisor on the board of directors for a dentist. We’ll go first.
Reese Harper: Yeah, good choice Let’s see. Your personal financial advisor is someone who can act as a quarterback on your advisory board, and they are really in a great position to coordinate decisions and activities with other board members, because they have a pretty broad base of knowledge—if they’re competent, they have a broad base of knowledge. The certified financial planner exam tests you in tax, and legal, and insurance, and investments, and business financials, and accounting. You might not be as experienced in each area, but you’re in a really good position to quarterback things and make sure that at the end of the day, your personal wealth is actually growing. Sometimes, you can get so focused on building your practice that you can kind of neglect your personal financial goals. And what’s best for your practice might not always be best for you and your family. So, the personal financial advisor can help you stay balanced, direct traffic between other advisory board members, and help you keep from getting distracted.
Ryan Isaac: Okay, great. Let’s move to the second one. Another important member of the board would be your accounting or tax professional.
Reese Harper: Yeah. Your CPA is really important, and in a lot of cases, this person can also function as kind of a quarterback between other advisors. Sometimes, their knowledge isn’t as deep in every area, and most CPAs have experience primarily in tax compliance and minimizing your tax liability, and that’s kind of their primary role. And the deeper they dive in that area, in my experience, the more they can help you, because it really isn’t easy to make sure that clients have maximized all their possible tax deductions. If you just maximize all the legal things that you can do from a tax perspective to minimize your taxes, you’re going to be in a better position than the average person, because most people don’t actually go through the process of following through and capturing all the possible legal tax deductions they can obtain. So, the deeper your CPA focuses on that area, I really feel like it can help. They also can be really integral in keeping your business financials organized and making sure that you know how much you’re making, where your overhead is going, and they can help you keep your chart of accounts really clean. In my experience, it’s good when they have access to your practice books and are doing your tax returns so that they can really have good insight into your entire operation. They can give you a lot of good advice, and they play a really crucial role for us as a financial advisor or planner to be able to maximize the opportunities you have for tax deductions each year as well.
Ryan Isaac: That’s really good advice. So, a third one we’ll mention feels to me like it gets overlooked quite a bit, like a second thought a lot of times at the bottom of a P&L, but a dentist should have a good marketing strategist on the board and someone around to give really good clear strategy and direction with marketing.
Reese Harper: Yeah, man, that’s a really good point. I think we encounter a lot of dentists who neglect marketing, right? And their collections stay flat or even decline over a long period of time, because they’re not investing in activities to grow the business. A good marketing strategist can help you measure the effectiveness of your marketing initiatives, so you can know if your marketing dollars are moving the needle for you. This person can help you with branding, lead gen, and reputation management. I think the thing that is often overlooked is, there is a huge difference between implementing or doing marketing and then deciding whether that marketing strategy is the best thing for you. I don’t know how you feel about that.
Ryan Isaac: Well I mean, not only seeing it in a lot of dental practices but seeing it in our own business and the decisions we have had to make… like you said, there is no shortage of things you could implement, but deciding which ones are actually most effective—and I think it’s easy as a business owner to fall into the trap of just doing what everyone else does for marketing. It happens in our industry; it happens in the dental industry. Whatever that might me, you kind of just go, “that’s what everyone does for marketing, so I’m just going to throw a little money at it and just kind of do that.” And there are a lot of different types of marketers out there, and so, what kind of marketing skill set should a dentist actually be looking for?
Reese Harper: Well, try to separate in your mind the difference between a strategic marketing person, someone who really has broad experience and can help you measure new patients—if you go through business school, there is one statistic that they want to tell you about in marketing, and that’s your customer acquisition cost, or your customer acquisition model. What that means is, how much do you have to spend to buy a new patient? And if you can figure out the method of doing that, like, if you can spend $110 dollars and you can buy a new patient and you know how to replicate that, now you have figured out what your customer acquisition cost is, and your customer acquisition model. It might be as simple as, you’ve figured out a way to design your print mailer to drive a new patient, and for this amount of dollars you spend, this is how many new patients it drives. Or, you’ve figured out how to spend money on a Facebook add with a targeted search in your zip code, and you spend this amount of money, and you get this number of patients. Or you figured out how to do one event every quarter at a local movie theater, and this is what it costs, and it buys you this many new patients. I mean, there are thirty different tactics, but your strategic marketing person should have the experience to help you get to the point where you’re actually measuring your cost of getting that new patient and determining what the lowest amount of money is that you can spend to buy that patient. Or maybe not the lowest, but how much do you have to spend to get the best type of patient?
