Kaitlyn Cole 0:00
Hello, and welcome to the dental education podcast with class solutions. This podcast is a community of dental professionals who share their knowledge and experience in order to provide value to you and your dental practice. I'm your host, Caitlin cool, also known as the K in class. This episode is recording from the cover your assets seminar held on April 30 2020. We hope this podcast brings you a lot of valuable information and that you enjoy it.
Phil Cole 0:28
The the thing that I know that we're getting a ton of kickback on is the employees that are having issues with wanting to go back because of one, the unemployment and two because of the PPE situation. So for the dentists that are on, you know, do you as far as unemployment wise, Chris, can you say something on that order to help relieve maybe whatever questions they have on how to handle that?
Unknown Speaker 1:02
Yeah, for sure. I mean, we've heard of issues, just still people in Indiana still have not gotten any money from the unemployment all the way up to, you know, folks are, are getting more paid more to be on unemployment, and, and the health concerns and the Children's situations. I mean, it's just that they don't want to come back right now. And so you're forced as a business owner, you know, especially if you took that PPP money, you need to get payroll. And so you're kind of, you're forced to just make a decision on move forward with a different hygienist, or just do your own hygiene. You know, the but there's, there's just so many other moving parts to that decision that, you know, I guess my recommendation would just be, you know, crunch the numbers to really factor in what is going to be the forgiveness. But even then, there's, there's still a lot of question marks on that regards. But I don't know if I answered your question. But it's a it's not an easy one. And I definitely feel the stress of clients and other dentists that I'll talk to about that decision. There is no right or wrong. And so you just kind of have to go with your gut sometimes and make the best decision that you can with the information available.
Phil Cole 2:22
So I guess one of the things though, that I hear all the time, as the doctors want to know, can you do? Can you have them on unemployment and still give them PPE? Or I mean, PPP? Sorry, you gotta get a right.
Unknown Speaker 2:34
Yeah. So if you're going to put them on payroll, then the unemployment benefits will be reduced. And at some point, they will just be zero and gone away. The point of the PPP is to bring everybody back and compensate them roughly what they were making before the virus pandemic. So, you know, if you're going to put them on PPE, you're going to pay them that regards, they're going to lose their unemployment benefits.
Phil Cole 3:00
So then, Joe, on the, you know, legal side, we've seen people sit there and say, you know, if they're not going to come back, you know, do I still have to continue to pay unemployment? Or can I report that as refusal to come back to work? You know, I know that this isn't totally your sector of things. But with your law firm and stuff, have you gotten any kind of idea of, of what the best way is of handling this?
Unknown Speaker 3:32
You know, it's not my sector. I haven't seen any guidance from our law firm on that. But just thinking about it right now. You know, some of the things that I would be worried about and thinking about too, when you got an employee that's refusing to come back to work and you're ultimately thinking about maybe letting that employee go or terminate that employee. We just don't know right now. Where the EEOC is going to be going with COVID. And whether it invokes any sort of disability discrimination under the ADEA. So just Just be careful as you go through that process. But in terms of whether or not that employee can still collect unemployment, I'm not mine. My expertise, I
Phil Cole 4:14
don't know. Okay, so, you know, we pushed out and I think most people I think most people have have, you know, seen it one way or the other, but we posted the new ADA, you know, suggestions for PPE and so forth like that. One of the suggestions is, of course, testing all the patients and then of course, testing the employees. What, what's your feedback on that? Joe? Because I know that I had a dentist asked me, I don't want my front desk, business people who are Doing non clinical activities throughout the day that he says the minute they take temperature that's considered a clinical act from a non clinical person. Is this the kind of I mean, is there something there that needs to be worried about on that stage? Or, or what?
Unknown Speaker 5:20
So testing patients that come in, I mean that it certainly can be problematic. And just thinking about this off off the cuff, I mean, patient certainly doesn't have to accept the testing. But by the same token, the dentist or the employer can refuse to treat the patient from an employer employee perspective. I don't know if you guys have seen but the governor of Ohio recently made a comment that all employers should test their employees every day before work, right. So that's something that certainly invokes the Americans with Disabilities Act, because any sort of medical examination or medical questions being asked, you're going to invoke that law, then the EEOC recently issued guidance. It's titled something like the ADEA and COVID-19. And what do you do, and I read that the other day, and some of the things that that I took away from the guidance are this. Employers are certainly entitled to ask their employees about any COVID related symptoms that they're experiencing, but you got to be careful. And remember that you don't want to cross into the, quote, disability arena, asking them about their underlying health conditions. The EEOC has said that you can check your employees temperatures, current employees, temperatures and new employees to so long as they have a conditional job offer, again, whether that's going to happen I you know, I don't know. And then if you got employees that refuse to do the testing that their employer wants to do, the employer can send them home and borrow them from the workplace, because they have the ability to protect their work environment. And any reasonable suspicion that employee has COVID or COVID related symptoms is a direct threat to the workforce. So you can still comply with the ADEA and send that employee home. Kind of enclosing the OSI as I, as I said earlier, they still haven't labeled COVID disability yet, because there's just not enough information out there about that. So there's just you know, it's an evolving landscape right now, there's just so many different legal issues that are coming up from the employee employer perspective that I can't stress enough, just reach out to your, your attorney, if you have one and walk through the process. If you have any questions whatsoever, it's less than you want to do is get hit with a disability discrimination lawsuit or something like that.
