How to Start Up or Purchase a Dental Practice for Increased Growth

Art Wiederman, CPA: Hello everyone and welcome to another edition of The Art of Dental Finance and Management with Art Wiederman, CPA. I'm your host, Art Wiederman, and I'm a dental division director at the CPA firm of Eide Bailly. I'm located out of Tustin, California. For those of you listening to the podcast for the first time, and as I tell you, every time we come on the air, I have gained many, many friends in the dental field in 38 years. We're coming up on 38 years in September that I've been a dental CPA.

And one of my good friends is going to be my guest today is Michael Dinsio, who is the co-founder of Next Level Consultants. He's out of Tacoma, Washington. Michael is a national dental coach. I like the word coach better than consultant. So he's a coach. If he wants to be a consultant, I guess he'd be a consultant. And Michael has worked with dentists in their practices, along with having a big specialty in helping doctors not only start up practices, but also do due diligence on the management side. And we're going to talk about that. And it's going to get into all kinds of discussions about what's going on in dentistry today. So I'll bring Michael on and in a moment, I'm really looking forward to this conversation.

So I want to remind you about our wonderful, wonderful partner, Decisions in Dentistry magazine. Go to their website at www.DecisionsinDentistry.com. 140 wonderful continuing education courses that they offer for a very reasonable price and the best clinical content and the best clinical articles you're going to find anywhere in the dental world. Go to www.DecisionsinDentistry.com.

Also my mothership is the Academy of Dental CPAs, 25 CPA firms across the United States that represent over 10,000 dentists. We at Eide Bailly represent about 1000 dentists. 300 of them are in our office in Tustin with my wonderful partners, Don Watson and Pam Chamberlain. So if you're looking for a dental CPA around the country, www.ADCPA.org. My phone number is 657.279.3243 and my email is awiederman@EideBailly.com.

So it's a beautiful day. The 1st of June, we're recording today. And yesterday I was in my happy place, which is on a golf course and I posted on my Instagram. If you want to follow me on Instagram, I'm Arthur Art Wiederman on Instagram and on my Instagram I posted a picture of me next to a golf ball that was about nine inches to a foot from the hole. So I mentioned on my post, I've been happily married to my wonderful wife Lynn for 37 years. I have two awesome children. I've talked about them on the podcast, Nathan and Forest, but something has been missing in my life and it's a hole in one. I didn't get the hole in one yesterday, but I came within a foot of it and it gives me hope.

You know, Robin Williams, when he talks about golf in Scotland and if you ever want a really good laugh, you're having a bad day, just Google Robin Williams golf in Scotland and it is the funniest thing you are ever going to hear. So he talks about giving you hope. So I came as close to a hole in one yesterday on a 100 200 yard par three in San Juan Capistrano, California. So I'm going to get that hole in one. When I do, folks, there's going to be a big party here in Southern California.

Anyway, I do remember a couple of things before we get to Michael. Number one, if you have not looked at the Employee Retention Tax Credit, we still have time to do that. We have about a year for the 2020 year and about two years for the 2021 year. If you had a greater than 20% reduction in your gross receipts for any of the first three quarters of 2021 versus 2019 or the fourth quarter of 2020 versus the fourth quarter of 2019, you've got a potential of $7,000 per quarter per employee. And we have been running up big, big numbers were up well over $4 million in tax credits just in my little group for dentists, over 100 dental practices. We've helped with that. And for 2020, in the second quarter of 2021, we all know that you had to shut down if you had a greater than 50% reduction in your gross receipts second quarter, 20/22 quarter, 2019, that is a little bit less, but we're getting some really nice numbers there. I just did one the other day, $250,000 for about a million and a half dollars dental practice. It was. It's really good. So you want information on that? Let me know. Make sure that if you most of you are coming up on your filing for forgiveness for your second PPP loan right around now, if you haven't done it, look at the date. It's 24 weeks plus ten months from the date you got the money. If you don't do that, the bank's going to ask for some of the money back.

And finally, folks were coming up. I'm putting some really good programs together. If any of you were going to be at the Academy of General Dentistry meeting, national meeting in Orlando, Florida, I will be speaking on July 28th, 3 hours on the metrics of a dental practice, knowing your numbers and 3 hours on financial planning. If you're going to be at the meeting, come to my lecture, come say hi. I'll be walking around the floor the 27th and speaking on the 28th.

All right. Let me get to my wonderful guest and my good friend, Michael Dinsio, who is the co-founder, as I mentioned, of Next Level Consultants. Michael's firm works nationwide. He is based out of Tacoma, Washington. Michael has been on the front end of more than 300 dental start ups and over 250 practice transitions from Alaska, Washington, Oregon, Colorado, New York, New Jersey, Connecticut, wherever he is, that's where he goes. He's just all over the place. He works nationwide, helping doctors by startup expand and manage their practices. Michael Dinsio, welcome to the Art of Dental Finance and Management.

Michael Dinsio: Art, thank you so much, brother. It's truly an honor. I've been listening to your show for years, so thank you for having me. Finally.

Art Wiederman, CPA: Well, I'm glad we were finally able to get together. In fact, it was it was my son for us to we talked and he said, you should really have Michael on the podcast. I said, Yeah. And we chatted and so, so before we get going, my understanding that one. Is that you? You played a little basketball in Ohio in high school against some guy named LeBron. Tell me about that.

Michael Dinsio: Yeah. Not too many people know him, but the LeBron James.

Art Wiederman, CPA: Not too many people know LeBron James, by the way. You don't like basketball? Yeah. LeBron is LeBron James, who is probably one of the, you know, two or three greatest basketball players in the history of the NBA.

Michael Dinsio: Yes. And the funny thing is, are like I don't tell too many people that story because it's kind of not true because I guarded him. But there's no guarding LeBron. So what I would like to say is, is I was on the court with him and I was running beside him on the court. He did what he wanted. He did what he wanted.

Art Wiederman, CPA: I mean, I've never met LeBron, I've met Shaq, but I've never met LeBron. And he is like guarding a freight train. I mean, the guy is just unbelievable, huh?

Michael Dinsio: Well, when I guarded him, he was as skinny as I was or I am. So he was I think he was a sophomore when I was a senior, which is dating me a little bit. But he was not the man that he is today. He put on so much muscle when he went from high school to the NBA. He looks completely different than he did when I was.

