The Introspective Leader's Advantage

Your leadership style is influenced, in part, by the natural role you tend to play. Perhaps you're a mentor-type, a great talent-spotter, or a clinical perfectionist. Whatever your style, throughout your career you've probably heard that you have a reputation for demonstrating certain qualities.

If someone pointed your style out to you, there'd likely be a flash of recognition. Chances are, however, unless you've asked, no one is spelling it out for you. This means that it's up to you to stop and think about what your natural leadership style actually is. Leaders who take the time to truly understand their natural roles and how those roles affect those around them have an advantage over those who don't take this inward-looking journey.

Finding your Role - Once you've identified the role or roles that you believe you most naturally fill, it's useful to test them by looking for objective supporting evidence. Start by listing a few of the ways your chosen role might manifest itself at work. Are these actions that you come by naturally? If so, great; If not, ask yourself why not. What is limiting your ability to fill the kinds of roles you would like to fill?It's possible that your selections are slightly off course. If there is no patient demand, it is possible that the role you'd like to play isn't aligned with your abilities. In that case, you need to reexamine the range of roles you identify with and assess whether your aspirations are clouding your perceptions of your strengths and weaknesses.

Is it the Right Role for You? - At the extreme, an increased understanding of your role can help you determine whether your position offers the alignment you need if you are to be satisfied over the long term. Consider the dentist - we'll call him Paul - who, in 2004, bought into a large practice.

Paul was flattered to be at the head of such a large practice, even to qualify for the loan. But many of his colleagues felt that he would be happier as an associate (his longtime position prior to his current position). He does not know if he is doing a good job as owner, he has not had the benefit of any business training. He has been taught he is a dentist, not a business person.

At leadership levels, the opportunities to let natural roles emerge often are limited by the regular demands of a wet-fingered dentist or by situational circumstance, such as key staff out on maternity leave, an intense periods of work resulting from new procedures, or an accounts receivable problem. All these things factor in to the mix of required and voluntary things you do each day. It's true that the day-to-day demands of a dentist can easily obscure the kinds of avenues a leader might prefer to pursue. The struggle is to try and find the balance to free up time to do more of the kinds of things that make your work ultimately rewarding.

Gaining a Deeper Understanding of your Role – If we work with the mind set of a dentist as a CEO - we'll call him Paul II - whose clinical schedule is so intense that it crowds out most of the chances he has to step back and reflect or to mentor younger members of his staff, as he would like. The daily demands of Paul II play to his strengths as an intense perfectionist, and practice builder. But they don't allow him to be the people mover he also would like to be. Paul II knows that he is good at envisioning and articulating a long - term strategic view. He knows he is good at motivating and mentoring younger staff, if he only had the time. He knows that his time is invaluable in their eyes. In rare free moments, he meets with these people, answering their requests for general guidance and pep talks. Yet Paul II finds it difficult to incorporate that mentoring into what is already an overloaded schedule. His typical workweek is six days. Does Paul II have "an issue" delegating work? It's possible. More likely, the structure of his “control” isn't optimal. His practice is running him rather than the other way around.

Recently, however, Paul II has made some progress in incorporating more of his would-be role as mentor and visionary into his job, despite the organizational circumstances. His practice has begun offering a coach facilitated “SOS” Staff Meeting to help develop a “vision” and to help get his staff to be more accountable and responsible for their own success in the practice. He has now built into his schedule staff meetings designed to allow his staff input and time to develop strategies that they can collectively commit to as goals. This provides quality time between himself and his staff that they crave (and, by the same token, to allow himself to "indulge" in the kinds of mentoring behaviors he rarely has time for otherwise).

Becoming a Better Leader – Paul II is well aware that he needs to address the design and structure of his team. In the meantime, he has found a way to make his working life more enjoyable in the short term (Staff Meetings) and to send a message that he wants to leave a “Vision” for the long term.This CEO/dentist, Paul II, is also a good example of the benefit of having an increased understanding of one's own natural roles. He has begun to identify others' natural roles as well and, in doing so, is better able to temper the advice or counseling he gets and gives. He is also better able to set appropriate benchmarks for his staff with the understanding gained from staff meetings that actively discuss the roles that dominate his team now. Paul II is constantly seeking people (advisors and or coaches) who will instinctively help the team gel to become more effective.

The point is, at work, if you see something heading your way that doesn't play to your strengths, you can divert it or avoid it. However, you'll be rewarded if you bring people into the practice who can handle the kinds of things you're not great at." Are you managing your practice on the fly?

