Is It Time to Hire an Office Manager?
By Sally McKenzie, CEO
Most dentists want to spend their days diagnosing and treating patients, not dealing with the many HR issues that come with running a practice. They have no interest in the business side of practice ownership, so they put off non-clinical responsibilities as long as possible, sometimes avoiding them altogether. This, of course, leads to huge problems – including broken systems, low team morale and a less-than-stellar bottom line.
As the practice CEO, you really need to embrace your role as a leader and understand the business side of owning a successful practice. If you don’t step outside of your comfort zone to make this effort, your practice will likely struggle and never truly meet its full potential. Don’t panic though. You don’t have to do this on your own. Hiring an effective Office Manager will help get you on the right track. An Office Manager can take on many of the HR and business-related responsibilities, leading to a more productive and profitable practice.
Not convinced it’s time for you to hire an Office Manager? Here are just a few of the many duties this vital team member can handle:
- Managing the practice’s business measurements
- Making financial arrangements with patients
- HR tasks such as recruitment, hiring, firing, raises, salaries, performance reviews and other personnel issues
- Reading various practice reports
- Overseeing practice overhead
- Creating and executing marketing campaigns
- Scheduling and running team meetings
- Developing and enforcing employee polices
Wouldn’t it be nice to get some of those duties off your plate? I thought so. Now that you’ve made the decision to bring on an Office Manager, you have to find the right person for the role. Not just anyone can handle this job, so if you’re thinking about promoting one of your star employees, I suggest you reconsider. The person you hire will become the practice’s Chief Operating Officer, or COO, and must be good at working with numbers as well as with people.
Characteristics of a great Office Manager
For this team member to be successful, he or she must have the right temperament. This isn’t an easy job and requires someone who is efficient yet personable. The Office Manager has to be a good problem solver and comfortable handling conflict. So if that star employee you want to promote is great with numbers but not so great with people, that team member isn’t the right fit.
As you’re looking for an Office Manager, keep in mind you want to find someone who exhibits a good balance between thinking and feeling in their temperament type. That’s because candidates who score high on the “thinking” scale are usually task oriented and often come off as demanding, while those who score higher on the “feeling” scale are likely to be uncomfortable disciplining other team members or maintaining practice policies. Neither personality type will be happy or effective in the role, which will only hurt your practice. I suggest you find someone who is a mix of both personality types. My book “Personality Types: How They Affect Your Practice Success” can help with this.
It’s also important to remember the person you hire will need to work well under pressure. This team member will be pulled in many different directions on a daily basis and must maintain composure through it all. Anyone who is quick to anger or easy to fluster just won’t have success in this role. Your Office Manager must be able to handle multiple tasks and know how to deal with stress.
Finding the Right Person
OK, so how are you going to find this person? I suggest you start by creating a detailed job description before you begin the search. Take some time to really think about what tasks you’d like your Office Manager to take over and what your expectations are. This will help guide you as you sort through resumes and start the interviewing process.
Set your Office Manager up for Success
Once you hire an Office Manager, you can’t expect this person to magically turn your practice around. As nice as that would be, it just doesn’t work that way. No matter how experienced your new Office Manager is, as the practice CEO you need to offer guidance. This comes in the form of that detailed job description I already talked about, proper management training and continual feedback.
An Office Manager can do a lot of good for your practice, as long as you hire the right person. Once you determine you’re ready to bring an Office Manager on board, take the time to find someone who will excel in the role, then provide the professional training he or she needs to succeed. Once you do, you’ll find the practice’s working environment is much less stressful, your other team members are happier to come to work each day, and your systems are more efficient and productive. Not only that, you’ll have more time to do what you love best: diagnose and treat patients.
Sally McKenzie is CEO of McKenzie Management, a nationwide dental management, practice development and educational consulting firm providing knowledge, guidance and personalized solutions that have propelled thousands of general and specialty practices to realize their potential. Learn more practice management tools from Sally’s “on-demand” webinars, 24/7, complimentary for Dentists and the Team. Start here.
Interested in speaking to Sally about your practice concerns? Email her at firstname.lastname@example.org or call 1.877.777.6151.