Art Wiederman, CPA: Like, Oh, yeah, the guy is an absolute beast. And just what's he? 37 38? I mean, he's just and he's at the top of his game, we're hoping here in Southern California that since we got a new coach and maybe we will make the playoffs next year. But that is another podcast that's called The Art of How the Lakers Make the Playoffs. But that's not what we're talking about today. So anyway, hey, Michael, why don't you tell us a little bit about your journey. Where have you come from and tell us how you got into forming starting Next Level Consultants?

Michael Dinsio: Yeah, no, thank you for that. You know, my journey is I like to say that I'm a recovering banker, an ex banker. I'm so glad I'm out of that world. It is crazy these days. But I was fortunate enough, though, to work with one of the biggest dental lenders in the country that your son now works for. That's how I got to know Forest. And in that journey, I had done tons and tons of acquisitions and startups, covered multiple areas of the country. Got to see the differences between the coasts, you know, how they value practices and how they look at underwriting for those types of practices. And then got to see what the mountain states were like in Denver. So covered Colorado and got a really good national idea of how dental deals were done as a banker and then just got a little exhausted from the transactional world. I, it's totally fine. It's just I always craved more. I wanted to understand more. I wanted to dig in deeper on these practices. I built great relationships with my clients and I just kind of wanted to follow them. So I realized quickly that consulting was probably the direction that I was going to go long term. And it wasn't till we had my wife and I had our first kiddo and some things happened in our lives where we had to move back to Washington. And so that was the trigger for me to get into consulting. And so since I since I've been in consulting, I think we've helped 118 docs alone in, in startup and or acquisitions. And we also have lots of practice management clients. So the firm's much different than that. But that's kind of the journey. Ex banker to consultant.

Art Wiederman, CPA: Cool. So we're going to talk today. We're going to split this into maybe two parts, Michael, like we talked about as we're going to talk about startups and we're going to talk about maybe some ideas of if you're going to buy a practice. But doctors who own practices were not doing either. Don't turn this podcast off because we're going to be getting into we're going to be talking about, you know, how do you find dental team members when you start up, you know, what kind of systems should you have? So this podcast, while we're focusing on the startups and we're focusing on acquisitions, is going to cover a lot more than that. So let's get started. Talk about for startups, what are the first things that a dentist should consider? You know, they're thinking, I want to start a practice. What's the first thing they come to? You say, I haven't done anything yet. Unfortunately, most of them come to you and say, I've done all these things and they're all wrong, right? Okay. But we hope that they come to you. So doctors, if you can start up a practice or are you going to start another location? Yeah. You want to give someone like Michael a call before you do anything? So what's the first things that we tell a dentist to do when they're starting to think about starting a practice?

Michael Dinsio: Yeah. So starting a practice, you know, again, that Bank of America history really helped me because Bank of America at one time did 1200 start ups in a calendar year, which is the most anybody had done in the country. And that was like 2012. So I'm sure they're doing well over 15, maybe even 2000 a year now. So they really did write the book on start ups and I learned a lot of stuff. And I guess what I'm trying to say there is that there is a process to startup. Just like I always say, there's a process to prepping a tooth. I'm not a clinician. I don't understand that world. But there everybody kind of has their own unique way to get to the final results of no margins. But there is an approach and there is a process that mitigates risk. So by doing specific things on the front end can mitigate a more difficult time in the future for a startup. So to answer to your question directly, you know, I find that people don't spend the time to prepare before they head into the process. And what I mean by that is business planning, really looking at their personal financials and how that relates to what they're about to do, not because of what the banks are requiring, but because they need a security blanket before they go into starting a business.

Art Wiederman, CPA: You know, Michael, that's a great point. And I've been involved in my share of startups, too. Not as deep as you are. You know, in my mind, you know, a dentist is not going to walk into a dental office and make $250,000 in the first year that they practice making as a net. I tell doctors, you know, that if you know, and I'd be curious as to what your goal number would be, but, you know, they're going to have to have working capital. We're going to talk about that here. But do you like to see a doctor maybe when they start their practice, maybe they're working, what, two or three days in the new startup and then working as an associate to pay the bill? How do you like to advise people to do that?

Michael Dinsio: Yeah, 100%. So, I mean, this this program is heavy financial and metrics and business. So from the startup perspective, it's the greatest fear for somebody to get into a startup because there's no cash flow in a startup and that's why everybody wants to do an acquisition. But sometimes they get kind of forced to a startup because they can't find a good practice device. They end up doing startup. But I think that's a false read. A doing a startup is not necessarily a place to go to be poor. The, you know, you need to hold on to your associate position and continue to earn and make money and pay the bills at home while you're growing your business, your startup. And so I like to coach people. They come to me early enough and you made a great point. Get professionals involved earlier because you can make some mistakes and some is it's going to cause you some heartburn later on. I always say find two jobs. Two associate positions and a lot of our are a lot of my clients are already doing this their moonlighting and other practices. But the perfect scenario would be you would get to associate positions one where you might be working two or three days and one where you might be working another two days. And the reason why I say you do that is because you're going to drop one of them and keep the other while you do the startup, because it's a lot harder to have a full time job, approach your employer and say, Hey, I'm your biggest producer, I'm a linchpin in your practice, but hey, I'm going to drop my hours in half because I'm going to go do a startup. It's a harder conversation.

Art Wiederman, CPA: That's a great point.

Michael Dinsio: Yeah. Yeah.

Art Wiederman, CPA: So that. Yeah, go ahead.

Michael Dinsio: And the cool thing about it is you get to choose which associate position you want to keep because there is going to be one that's better than the other. Maybe the hours, maybe the production, maybe it's less stressful. But the cool thing is you get to choose out of the two which one you keep and then you go build your business around that, that other one.

Art Wiederman, CPA: And hopefully you get to the point where you can drop the second two day a week job and go full bore and do your practice four or five, whatever, number of days a week. So I'll tell you what I hear from dentists who are starting a practice is they all say to me, I have to sign up for every single PPO there is or I won't have any patients. What's your take when we start off on that, I mean, obviously, when you start a start up, you don't have any patients. You got a clean slate. What do you talk to your doctors about regarding PPO versus fee for service versus HMO versus, you know, the other options out there?