Adapted from Harvard Business School Press from Your Leadership Legacy - Why Looking Towards the Future will Make you a Better Leader Today by Robert M. Galford and Regina Fazio Maruca. Copyright 2006 Robert M. Galford and Regina Fazio Maruca. All Rights Reserved
http://www.management-issues.com/2007/1/30/opinion/the-introspective-leaders-advantage.asp

A Good Question From A Canadian Dentist

(Reprinted here with the permission of the Canadian Dental Association)

Q: I've found myself in the position of having to decide where to live, 7 years after graduation. My husband has been relocated to Vancouver and I am very ready to own my own practice. The question is, do I wait and associate in Vancouver and buy in Toronto because the remuneration is that much better (ie return to Toronto to live permanently) or do I buy in Vancouver because you do just as well? I realize both are very similar cities- small downtown practices or big all day and all night suburban practices.

I like both cities for different reasons so it's not a lifestyle decision per se.

I'm just wondering how dentists do across the provinces. Does anyone know the stats on that? The last thing I want to do is throw myself into an already saturated mix.

A: Your query is one of the most common questions that new and practicing dentists ask. Determining a good practice location has to take into consideration a wide variety of issues and information., most of them dealing with personal lifestyle choices.

But in terms of some data that may be helpful, incomes in the locations you have indicated, and population: dentist ratios may serve as good indicators for further exploration.

The population: dentist ratios in Vancouver and Toronto in 2005 were 852, and 934 respectively. The Canada average ratio was 1734, therefore both of these urban centres have a much greater concentration of dentists. However, this is to be expected, as the catchment area of patients is from the city centres. Nonetheless, these figures indicate that Vancouver may be slightly more saturated than Toronto, but not a significant difference.

When looking at salaries, occupational income data from the 2000 Canada census indicate that the average employment income for dentists was $108,034. This is the latest information we have from public sources on dental incomes. The average employment income in Vancouver was $79,138 versus $90,139 in Toronto. However, it should be noted that in every city male dentists reported earning significantly more income than female dentists. The median income of female dentists working in both Vancouver and Toronto were between $85,000 and $90,000, therefore, there were no significant differences for female dentists.

When taking this information into consideration, I would say that the differences in these two cities seem negligible and the most important factor when making this decision should be lifestyle considerations.

Costa Papadopoulos

Manager, Health Policy & Information
Canadian Dental Association

Editor’s note:

The CDA makes this information available from their website at www.cda-adc.ca. They have resources for your dental career,
http://www.cda-adc.ca/en/dental_profession/index.asp, and for members they have additional resources at the CDA Resource Centre at http://www.cda-adc.ca/en/members/login.asp or try
http://www.cda-adc.ca/en/members/resource/research/index.asp.

The American Dental Association keeps demographic information too. However the smallest area they cover is by county, not by city. They also have a large state and regional report called the Distribution of Dentists. These materials are available for a fee from their catalog department at www.adacatalog.org or https://siebel.ada.org/ecustomer_enu/start.swe?SWECmd=Start. Also you can go to the ADA home page, www.ada.org, and there, in the middle of the page is a link on Survey Research for Dentistry, or http://www.ada.org/ada/prod/survey/index.asp. Here you can find the free resource of FAQs at http://www.ada.org/ada/prod/survey/faq.asp.

What Is the Lifecycle of a Dental Career?

By analyzing the life cycle of a dental career we know that the first 10 years make up a period known as the rapid growth phase. At the end of this phase most of the practice’s assets will have been depreciated down significently. The next 15 years will be the peak earning years. Around the 25th year in practice a dentist will experience a slow but steady decline due to his or her desire to work less. According to the past president of the CDA, only 6% of dentists will be able to retire at the age of 65 in a manner and standard to which they are accustomed.

Don't miss out on the most missed opportunity in dentistry, that of capturing the goodwill value of your practice more than once in your career. This is accomplished by selling your practice more than once. For example, by years 10 -15 you have substantially built-up most of your practice's goodwill value and you have depreciated down most of the value of your assets. Think about it, this is the time when your practice is at its optimum value to sell, not thirty years later when you have reduced your schedule and are generally slowing the practice down.

This does not mean that you would have to move from your community, as you could consider selling 1/2 of your practice or all of your practice and commuting to a different area outside of any restrictive geographic covenant.

Mutual Funds with Re-invested Distributions? Don’t Overpay Your Taxes!

It’s tax season again, and that means questions, questions, questions. Over the course of the next few months we’ll be putting forth what we believe to be useful tidbits for investors with taxable accounts. This is the first.

Say you’re an investor holding mutual fund shares in a taxable brokerage account. You’ve elected to “re-invest” all distributions in the fund, meaning that dividends, as well as short and long-term capital gains are all paid out to you and then re-invested into additional shares of the fund. Your initial investment was $2,500 and over the past 3 years capital appreciation and re-invested distributions have allowed you to build up a sizable stake in the “XYZ Fund”. Further let’s assume that in each of the past 3 years the fund paid out $200 in distributions that were re-invested. On the last day of 2006, your stake is worth $5,000 and you sell your entire position. What’s the gain on which you’re taxed?