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Practice Valuations: It’s Not “One Size Fits All”
By Thomas L. Snyder, DMD, MBA, Senior Director Henry Schein Professional Practice Transitions
Most of us are familiar with the need to have a practice valuation prepared for transition planning purposes or a potential sale or partnership buy-in. The type of valuation prepared for these scenarios is called a “Market Value” practice valuation. For those doctors considering a practice sale, the primary purposes for preparing a “Market Value” practice valuation is threefold:
1) Determine the probable selling price for the practice
2) Assist the seller in setting an initial “asking price”
3) Assist the seller in projecting an acceptable potential “Sale Price”
Ultimately, a potential buyer will use a “Market Value” practice valuation as an aid in determining what a fair offer would be, based on an accurately prepared Business Valuation. Many lenders will also require a “Market Value” practice valuation to determine whether the transaction makes sense for their customer, the buyer. In the Market Valuation, valuators use three different approaches to reach their conclusion of Market Value. They are: Market, Income and Asset approaches. Each of these approaches then use one of several valuation methodologies that are specific for each approach.
There are several other reasons for preparing a practice valuation utilizing other valuation methodologies, which may differ from the methodologies used in calculating Market Value. These “Special Purpose” valuations are either prepared to minimize the tax implications regarding a practice sale or co-ownership transaction, or for use in potential litigation proceedings.
1) C Corporations and Personal Goodwill Valuation
This “Special Purpose” valuation is used in conjunction with the sale of a practice having a C Corp business entity. Due to the double taxation nature of a C Corp, most tax advisers prefer to allocate the majority of the value of the practice’s intangible assets to personal goodwill, not corporate or enterprise goodwill. Thus, personal goodwill is taxed outside of the PC as is considered an asset of the doctor, not the PC.
For many years, the courts upheld the personal goodwill allocation of a doctor/owner. But a number of years ago, a tax court case in California disallowed the personal goodwill allocation of a solo doctor who had a C Corp as well as an Employment Agreement with himself containing a Restrictive Covenant. Unfortunately, the doctor lost that court case, and as a result, many CPAs and tax advisors are now concerned about the potential audit risk of their clients who have a C Corp without a separate personal goodwill valuation to back up the allocation for their client’s personal goodwill at the time of sale.
Even though most solo C Corp doctors do not have an Employment Agreement with the PC, many advisers want to have a special Goodwill Valuation as an insurance policy in the event their client audited. Goodwill Valuations apply different methodologies in separating a doctor’s personal goodwill from the enterprise or corporate goodwill. A typical Market Value does not break down the goodwill into these classifications.
2) C Corp Conversions to S Corp status
Many doctors have converted their C Corp to an S Corporation to avoid the double taxation predicament when it is time to sell the practice. One frequently overlooked aspect of this conversion is the requirement for a “Special Purpose” valuation to be prepared if the timeframe for conversion at time of sale is less than five years (i.e., the look-back period following a conversion). The valuation should be prepared at the time of conversion to establish the appropriate tax basis. Failure to have this type of “Special Purpose” valuation may result in the doctor paying a higher amount of tax when the practice is sold.
3) Estate Sale and Gifting
In cases where a doctor has a relative who wants to become an owner in the business, a “Special Purpose” valuation is required whereby the goal is to reduce the goodwill in the value of the practice. In addition, if any gifting to a relative is contemplated, this “Special Purpose” valuation is also required. A standard “Market Value” valuation will not be sufficient to support a gifting transaction.
4) Divorce and Partnership Dissolution and other Litigation Matters
This final “Special Purpose” valuation not only must follow standard valuation protocols, but these valuations must also be prepared in accordance with local state law (which varies considerably from state to state). The valuators preparing these documents are also frequently called to justify and defend their valuation, either through deposition or under testimony and/or personal appearances’ as a qualified expert witness in any litigation proceedings.
As you can see, there are many variations to the standard “Market Value” approach which brokers traditionally use to place a value on a practice. These “Special Purpose” valuations usually command higher fees due their technical nature as well as the customization required to properly value the business for those “Special Business” purposes.
If you would like additional help, email Dr. Snyder at email@example.com
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