Michael Dinsio: Yeah, I'm going to I'm going to say this, that there is no one size fits all, of course. I mean, Art and I, we both have a podcast and the things that we tell folks on our podcast. Sometimes I get people call me and say, You said this and the truth is, is one size never fits all. But if I were to go out on the limb and just kind of generically say what you should do as a start up, the answer is, is absolutely take insurance. I don't know all of your visions out there. You could be a a prost. You could be a full mouth restore type dentist. That might be a different conversation. But for the everyday bread and butter dentists, crown bridge fillings, perio hygiene, you know, the everyday bread and butter, the answer is, is absolutely take insurance is you can always wean yourself off later. But to sit around and twiddle your thumbs and pay employees. Just to sit around and not have any revenue is just bad business in my in my mind and I again there's a strategy on how to get off of them. But $2 is better than $0. And, and when you have rent, loan payments, wages mean when you have these expenses that you have to pay no matter what, you've got to get patients. And that's number one. Number two, remember, folks, your first 100 patients will drive the growth of your first practice. If you can't see 100 patients, you can't get Google reviews, you can't get referrals to other friends and family. You activity breeds activity. So if your ultimate plan is to get off insurance, fine. But to grow and build a business from scratch, you need activity to breed more activity.

Art Wiederman, CPA: And with that point, Michael, let's jump into it because again, we have a limited amount of time. I want to cover as many areas as we can. You know, we need 100 patients to get to the starting line. What kind of marketing do you like to recommend for someone who's doing a startup? What's a good budget? What do you like to see them do? How do you advise them on that? I know you're not a marketing expert, but you obviously have input into what they should be doing, right?

Michael Dinsio: Yeah. So ironically, my undergrad, I went to Ohio State Go Buckeyes and went to they're really great business school and focused in marketing. Then I worked for a marketing firm before my banking career, so marketing, banking, now consulting. So I have a lot of a lot of things to talk about and this is one of my hot buttons. There are marketing firms all over this great country. I've tons of met tons I, I probably get three LinkedIn messages a week from marketing people that want your business. Folks want your business. And the truth is, is not all of them are equal and not all of them can get the job done. And some of them have a lot of experience and there's a lot of things to say about this topic. But this is where I want to pull in the practice owners of your ear, your listener pool. The practice owners are always asking me like, How do I grow my practice for a start up for an existing practice owner? The answer is are exactly the same. So this is where you could pull in some little carrots. I will tell you that everybody has to have an appealing website, that when someone lands on your website, it attracts them and they are appeal to call. So like it can't just be a slapstick templated website it should it be anyways and remember I read an article 53 seconds is the average time people spend on your website. That's probably like two scrolls, maybe three scrolls, and then they're gone. So if you can't connect with them somehow in 53 seconds, forget it. If all of your great information is at the end of the first page, they're never going to read it. That the best things that you have to offer have to be the first thing they see.

Art Wiederman, CPA: So here's my hot button on that. I can't tell you how many websites, dental and non dental that I've gone on. I can't find the phone number.

Michael Dinsio: I Yeah, I know. You want me to call.

Art Wiederman, CPA: You to be a customer or a patient and I can't find your phone number. See, I didn't say a bad word, I said. Flippen Yeah, so, you know, I can't find your phone number.

Michael Dinsio: That's Art. What's up with that? That's Art's passion words on my podcast startup uncensored and acquisition uncensored. We actually say the real F words are it's a lot more classy than that. I'm joking.

Art Wiederman, CPA: We don't I wouldn't go that far.

Michael Dinsio: But yeah. Yeah, but the point the point that I'm making here is, is that, yes, you have to be able to get somebody to act and to your point, have a link on there that says book an appointment or call us or a map. But that's not the marketing like silver bullet to me. You have to spend money to make money and your first 100 patients are going to be your most expensive investment, the most expensive one. But you take those opportunities and you get ROI from them. You ask them for a review, you ask them to refer their friends. And like I said, it breeds activity. So to answer your question, I think for practice owners, if you're in growth mode, I always say 3 to 5% is an aggressive budget, but that's a growth strategy budget, 3 to 5% of your top line.

Art Wiederman, CPA: There in our.

Michael Dinsio: Startup first. Startup, though, are for a startup, you have no revenue. So what's the proper budget? I always say somewhere between 30 to 50000. If you're aggressive, if you if you have the money, a lot of people don't have that money. But 30 to 50 is what you probably should do your first year.

Art Wiederman, CPA: But you need to build that into your loan and your budget. And it's so important. It's so it's so important, Michael, that people look at their personal financial situation and say, can I afford to do this right?

Michael Dinsio: Yeah, no, I know. That's always the question. The shocker is that there's plenty of lenders out there, including your son, that can give you a loan fairly easy. But there are still some qualifiers. You've got to have some cash in on hand because no banker wants to give somebody six, $700,000 and you have five grand in the bank account like that. That doesn't make sense. So you got to have 50 to 70 grand just to make a banker feel good about giving you almost a half a million to, oh, well, a half million dollars. But then they also give you graduated payments. They also give you a ton of working capital. You're also negotiating free rent. You're also not hiring a full, full team because you're trained. You've got to manage all these expenses in your first two years. So it's not as bad as you might think. You just got to control it.

Art Wiederman, CPA: Yeah. So we're going to hit the team in a minute. I want to hit one more thing. Choosing a location. What steps should a dentist take to choose the right location to open his or her dental practice?

Michael Dinsio: Love that question. Remember when I said that the first step should be more planning, business planning? Well, it goes in the same vein of that. Like you got to have a business plan and know what kind of patients you're looking for. You know, what kind of team members you want to look for, like what kind of brand you have and competitors competitive analysis. You really need to have that game plan before you even approach a banker. Oftentimes, our clients have zero plan and then they have the banker or an equipment rep help them with their own game plan. Well, that's what's your game plan? Right. And so in that line, if you're very clear about your vision, what kind of business you want to operate in, then you do a demographic report and a demographic report's going to tell you and there are some great ones out there, maybe arts interviewed them, but they're going to tell you some metrics that hedge our bets or our risk. It's not the tell all. It's not you know, there's going to be some noise in some of these reports. But if you could get a report that says this area needs a dentist desperately, then that's going to be a really good area for you to set up shop. Just by supply and demand alone, you're also going to get growth percentages. You're also going to get income, you know, average income, household ownership, average age, get a lot of data points so that you can kind of compare and contrast which areas might be best for you. But remember, it all depends on your vision. I talked to a price that's honest yesterday, and demographics doesn't necessarily make sense because he is doing some highly specialized stuff. So competition's not as important. He's just trying to pull the right people. So he needs higher earners, you know, stuff like that. So there's a lot of variables there. But big picture business plan and demographics report will steer you in the right direction to find the right location.