Ryan Isaac: Right, the most efficient. The most effective.
Reese Harper: Yeah. So, I mean, you have people with digital marketing experience, and social, and search advertising, print, and events, but I really think it’s important– in dentistry digital marketing is becoming one of the most important areas of marketing. I do think, though, that events and print media still have a place, and it’s important to just make sure you have someone focusing on that that really has good experience there, and you’re not just winging it.
Ryan Isaac: Okay. Another member of the board would be your estate planning expert, or asset protection lawyer. Let’s talk about that for a little bit.
Reese Harper: Yeah, there are a lot of different types of lawyers, but this type of lawyer really specializes in making sure that all of your assets are protected from creditors and lawsuits. As best you can, right? And they can also help you and your financial advisor know when to assign ownership for different accounts and properties. So as you buy new assets, or as you open new investment accounts, and your financial advisor makes recommendations on what to do, the asset protection or estate planning attorney should be involved to say, “I recommend you own it this way,” or “you should own it this way.” And that person should really have deep experience in protecting you against lawsuits from creditors and protecting your assets as well as planning for your family in the case of your premature death or death.
Ryan Isaac: Premature?
Reese Harper: That’s a nice way of saying it.
Ryan Isaac: Yeah, okay. It probably always seems premature, I think.
Reese Harper: Dude, if I live out there a ways, I won’t feel like it’s too premature. I mean, how old do you have to be? You want to live to 105.
Ryan Isaac: Probably. As long as I can keep lifting weights in my hundreds (laughs). While we’re on the subject of legal advisors though, there is kind of a different type of legal advisor that can be helpful in different situations that a dentist might want to consider having on their board, which would be a litigation lawyer.
Reese Harper: Yeah, I mean, there is a difference between an estate planning attorney and then someone who has a lot of experience in litigation, and this person can help protect you in the case of a patient complaint, or a weird lawsuit there, embezzlement, or other legal issues with staff. So, I think that’s important to distinguish. You probably won’t have just one lawyer, but if you had to have one, you’ll have an estate planning attorney that then can help bring in someone else as needed. But you should probably have someone on the speed dial for both.
Ryan Isaac: Yeah, the estate planning is probably the guy on the legal side that you would probably interact with more frequently, hopefully, than the litigation expert. And we did an entire show on that. Dentists are really exposed when it comes to litigation for a lot of different areas. We talked about that in detail on another episode. So, it’s obviously really important to have good representation there. Let’s talk about real estate for a minute. What about a real estate expert?
Reese Harper: Yeah, I think you need to have someone who you can really trust to be objective with you and help you decide whether you should lease or purchase your practice space, whether you should relocate, to give you a pulse on the local market—I mean, that person is super integral, and having the right person that you really can trust is difficult to replace. I mean, the real estate industry has a pretty mixed bag of professionals, and it’s really important to find someone who specializes in working with dentists and somebody you feel like who can represent you and sometimes do consulting for you even though they may not be wanting to relocate you, but just help you make decisions and that kind of stuff.
Ryan Isaac: Okay, we have like two or three more that we’d like to discuss. Another essential member of the board would be a personal coach. And I know you have experience in this in our business, and you have done that for years now.