If you answered $2,500 (the $5,000 sales proceeds less the $2,500 initial investment), you’d be wrong and, more importantly, end up paying too much in taxes.

The correct tax basis is the summation of all money used to purchase shares – both the initial investment and all re-invested distributions. In this case this amounts to $3,100. So, when you go to sell the XYZ Fund, your realized gain would be $1,900 (the $5,000 sales proceeds less the $3,100 adjusted cost basis of all your shares).

Further, while the distributions are re-invested in additional XYZ shares each year and the re-invested amount added to the share basis, the distributions themselves are taxable in the year in which they’re paid out, regardless of the fact they’re re-invested. For example if the $200 in the first year were comprised of $100 long-term gains and $100 in short-term gains, you’d recognize these payouts on your year 1 tax returns.

Finally, if a re-invested distribution is held less than a full year, the shares purchased with this distribution are taxable as short-term gains (or losses) in the year the position was liquidated. Using our example, assuming the fund paid out its last distribution on December 1, 2006 and the entire position was then liquidated on December 31, 2006 the shares purchased with the last distribution are short-term gains or losses. The remainder would be taxed as long-term gains/losses.

Most accounting software such as Intuit Quicken and Microsoft Money automatically account for these distributions correctly. However, if you’re not using personal finance software, the steps noted above should help you avoid paying too much to Uncle Sam.

What Are Some Of The Factors That Practice Value Depends On?

Market Value
Goodwill
Interest rates
Effects of supply and demand in your area
Cash Flow
Expectation of future earnings growth, which can further be classified by:

Prospects for growth from the efficiency of operations

Expense to Gross Revenue (overhead)

Potential to increase production

Increased debt financing to invest (either inside or outside of the practice providing the investment yields a greater return than the cost of borrowed money)

The growth rate of a practice typically ranges between 0 and 20% and can be measured by a modified Return on Investment, (ROI)), as a proxy for the growth rate. Anticipation of the growth in profits makes one practice more attractive than another. An improving trend would signify increased value. It is important to know the reasons for the trend.

Investment In Financial Skills Training For Yourself And Your Staff Directly Increases Your Bottom Line

Do you know the importance of investing in your practice?

Do you know the importance of tracking the value of your investment into your practice, what your return is?

As the CEO of your practice I would like to suggest to you that you manage your practice just as you would any other type of investment. Make the effort to measure track and graph your practice's progress over time and follow its trends.

You should be applying this outlook to all of your assets. Ever think of your staff as an asset? Ever heard of human capital? Investment in the financial skills training and awareness of your employees directly leads to better practice performance and financial gain through:

Increased Revenue
Increased Productivity
Reduced Operational Errors
Increased Opportunity
Increased Job Satisfaction, Motivation and Staff Retention

Learn how to improve practice performance, increase financial gain and measure the value of your investment into your practice through Advanced Business Management for Dentists' (ABMD's) outlook and perspective available through its flagship online CE course, "Run Your Practice Like A Business, Think Like A CEO", available at www.ABMDDS.com.

ABMD's solutions include a web-based continuing education course, instructor led training and implementation, blended learning through live interactive workshops/Study Club, "Dentist-to-Dentist" Coaching and a knowledge-on-demand website dedicated to support this learning. ABMD is an AGD-PACE Provider of CE.

Are You Ready For Take Off?

What is “Dentist-to-Dentist” coaching?

Like an athletic coach working with an athlete to improve performance, a dentist coach works with you, the dentist client, to improve your performance.

Unlike the athlete’s coach, the dentist coach works YOUR agenda, and begins where YOU want to begin. Coaching is about you as a whole person: your values, your goals, your practice, your balance, fulfillment and life purpose. Coaching does not give you the answers, rather it helps you figure them out for yourself and facilitates you getting what you want. Nor does a coach expect you to see things from the coach’s point of view. It is your point of view that the coach tries to help uncover. If your are seeking clarity and empowerment, then a coach will assist you to find your power.

Think of coaching as a private conversation you are having with yourself, (only it’s the coach), that is designed to help you get what you want. It does this by coaching your whole person and not just the “dentist/clinician.” In this process you learn to advance your goals towards the fulfillment of your life’s purpose. One of my prime objectives of coaching is to help you discover the skills and the confidence to create the practice of your dreams, quite literally, and to empower you with some coaching tools and techniques that you can bring to your practice with the self-assurance of a leader and a visionary.

Of course, you and your coach have to build trust and rapport to help you bring forth what you want out of life. This is done by your coach asking powerful, creative, “out of the box” questions, by being non-judgmental, by being intuitive and curious and by helping you resist the temptation of your own “saboteur” that tends to oppose change and succumb to the status quo.

If you are curious and want to learn more about the coaching experience, I offer a complimentary 30-minute telephone sample coaching call. You can reach me, Coach Dan Kingsbury, DDS, at 888-881-2263 or dan@abmdds.com.