Art Wiederman, CPA: All right. And then I know one of the things that you help doctors with are minimizing construction and equipment costs. Maybe some tips if you're starting up or building out a second location or expanding, what can you do on that end?

Michael Dinsio: Yeah so project so projects and today you said that the date and time the date of this episode and this is marking a moment in time where construction is crazy. I mean, absolutely crazy. Like in the last five years, dollar per square foot has just blown up. And the banks are trying to keep up with it with how much money they can give. But honestly, they're not keeping up with the construction you've got plumbing supplies are crazy. Labor supplies are crazy. I mean, even you all folks are dealing with the hygienists and dental assistants and everybody asking for more raises or the contractors are dealing with the same thing. So big picture, you know, there's a lot of strategies. There could be an episode in itself. Ah, but there's two strategies. There's two strategies there. There's bidding. And there's doing a design build. And when you bid, you need an architect to help you put the plans together and really design the space. And there's a pitfall with that, that route, because a designer could overdesigned the space. And then the contractor has is they're only going to give you an expensive price because your designer over engineered this. So bidding is great, but the engineer or the architect could over engineer. Then the other route is design bid or I'm sorry, design, build, design build. And that's partnering with the contractor and putting the architect underneath the contractor, but partnering with the contractor. And you're always going to usually you're typically going to hate your budget, but all of the control and all of the power is with the contractor. So you really got to trust your contractor if you go all in with them. And so there's different ways about approaching construction.

Art Wiederman, CPA: Yeah. And again, you're right, you could make each one of these topics a separate, separate podcast. I want to take a second. And Michael talked a little bit about what you guys do at next level and how if someone had some questions or wanted to connect with you, you're thinking about a startup, you're thinking about due diligence on buying a practice, or you're just thinking about, you know, your practice needs some help and you like what you're hearing here. How do people get a hold of you.

Michael Dinsio: Yeah thanks for that our go to NextLevelConsultants.com so Next Level Consultants dot com is the website you can find us there. I'm sure Art will have the show notes below. I'll give him all my contact information there. But my big givers is call me. I'm I give my time. That's what I give and I'll give you everything I have on that first call. A lot of consultants hold back. They think they might hold the secret sauce. If you can ask me direct questions like Art is I will give you I will give you as much as I can inside that 45 minute consult. And if you like what you're hearing, we can we can move the conversation forward. If I never hear from you again, that's okay. But I'll give you a free coaching call basically inside that 45 minutes. And if you're looking to buy practice, start a practice or grow your practice, me and my team, we can help. I've got other folks that help me. I've got a hygienist that owns a practice and has been in the business for 30 years. I have a front office guy who's credential a credentialing queen and billing queen and a front office guru. And between the three of us, we have the answers. And I think that's what differentiates us are is that I don't act like I know everything. I was never a hygienist. I never worked at the front desk. So how can I coach that? I have two professionals that have done that for careers, and the three of us kind of stay in our lane as we coach the folks that we coach. And if I don't know what Paula knows and if Paula doesn't know it, Stephanie knows it, and so on. So we try to put a team around you so that you have answers, real tangible, roll up the sleeves, actionable things.

Art Wiederman, CPA: There are phone number they can reach you at.

Michael Dinsio: You can call my cell phone at 720.309.9551 and I might not pick up, but I'll definitely get back to you.

Art Wiederman, CPA: Perfect. All right. Let's get back to the topics and then I want to get into some stuff on buying a practice. So and again, this topic affects everybody. So the biggest, biggest thing that dentists are dealing with, that accountants are dealing with, the banks are dealing with, retail stores are finding and maintaining good team members. So you're doing a start up. How do my dentists who are doing a start up or even dentists in practice, what are some tips? What do you look for in an employee and maybe some tips on what you're seeing is the best way to find them and to keep them again. Another full podcast.

Michael Dinsio: Yeah, love loaded question. Okay. I'm going to try not to be cliche here, I'm going to try not to sound like a consultant slash coach. Okay. But I'm but I'm going to be honest here. My start ups that believe in themselves and have a very crystal clear vision can get almost anybody to work for them because they will help that hygienist or dental assistant buy into what we're trying to create. People naturally want to be a part of something that's new, that's better than what's being offered today. So for folks that own a practice today. You know, you may have been practicing for 20 years. You're tired, covid beat the crap out of you. Like I could see how you could get into a funk as a practice owner and had been in the business forever. But I'm here to tell you, when you get in front of somebody that you want that's talented, show them why you're the best practice to work for. Not just benefits, not just pay, but get them to buy into your culture and why you're special. So that's number one. If you don't believe in it, they're not going to believe in it. So you got to sell your practice to them. I don't think people do that enough. And if you have a great culture, that's your biggest selling point. If you don't think you have a great culture. Call us. We'll help you get one. But the point is, is people want to work for companies that are thriving, growing or are making a difference in the community. Number two, listen. Unfortunately, we're in a place where they have a lot of options. So you got to interview people, figure out if they're the right person, but listen to what their needs are and try to customize packages, quote unquote, packages that meet their needs and head on direct with, hey, what would it take? What? I want to have you in my practice. I don't want metrics or numbers to be the reason. So please, let's have an honest conversation. Having those direct conversations on somebody that you want can really move the needle. I find that people just throw offers out and they hope and pray. But you just can't do that today. Maybe three years ago you could. Today you can't. There's so much more Art. But I could keep going.

Art Wiederman, CPA: I know you could. And I'll tell you, I've always said and I've said this again on the podcast and my listeners know I repeat myself and I will repeat myself again. I as an employer, a CPA for 33 years, I ran my own practice before I merged it with another firm. I will hire attitude and I can teach skills. Attitude is really number one to me and in my opinion, Michael, and this is what I tell people, my clients and anybody who listen to me is number one. When you're talking to a prospect, I like to say the number one thing that is most important in this practice is the total health of our patients. It's not money. It's not making money. It's the health of the patients and their well-being, not just their dental health, but their total health. And the other thing is that we treat our employees with respect and we elicit their input. And it's a fun place to work. What do you think about that?