Reese Harper: Yeah. I mean, a lot of this stuff—the more you add up board members, people are just thinking, “well that’s gonna cost money!” And the hard part is, building a company and building a really solid, stable dentist practice is going to cost money (laughs). It’s not cheap, and unfortunately, there is no way. And a coach is one of those things where, when you say that term, it kind of has mixed messages. When I look at that, I feel like I have probably one of the best personal coaches for me; I have spent a long time trying to find somebody. I don’t spend a lot of money on it; I probably spend $500-$700 a month, and I have good calls with that person. The primary thing that I think that person does for me is when I feel a little bit overwhelmed or I feel like I may not have the best—I don’t know. How would you say—
Ryan Isaac: Overwhelmed is a good way to describe it. There’s just not enough time—
Reese Harper: There’s a lot going on! You don’t’ have enough time for everything. Sometimes, it’s good to be able to articulate your personal goals to someone who has some psychology experience where they can kind of say—and I do prefer coaches who are not just business consultants. The business consultant is a different board member, okay? But a coach is somebody who really does have experience in psychology or psychiatry, and they can actually see the patterns over time of things you say. The things you repeat; the habits you might have in your thought processes. They’ll help you kind of identify, “hey, you did this a couple of months ago, remember? You always say this, and this is what you’ve been saying.” It doesn’t have to be super expensive, but I do think that person can help you a lot of times. If they’re interacting with your other board members, and your other board members can get insight from that person into your personality, it just makes you be in a lot stronger situation. It’s kind of like someone you can go to who you can talk to about your practice and stress management, give you some motivational insight, and keep you on the right track. I don’t know if it’s essential for everybody, but I kind of consider myself a pretty independent person and I have a lot of drive and ambition, but I find that having someone I can bounce those things off of periodically really does help me avoid making strategic mistakes in my business that I might make otherwise.
Ryan Isaac: Or just decisions that you feel pressured to make. I mean, I think that is kind of the pattern: you feel stressed, you feel overwhelmed, and you feel kind of compelled to make quick decisions that might be—
Reese Harper: Based on some kind of emotional response.
Ryan Isaac: Yeah. I think I speak for the office when I say we’re grateful for your coach. Like, you get too stressed out and we’re like, “just call the guy. Go have a call, okay?” You always seem in a good mood when you do that. Okay, you mentioned consultants, though. How do they fit into this board?
Reese Harper: So, think of a consultant separate from your coach. I mean, your coach might give you some consulting advice, but a consultant is someone more tactical. They are actually going to get involved in your practice at a deeper level and actually implement change. And so, I think a good board shouldn’t have one consultant on hand, but I think you have to have several people ready to call at a moment’s notice. I know we do in our business. Sometimes, those people just fill gaps that are maybe gaps that your staff doesn’t have in their skill set. Maybe something your office manager doesn’t have a lot of experience in. But you have to pinpoint and really prioritize the target areas that you need and then you have to learn how to identify the specific strengths of each consultant so that you can know who to call for specific issues. So, maybe you’re struggling with an equipment purchasing decision, or an overhead management issue, or a new patient or growth issue. Do you have a scheduling problem, or do you have an HR issue? Do you have a front desk and insurance issue? Every practice is going to have things that come up over the course of the year that really require specific advice. And you won’t get it right right out of the gate. I mean, if you haven’t spent money on consulting, the first time you do it, it’s probably going to feel like a waste of money. But if you do it a few times in small increments— I don’t recommend large expenses. I like paying people for time as I go. I’d rather pay someone for a day and then feel like that day was a waste than spend money on five days and realize that the whole five days was a waste, or 24 months, or a year-long contract. I think good consultants prove their value along the way, and I prefer to see them earn it and show their value on a regular ongoing basis. I know how that’s our business works: we don’t ask for contracts, and we don’t ask for being paid in advance. And so, I want to see consultants that really can focus on specific areas and earn their value over time, and then you can learn to determine which areas in your practice you want to call on those specific people for.