What Are Some Of The Problems Associated With A Practice Sale?

There are all kinds of problems or issues that go hand in hand with the sale of a Practice; usually all of them can be solved.

Consider the following:

Taking "positions" in the negotiation of a practice sale could be detrimental to the outcome. Try focusing on mutual interests. The buyer and seller have a mutual interest in that they are both investors, when all is said and done.

Make sure you agree on some fair standards of negotiation, ahead of time. Try to separate the "people" from the "problem", i.e. try not to let personalities get in the way. Focus on the common interests of buyer and seller and use objective criteria during the negotiation process.

Of course, this is the ideal scenario and not easy when it comes to the selling of a practice that you’ve put your heart and soul into and it is equally difficult for the buyer who is about to invest a substantial amount of money into a practice. For this reason, the use of a practice broker is key towards a successful sales agreement. The practice broker frequently demonstrates a "hand-holding" approach. However, it is important to note that the practice broker’s job is to get the very best price for the party he of she represents and to negotiate a successful sales agreement.

Staff Issues

Some of the problems to consider in regards to staff that may arise after the sale of a practice are: What if a staff person is let go following a practice sale? Who is legally responsible for compensation? What if key staff leave? What if the key staff are members of the seller’s family?

Group Practice Issues

Group Practices can potentially pose some specific problems. For example, what can you do to prevent the slippage of patients you purchased as part of the goodwill of the practice, to the other partners? The answer is to have a separate telephone number for each "partner" in the group in order to maintain separate identities. This should preserve the goodwill value of everyone involved in the group. Another thing the buyer has to be aware of is any rights of 1st refusal in a business agreement between the "partners". The potential buyer is an a vulnerable position after having possibly invested money into investigative and due diligence fees, and then finding out that the purchase opportunity could be sold out from underneath him or her to a partner in the practice.

What happens when the seller stays on as an associate?

Other issues to consider revolve around "authority", i.e. who’s in control of the practice if the seller stays on as an associate? Where will the old staff’s loyalties be? What about the transfer of patients to the buyer when the seller stays on in the practice? Part of the answer to these issues could be best addressed if the seller takes a 3-6 month holiday, switches office hours and agrees to reduce services.

Restrictive Covenants

Another concern can be if Dr. A, the seller, has a restrictive covenant with Dr. B, the associate, that says that Dr. B. cannot leave the practice and compete with Dr. A. during a specified time period and within a certain distance to the practice. If Dr. A. sells the practice to an outside purchaser, will the restrictive covenant with Dr. B be transferable to the new purchaser? This should be food for thought.

Seller’s Aged Receivables

How is the collection of the seller’s accounts receivables handled? The seller can deal with this problem alone OR the buyer could purchase the A/R’s for a discount considering the buyer’s time and trouble to collect the seller’s A/R’s and the fact that as the A/R’s age, they are less likely to be collected.

Re-Treatment of Seller’s Work

Sometimes, after the sale of a practice, the buyer has to re-treat "work" that the seller has done. When this happens, the seller should be responsible for all of the expenses needed to repair failed workmanship. To protect the buyer, an agreement should be signed to this effect between the seller and the buyer.

How Does A Buyer Select A Practice From An Investment Perspective?

The typical procedure for selecting a practice begins with an analysis of the entire business as a business. What kind of return on your investment would you be looking for?

Typically, the sources of information for this analysis include company reports, computer databases, and financial statements. This information is used to focus on the fundamental characteristics of the practice. Items including, but not limited to, earnings, book value, cash flow, and capital structure (i.e. how much is owned vs. how much is owed), are all analyzed to develop an estimate of the practice’s intrinsic value.

Once a practice is given an estimated value, this value is then compared to the market or asking price of the practice. If the current market price is substantially lower than the estimated value of the practice (from an investment perspective), then one could say that this practice could offer an above-average chance for profits and is likely a "good deal". If the asking price is considerably higher than the estimated value of the practice, then the buyer would have to seriously consider whether this is a wise investment.

Why Would A Seller Use An Investment Perspective To Value His Or Her Practice For An Eventual Sale?

In reality, both the seller and the buyer are investors. The seller is hoping to realize a good return on his or her investment into the practice and will likely invest the proceeds of the sale into some other investment vehicle. The purchaser is counting on the practice allowing for a good salary and a healthy return on the investment, as well.

Therefore, analyzing a practice from an investment perspective should align the interests of both parties, the seller and the buyer, towards a common value.The process to establish this value involves a combination of different valuation techniques to establish a range of values. From this range of values the seller selects a market price that can be justified to the buyer.

The key point to reinforce is that what both the seller and the buyer have in common is that they are investors. The "numbers" have to make sense to both of them and once that has been achieved, a sale price can be established that is satisfactory to both parties.