Michael Dinsio: I couldn't I couldn't echo that louder. In fact, I'm going to tell you a little story and I just got it out of a book. Okay. So there's a book that I would suggest all of you read on this topic, and it's called The Nordstrom Way. The Nordstrom Way.

Art Wiederman, CPA: Yep.

Michael Dinsio: It's such a great book. And I'm and I'm based out of Washington, Seattle, Washington, Tacoma. It's all the same. And Nordstrom's right there, the flagship. And so, of course, I have to talk about Nordstrom. Right. But Nordstrom talks about the greatest trainers. For employees aren't employees parents. Think about that. And yes, I just ignored it because if a parent can teach people responsibility and passion and, you know, respect, attitude, you can train everything. I mean, I'm a consultant. I teach people. Stephanie, Paula, teach people skills. We can we can teach skills all day long, grab the right person. But here's the story. So empower your employees and if you can somehow convey this in an interview. Nordstrom before it was Nordstrom, what basically operated when they bought the company. I forget what the company was is kind of like a Sears. Imagine a Sears. You can buy anything at Sears Tires, whatever. Nordstrom bought this company with the idea of retail long term, but a customer came in when Nordstrom had just acquired that company in its inception, and a customer came in and said, Hey, I bought these tires and the tread is just not really what I wanted. And they just weren't happy with the tire. And Nordstrom had just bought the company and they're not in the business of tires. Right. The other company was. And so Nordstrom, though, had this top down policy to empower every salesperson on the floor to make the right decision for the patient. Okay. And I'm kind of going digressing here, but this is a really cool, cool story. The person that had that opportunity decided to honor the refund of that tire. 100%. No questions asked just to make sure that that that customer was 100% satisfied. They returned a tire. They're not even in the business of tires. They made the right decision. They empowered every salesperson on the floor to make the right decision. If you are hiring people, if you're interviewing something, somebody, you have to be able to trust them to make great decisions on the floor. And if you can't, then you got to you got to you got to you got to second guess it. But you can always train skills. If you meet somebody at the Cheesecake Factory or an Uber driver or someone at the airport, and they just wowed you with customer service. Respect, honesty, passion. Grab them. We can make them a dental assistant. We can make them a front office guru. It's that that's easy. But grab the right people.

Art Wiederman, CPA: Yeah, that's great. Last thing I want to talk about on startups and I want to get into a little bit on due diligence in buying dental practice expectations. Michael In the first year of a startup, what maybe some you know, what's a good expectation? I have a number in mind I'm interested to hear as far as gross revenues in a first year that would make me successful. I know it's all over the board and maybe some traits of what your successful startups have done.

Michael Dinsio: Oh, great. Okay. So I'll just answer the question directly on a revenue curve basis. But everybody wants $1,000,000 start up right out of the gate. It's not going to happen. I mean, of course. Of course I have anonymous. I've got one right now in Colorado that's facing it, but perfect storm. Right environment, right. Dr.. Right. The answer is, is I'd be happy if my clients hit 500 in the first year. I'd be happy that four or 25 is probably the average for 25. My average anyways, I think the banks average is closer to 400 or 390 something in the first year. So there's some numbers and then you would think that it would be a crazy ramp up, but it's not. You know, I think the bank has a projection of like 400 for 25 for 60. Like it's not like for 5600, it's not. And so, so, so there's the metrics. I always say keeping your associate position and your first year as a start up, you'll make 150 if you do it right.

Art Wiederman, CPA: Yeah. That, that would be great. I mean that pays the bills, pays your student loans. And so okay, well, let's jump into a little bit about the other part of some of the stuff that you do. You do a lot of different things is management, due diligence. So someone's going to buy and I'm a dental practice broker. So you come in, look at one of the practices that I'm selling and well, you know, what do you what reports do you look at? I mean, what do you give me kind of an overview? What do you do when you go in there and what are you looking for?

Michael Dinsio: Great, great, great question. And this is what I'm going to have you on my past podcast are we're going to have this discussion on dental acquisition uncensored.

Art Wiederman, CPA: But you said I can say bad words on your podcast, right?

Michael Dinsio: Yes, that's right. I give you.

Art Wiederman, CPA: That. Those so cool. I've never said one bad in three and a half years in.

Michael Dinsio: Your in your whole life. No, no, no.

Art Wiederman, CPA: No, no, no, no, no, no, no, no, no, no, no, no, no, no, no. I've never said it on a podcast. I've never said a bad word, I've never slept. I'm very impressed that I've done that. But I guess.

Michael Dinsio: Folks, I bet, I bet if I had a microphone on our on the golf course, we would get a couple of bad words out of him, I bet.

Art Wiederman, CPA: Yeah. You probably ask. Well, ask my son. He's been on the job. Actually, both my son's a bit on the golf course with me, so. There you go.

Michael Dinsio: All right. So we we're going to interview you are going to ask you the same question of mine so we can compare notes here. But so as a buyer's rep, I'm my first line of defense is cashflow. It is it? How could it not be? You're buying a practice for a history. You're looking at a practice for history of cash flow to try to predict a future outcome of what your cash flow will look like in the future. So if you don't know what the cash flow truly is, and that's the key truly is you're a practice broker. I would trust your cash flow art because you're a natural born CPA, an accountant. So I like your I would probably love your adjustments in add backs, but I know that a lot of practice brokers really are sloppy with their cash flow. So I want to do my own. And I want to know exactly if the closest I can. It's impossible to know for certain, but exactly what amount of money my clients could potentially make by comparing 20, 21 or time stamping it. Because we just were in May, right? Well, June are we do today.

Art Wiederman, CPA: June 1st today, June. This podcast will come out probably sometime in July, but today is June 1st.

Michael Dinsio: So that means that 2020 one's tax returns are probably done. So I'm going to look at 2021. I'm going to totally discard 2021 and I'll do that.

Art Wiederman, CPA: Yeah. 2020 is like a throw away year.