Ryan Isaac: Okay. So, let’s just wrap this up with the last but for sure not the least. It’s probably the person you would interact with more than any of these other board members, I might think. You need to have a good office manager. You might not consider that part of the board because it’s a staff member and someone that you have to pay on payroll anyway, but—
Reese Harper: Yeah. But I think really people need to really relook— if you’re going to be an independent entrepreneurial dentist, the office manager is probably the most important person on your advisory board. A good office manager is going to alleviate a lot of the concerns that are causing you to seek help elsewhere. And if you have a competent office manager and you spend some time and money looking for someone— I think a lot of people feel like they can’t find an experienced office manager, and I think that struggle comes because they’re looking within the dental industry almost exclusively to try to find someone who has dental experience. And I know that that’s an important quality for a lot of reasons, but if you bring in someone that’s really sharp and someone who is paid well that has experience running a business, they can reference forums or other help resources to know how to learn the clinical and tactical side of dentistry. But it’s difficult to find competency if your search is limited so narrowly, especially when where you live is more rural and you don’t have a bunch of inventory of office management to hire from. It’s easier in a bigger city, but in smaller areas, you might need to look outside the field to find someone that you really trust and that’s really sharp and dependable and can have good conversations with people and act more like a manager. I think generally, people’s expectations for what they need to pay for this role are probably too low, and if they just paid 20% or 25% more than what they expected to pay, it opens up a whole different hiring pool, and they can grow a lot bigger with that person. So, I think it’s really important.
Ryan Isaac: Okay, I think we made it. The last point we wanted to make before we close this out is that for the most part, the people on your board should know each other. They should probably trust each other and communicate regularly. The office manager, for example, will communicate with the marketing strategist, and the consultants, the accountant, should be in regular contact with the financial advisor, who also needs to work with the attorney and the real estate expert.
Reese Harper: Yeah, exactly. If you’re making a strategic decision— the last point I’ll make is, if you have more than one person on your board telling you that they don’t like the decision you’re making, it’s probably a sign that you might not be heading down the right direction. I would say that any decision you make, find at least two people on your board who completely agree with you, and make sure that those two people who agree with you don’t always have the same opinion because they’re buddies. I mean, make sure you can get multiple people to buy into your decisions. That’s a good way to use your board. And if you’re being really smart, you’ll get the majority of your board to agree with you.
Ryan Isaac: One of the first things we try to do when we get a new client is, we want this open communication to be happening with all the different people, whether you call it your board or not, you know? You do have these people in your life more often than not. It’s one of the first things we work on when we get a new client, right?
Reese Harper: Yeah. Clients sign a contract, and then we respond by asking them for a list of all their professional contacts, because we know we’ll do a better job at advising when we know the other people who are helping them make decisions. If you can leverage the power of a group of people, it really is a lot more efficient, and you’ll grow a lot faster than trying to do it on your own with only one member of your board being engaged.
Ryan Isaac: Yeah, and it takes a lot of the burden off of the dentist’s shoulders so the dentist can just do good dentistry.
Reese Harper: And I feel like it’s okay to pay for these things. It’s important to be able to manage your expenses. I think what happens is dentists either pay way too much for it or they don’t pay enough, you know? It’s kind of an extreme situation. You just need to pay the right amount to make sure you have the right board and the right key people in place. You can’t leave a gap in your board. So, choose people who know dentistry and are good at what they do, and it’s going to pay huge dividends down the road.
Ryan Isaac: Thanks, Reese! As they say in the biz, you are a wise old sage.
Reese Harper: I don’t know about that, Ryan. It’s good to be here, and good to hear you share some of that wisdom too. Especially from the old D&D message board.
Ryan Isaac: Well, I was going to close this up with one more quote from the D&D message board. We’ll probably never reference these ever again (laughs). They’ve been pretty decent though!
Reese Harper: Let’s see what they have to say today.
Ryan Isaac: The final one says, “you need wisdom if you’re a wizard. You need intelligence if you’re a cleric.”
Reese Harper: Well done. Thank you, Ryan. That’s very wise.
Ryan Isaac: Thank you, and thanks to all of our listeners for joining us. Remember, give us some feedback! While you’re on this episode and while it’s fresh in your mind, just go to the “listen” tab at dentistadvisors.com. Click on “listen” at the top. You can use the comments section for this episode; we’d love to hear from you. While you’re on the website, you can also schedule a free consultation, you can call our phone number, and don’t forget to like our Dentist Advisors Facebook page.
Reese Harper: Carry on!Advisors, Practice Management