Michael Dinsio: And then 19 is my other really anchor. So I'm looking at 2021 and 2019 and those are my anchors to predict. So first and foremost, cash flow. Then I'm looking at production reports to try to get a gauge and I know some metrics to kind of get a gauge of how their hygiene department is doing if they're a conservative or aggressive diagnosis or what things they are doing that my buyer can't do and what things they are not doing that my buyer can do. And lining all of that up, you're in a pretty good, pretty good spot to make an offer, in my opinion.

Art Wiederman, CPA: Okay. And so let's talk about where you see I mean, I'm assuming that there's three answers you give to a buyer. Either jump on this practice, buy it. I don't care if you pay an extra 25,000 or don't walk, run as fast as you can from this practice or somewhere in between. So what are some of the opportunities and some of the I mean, you've looked at some really great practices where you've said to the buyer, this is really great and we can make it greater. What are some of the things that you see with a good practice that stay that tell you to tell a buyer, jump on this.

Michael Dinsio: Yeah. Back to kind of similar to the answer before. If I have an associate that's making 150 grand as an associate and we're looking at a practice that's thrown off 300 after debt, 200 or 250 that that's a change in lifestyle instantly cash flows. King. If I have an associate making three 400 as associate and they're going to bring me a practice that's thrown off 150, I'm going to have a real conversation about what their lifestyle looks like. And I've had buyers, I've had clients tell me, it's okay, Michael, I know what I'm buying. And then a year after they're into it, they're like, Why did I do this? And I'm like, I tried to tell you so. So lifestyle and cash flow. That's why cash flow is that first thing that I look at because lifestyle is the first thing, right? The other thing the other thing is if I can if I can figure out by the numbers on the front end because you're not looking at chart audit yet, you're not doing you're not digging in and looking at your reports in the practice. You're just looking at what's been provided. If I can determine that it's a conservative practice and I asked my client, Do you think you're aggressive? Do you think you're I can typically tell what their chair side looks like just by all my conversations. You can quickly see I've seen it where clients buy practice that semi conservative or really conservative. Like I'm looking at one and there's a crown, a filling ratio of like 10 to 1 or 7 to 1 and I like to see 3 to 1. That's kind of the average feeling to crown ratio. So that's a 7 to 1. And my clients like, yeah, I'm not aggressive, but I'm a little bit more than conservative. They're going to crush it. They're going to absolutely crush it. And if they're if they're naturally trained to root canals and implants and stuff that the other practice isn't. Again, I'm looking at opportunity. I'm not saying I'm valuing the practice based on opportunity, but I am looking at opportunity as a practice consultant, helping my client really figure out what that transition plan looks like. Close.

Art Wiederman, CPA: But you're so accurate, Michael. I was I was reading an article on the Internet this morning. I try and read as much as I can. 36% of Americans. A survey was done by a national company. 36% of Americans who make $250,000 a year or more are living paycheck to paycheck. That's scary. So if you're a doctor who's making, like Michael says, three or 400,000 a year, I mean, if you're going to buy a practice, you need to buy a million and a half dollar practice just to break even. And your payment is going to be over 10,000. I mean, it's scary stuff. So you need to go into this with your eyes wide open. Let's go to the other gamut, Michael. You look into a practice and you just say, yeah, here are some what are some warning signs of a practice like the doctor, the buyer's just falls in love. It's in the town he grew up in or she grew up in, and they like the seller because the seller is a nice person. But what are some warning signs when you start digging into the management reports or the what you do that says run from this practice?

Michael Dinsio: Yeah. It's a I hate the a fluctuation of sales like major fluctuations a spike in sales if we've been pacing 809 800 825 815 850 I love that consistency in top line. If I see eight 5851 million, I'm a little concerned.

Art Wiederman, CPA: Well, there's we need to ask why, right.

Michael Dinsio: Well, because they may have been ramping it up and did all the dentistry and the practice. And you walk in and there's nothing left because they knew they were going to sell in a year and just crushed it or. But there's a story, too. You don't you don't run from that. I'm just simply saying you got to get the story on that. You know, maybe they just got an associate in there that that went full time when they kind of barely were looking at it part timer or whatever you got to look at or so. I mean, if you're not someone that's comfortable with Ortho and there's 20 cases happening right now, ortho can be very scary, especially since the way you get paid upfront typically. And then you got to figure out who owes who at the end. That's nervous. Nervous Nellie. For me, if you're seeing like a 1 to 1 crown filling ratio, I mean, that could be a full mouth restore. Sometimes type practice, sometimes practice brokers say, no, it's not, and you're just seeing a lot of crowns and very little fillings. That could be a more of a, you know, a cosmetic type practice. If you're a bread and butter dentist, do not think that you can take an LVI training and tomorrow be that type of practice on nope.

Art Wiederman, CPA: Nope.

Michael Dinsio: I'm shut down more practices that that were like that full restore like crazy good dentistry type practices where bread and butter Dennis a client of mine was like, Yeah, I think I can do that with a little hand-holding of the seller. He said He's going to stay around and help me. Do not take that on. That's a run away for me, I think. Anyways.

Art Wiederman, CPA: Now here's one as and again, as a practice broker and there's a lot there's good dental coaches and bad dental coaches. You're a good dental coach. There's good CPAs and basically they're good and bad brokers. I do not get in your way. I don't challenge you as when I was a CPA. I mean, I'm still a CPA, but when I was doing due diligence work as an accountant, my partner Pam does all the due diligence now. And my big joke with Pam is that she's pissed off all the dental practice brokers in Southern California because she's doing her job of looking at the numbers. But, you know, when I look at this, I stay out of your way. You know, you have it's important to me that the buyer does every bit of due diligence that they can do. And if they don't, shame on them because it is buyer beware out there. And so here's another thing. Co-payments you ever run into a practice, Michael, where the where the seller waives the co-payments.

Michael Dinsio: Yes. Well, I'm glad you brought that up so, major. No, no. Yeah, but collections.

Art Wiederman, CPA: And I'm sure it's fraud, racketeering, illegal. Other than that, it's okay, right?

Michael Dinsio: Look. That's right. And look at the codes. If they're a bunch of made up codes, that that's a challenge. You got to look at the codes.

Art Wiederman, CPA: They made an alignment. What do you mean by made up codes?

Michael Dinsio: Just not ADA codes. It's just a random. They make them random code and call it. They build whatever they want. If it's a random code, you can make up your own country. Oh, that's. Oh, gosh, 38 years.

Art Wiederman, CPA: I've not heard that one. I've never heard made up codes. But go ahead.

Michael Dinsio: I mean, there's I believe the reason the reason why you can do that, it makes sense if you're trying to track something like I just asked my client, the team thinks that we're not getting good acceptance rates on or having too many failures on some fillings with a younger associate. So I said make up a code and attach that code to every fillings so that we can start tracking the failures on each one of the code. You can then pull a report just on that code and how many you did. So it's for, it's for tracking purposes. But yeah, people make up codes all the time, like charging for Invisalign sleeves, charging for tips on lasers. There's no codes in the ADA book for that, but you can make one up and charge it. You got to look into the weird codes and that it's not very common but I've I definitely have seen it. But Art, you said what are the things that you would run away from collecting is one of those things. If the accounts receivables are a mess, you got to know they're going to be a mess day one. And so you got to address that pretty quickly. And what they're doing, maybe they don't have these schedules entered, maybe their treatment planning process needs to be figured out. But if you think you're going to collect better than the seller, the answer is probably not unless you fire the front office person and bring your own in.

Art Wiederman, CPA: And the problem, Michael, is that when the and I have a number of the interesting years, I like to see 65 to 75% of the average one month's production to be accounts receivable. That that's my number. Is your number close to that?

Michael Dinsio: Yeah, it's basically yeah. That's even better than mine. I, I take the collections of 2021 and in this case and divide it by 12, which gives you one month. Right. And if the hours are less than that I'm fairly happy.

Art Wiederman, CPA: Okay. So they're less than that. But, but the problem that you have, if the hours are really high, is the front office and the doctor has trained they have trained the patients not to pay. So now the new buyer comes in and the new buyer says the front, well, I need to collect your portion upfront. We need half for the crown. Wait a minute. What kind of, what kind of crapper you pulling with me. Crap is okay on the show but.

Michael Dinsio: Anyway so.

Art Wiederman, CPA: What kind of crap what kind of crap are we. Are we porn? I'm looking forward to your pocket anyway, so I.

Michael Dinsio: I'm just kidding, folks.

Art Wiederman, CPA: Really, I am looking for it, but. But what are you pulling? Because we're going to you know, Doctor, Dr. Smith never made me do that. And then the thing with not collecting copayments now we don't see it often, but when we do, I as a broker, if I see that the buy asked the question you collect copies of, the answer is no. I refuse to take the listing. That is a lawsuit waiting to happen because then all the patients to say, Wait a minute, Dr. Smith never made me pay my co-pay. What are you pull it. I'm leaving and they'll all do that. So anyway.

Michael Dinsio: There's another. There's another one. Art, we're talking about financial arrangements that's so important to a transition to understand what that looks like. But I'm a big fan of memberships and membership plans, and.

Art Wiederman, CPA: That's how I am to.

Michael Dinsio: But the folks that do their own in house that they've made up and some people do that. And for the listeners out there, if you've done that, I'm not condoning it, but there are some really aggressive membership plans that collect a lot of money upfront and leave very little on a monthly basis or whatever. And if you buy that practice, it's just like ortho. You got to look at the membership plans and see what you're inheriting. To figure to figure that out. And are you okay with that membership plan? And if you're not, are you going to offer a different membership plan? But the patients are used to this, whether or not it's right or wrong. Are you made a solid point? The patients are used to another one. You're in California, Delta Dental. I mean, let's talk about that premier people.

Art Wiederman, CPA: That makes this a three hour podcast, but go ahead.

Michael Dinsio: The financial arrangements are just so huge. So you got to decide if you're going to keep Delta or not and what that conversation looks like. So these are all things from a financial arrangement perspective you got to think about before you buy. And if you don't understand all of the arrangements, you've got to figure that out quick.

Art Wiederman, CPA: And this is why doctors, if you are starting up or if you are buying a practice, you need to talk to a professional who's been through it hundreds of times. And again, I don't do advertising for my guests. I don't have to because they're all the best of the best. I don't I really I don't. I get I probably get ten or 15 solicitations a month of people who want to be on my podcast. And I don't I, I choose who I choose. So, you know, this is really important. How about prior work experience? Michael In other words, if I get a doctor who's been working in a, you know, a high volume clinic and they're producing 150,000 a month, how are they going to adjust to buying a fee for service practice and maybe vice versa? Do you do you get into that conversation with a buyer?

Michael Dinsio: Yeah, I do. And it's more psychological. And it again, it's deeper conversation because there could be fee schedule, things like if the fee schedule is dramatically different to your point, PPO, but even even looking at a PPO versus another PPO or a Medicaid, you could have a high producer on a very low fee schedule. Right, right. Or you could have a really weak producer with a high fees schedule. It's really about that marriage. And what that looks like. And when we do chart audits for my clients who chart, I always ask them to take some pictures of the schedule and let's see how busy it is. And they oftentimes come back and say, gosh, it's really slow. I'm so much busier than this. And so that's not necessarily a bad thing. Obviously, there's room to grow, but if the schedules are good for like a fee for service type practice, we're all striving to work less hard and make more money. We're all striving for that. So I wouldn't say that it's, you know, one size one, one shoe, one size fits all type scenario. You just got to really look at the fee schedules. You got to look at the schedule. You got to look at what you're doing. But again, if you keep taking it back to the cash flow, if the schedule is not full, but you're still throwing off 300. Okay. Let's make it bigger. We've got room to grow, you know what I mean? But yeah.

Art Wiederman, CPA: It's about having a plan and having a vision. It's like anything else. The last thing I want to touch on before we call it a day, Michael, is let's talk about that. The biggest challenge I mentioned earlier, the biggest challenge that dentists have today is finding and maintaining, you know, team members. I had I was at the dental convention. One of my clients came by and he says, Art, I had my best assistant who this place would fall apart without. And basically they said, I'm paying them 26 an hour and they wanted 40 an hour and I gave it to them. I mean, that's scary stuff out there. But, you know, maybe. Do you have any tips on what your clients are doing on finding people and keeping them? You know, I think that's important for all people listening to this podcast.

Michael Dinsio: Yeah. You know, we're at a place where you can't afford to lose them. But at the same time, there is a cross section of what makes sense and what doesn't. I don't you know, I wish I had an answer for High Genius. Like, I read an article that there's like two thirds of the hygienists in the in the market today, or maybe even less than there was three years ago. That's a huge gaping hole that huge that we cannot fill. And so when I Genest. Again, it's a very difficult time for a consultant coach because there's so much opportunity and hygiene. But then the question is, is how hard you press and what can you ask of your hygienist before they walk out mad that you're asking them to improve? Three, four years ago, I could ask a hygienist, hey, listen, we really need to start tracking Perio. We need to we need to get you to start helping the dentist sell more cases. We need you to be a little bit quicker today.

Art Wiederman, CPA: Yeah, that's. Yeah, that's. That's Russian roulette. I mean, that's the.

Michael Dinsio: Yeah, it is. It is. So I don't have a solution on finding. Hi, Janice, but, but what I can tell you is think outside the box and control what you can control. If a dental assistant or a front office or an insurance coordinator is holding you hostage, you can train these skills. It's going to be difficult. You might have to take a couple of Saturdays out on your day off and try and teach them how to put a dental dam on or to do an impression the right way. But you can train a dental assistant that's got less experience, too, and mold them. And usually those people will be more loyal and appreciate that training. So that's a that's a that's a good thing. Check, check. So I think we all in the industry have to find ways to give our employees who don't have the skills, skills, maybe it's higher next level, maybe it's send them off to Arizona and do some program. I don't have a solution for hygiene, but for the other for the other ones, you shouldn't be held hostage for a scheduling coordinator, a treatment coordinator, insurance coordinator, a dental assistant, a floater. We can train all these types of people, get the right people. Maybe someone that works at Nordstrom and train them. I know it's going to be a lot of hard work, but you're going to get them cheaper. They're going to be more loyal. They're all there's people looking to break into our industry every single day. We just got to spend a little time with them. That's the solution, frankly.

Art Wiederman, CPA: That's a great, great answer. Michael, final comments to our audience and I'm going to let you give out your information one more time. This is great. I love doing this. I if I could sit behind a microphone 24 hours or maybe not 24 hours a day, I mean, there is basketball to be watched. But, you know. Anyway, any final comments?

Michael Dinsio: You know, first of all, thanks again for having me on. You're a legend in the industry and I'm honored to be on the program. I love what I do. I think you guys all hear that in my in my passion, my vision and my philosophy is helping doctors make great decisions, whether that's someone trying to get into ownership or someone that's looking to grow their practice or someone that's looking to transition out on an exit strategy of some sort. We love what we do. We've got a lot of great coaches to help you do that. But my final point of this whole episode is have a healthy skepticism of advisors in the network. There definitely are some bad eggs out there are already said that. But you need people on your team that know what they're doing, vet them asking questions, ask for references, interview them more than maybe the first interview, interview them three more times. But once they are on your team, trust them because they have done hundreds, maybe thousands of deals and they've seen things and trust them. Don't fight them. Trust them. That's my biggest thing, is get people in your corner to help you be a better business person. Big picture. That's my final final.

Art Wiederman, CPA: That that's fantastic advice. Okay, Michael, you give out a website and a phone number. Why don't you go ahead and tell people how they can get a hold of you if you have any questions? Michael's offered to give you basically a free coaching lesson for 45 minutes. So what? How do they get a hold of you yet?

Michael Dinsio: Look below in the show notes, but definitely call me 720.309.9551. 720.309.9551. But I did want the opportunity to plug the podcast and we already did. I have to go. Please do. What one podcast is specific to startups. And we literally walk through start to finish on how to do a startup vision banking demographics, lease construction architecture attorneys, architect or CPUs, CPAs literally from step 1 to 22 on how to do a startup. And that's called Startup Uncensored. And we just started a new one called Acquisition Uncensored. Same thing, vision, banking, practice brokers. And we're going to have our on during the due diligence. Like what do we look at for the due diligence of our it's going to be on all the way through our marketing. So in order to a lot of podcasts bring on great interviewers like yours are where you're talking about different concepts. Our podcasts have been very specific to the process of a startup and the process of an acquisition. So check that out. There's two specific ones.

Art Wiederman, CPA: And remember, doctors, if you're looking at a startup or you're looking at an acquisition, the great thing about the podcast world is that you can go back in Michael's, you know, podcast and you can literally start listening from podcast number one all the way through. You know, it's not like, you know, binge watching a Netflix show. Maybe it maybe it is. I don't know. But yeah, it's like, yeah, yeah, we will, we won't go down that road. But anyway, but the point is, is that you can listen to all of them and if they're in order, I mean, it's basically a you know, it's a manual on how to do the startup. It's a manual on how to do, you know, to buy a practice. And if you're going to do it, it's going to be one of the biggest investments you're ever going to make in your life. Take the time, hire the coach, you know, do your homework. Michael Dinsio, please hang with me until I take the podcast out. Don't go away. Great, great, great information. Really appreciate it. Looking forward to returning the favor on your podcast in a little bit when we're scheduled to do that. And really, really, I just this is just so much fun for me. And the bottom line is we're helping our doctors, which is really all that matters. That's what my what my vision, you know, what my legacy is, is what your legacy is.

So anyway, you guys remember my wonderful partner Decisions in Dentistry magazine www.DecisionsinDentistry.com. Go to their website you know look at their clinical their articles their CE courses. They've got a lot of new stuff coming up in the future. I know that for a fact so just kind of keep watching what they're doing. www.DecisionsinDentistry.com.

If you're looking for a dental CPA, my phone number is 657.279.3243 and by my email is awiederman@EideBailly.com Academy of Dental CPAs www.ADCPA.org. We were the first responders financially for the dental profession for the last two years and we are all very proud of the work we've done to help. I mean, I, I did, I got 50, 75 webinars talking about PPP and ERTC and HHS and ESPN and HBO and I mean, whatever, whatever initials the government throw at us, we dealt with. So anyway, you like that, huh?

Michael But anyway, that was a great, great interview today. And folks, thank you for the honor and the privilege of your time. Please tell your friends about our podcast. Please listen to the episodes, download them. They're all available on all the podcast locations. And I hope this is helpful for you. And with that, my name is Art Wiederman Dental Division Director at the CPA firm of Eide Bailly, and this has been the Art of Dental Finance and Management with Art Wiederman. Thank you for listening and we'll see you next time.