Phil Cole 7:58
Okay. Got a question from Jackie. And she says, I'm in Michigan, my PPE loan was just approved, but we haven't signed on it yet. I'm worried about one, I will have to put my staff on payroll, when we are not able to work yet. Vice denied the loan for now. Chris. Can you hear me? Yes?
Unknown Speaker 8:24
That's such a, it's such a loaded question. There's, there's a I mean, it's really, there's pros and cons to each way, and you're just gonna have to pick the lesser of two evils. So I'm assuming that this attendee is in Michigan. And so, you know, depending on when they're going to come back, I mean, that is going to if you delay bringing them back off off unemployment, then that's going to impact your forgiveness, and they're still language out there. That's not clear whether, you know, if you meet the 75% towards payroll threshold, or if you don't meet that, is the forgiveness zero, or is it just prorated down on the forgiveness? We're still waiting on on language to clarify that penalty? And so, you know, are you willing to sacrifice the retention credit for the larger benefit of the PPP? And, and again, I mean, I would just put together the forgiveness calculations and try to, to figure out, you know, really, what is the exact amount that that could be forgiven? If it were just a pro rata? And then if it's zero, are you willing to I mean, are you okay, sacrificing that amount, if you don't, if the forgiveness is zero? Does that make sense? It's a it's a, it's a difficult question to answer.
Phil Cole 9:47
Yeah, I there's, yeah, I don't think that I think what so what are your feelings? I mean, since you're doing taxes, and you're dealing with the IRS all the time, I mean, my guess my big thing is is censored is all we hear all the time is the language isn't clear the language is unclear. I mean, does eventually people just get stuck with this? Or is there something where eventually the government after it all kinds of starts ironed out, the government will do some other type of situation too, because there's been dentists, like Jackie just got hers. And isn't quite sure, but I know that we've had clients that jumped on board, the second that that the site opened up and are talking about that they got the money and blah, blah, blah. And I know that, you know, at the time it was there was a ton of insecurity of what the wording was and stuff. I mean, what is your I mean, just for me, I always look at it as a So what happens if they did jump on it right away? Or what happens if Jackie did go on this? And now, they make the they change the wording or something down the road? Do you find? Do they have a have? So do you find that they eventually circle back so that these guys don't have to be too worried? And they could, you know, try to make a decision or what?
Unknown Speaker 11:05
Yeah, I mean, I wish I had the answer. I've worked with Joe and his team to try to figure out the best solutions, but they keep moving the goalposts and you're, and it's incredibly frustrating, you know, from an from an accounting standpoint, that, you know, we want to provide concrete answers, or, you know, a better solution. But the fact is that, I mean, there's just not a whole lot of clarity right now. And it's frustrating because you as dentists are being forced to make decisions today, without all of the information and all of the the clear impact that it's going to have down the road. incredibly frustrating, I get it, I share in that frustration. And, you know, unfortunately, you're just it's a risk game. I mean, how much are you willing? How much risk are you willing to tolerate? And, and just deal with the consequences down the road. But I guess, in your case, Jackie, you know, I would try to extend the closing as long as possible. And I believe that's the 10 day rule from the date of approval until you can't, the funds need to be dispersed. And so try to stretch it out that as far out as you can, if you want to go ahead and take the PPP money, I mean, we've really seen all all spectrums of this decision from they're turning down the money, and they're not taking idle all the way up to they're taking both and, you know, they're just sitting on it, wait, you know, and they're gonna gamble that the forgiveness is going to be pro rata versus zero. So we're all across the board on on decisions with clients.
Phil Cole 12:40
Well, thanks, Jackie, for that question. If you got any more, feel free to send it once again. So Scott, we this a question for you, since you're dealing in the technology world, and so forth, got off with a doctor today. And he was discussing kind of fallen into the, you know, the world is coming to an end type mentality. And as I was talking to him, I was trying to make sure that he understood that, you know, one of the big things is, is staying in, you know, in contact with your, your team, stay in contact with your patients, let them know that, you know, you're doing, you know, the certain things that need to be done. And he basically said, How am I supposed to do that? You know, a lot of what are some suggestions that you have, because I, I, of course, gave him my suggestions, but what are some of the easiest things that they could do for reaching out to these people?
Unknown Speaker 13:45
Yeah, no, that's, that's, that's awesome point. So, you know, obviously, the dental world in general, for those that don't know me is very intimate. For me. My My father was a dentist for 36 years here in a Greater Grand Rapids area. My grandfather was a dentist in Sioux Sainte Marie in the up. So you know, and just, obviously, a very, very important to me. So, yeah, what I've got just in general, for all types of businesses and people, and again, everybody keeping their sanity, right, it's these types of sessions, hey, we might were able to do kind of face to face, we're not in person, but this at least keeps us a little bit normalcy. And so there's a lot of really cool programs, C three, we partner with a bunch of different different programs, I think Phil, and I were talking about earlier is that you can do video conferencing. And so you know, whether it be zoom, whether it be RingCentral, whether it be Microsoft Teams, there's a new Facebook platform that's coming out, that's going to be I think free for the first 60 days. And a lot of these programs do again, they're offering it for free for people to get into it. Try it out, let them kind of drink the Kool Aid taste it and understand it and the world of telemedicine in general is probably a lot of you guys know, is just exploding right now to, I think, obviously, the dental world is a little bit more unique because of what you know, the intimacy and things that are involved with it. But again, at least having those conversations with patients with staff, with whomever, because when when we come out of this, it's, again, it's we want to try to get back to normalcy. But again, whether it be having weekly phone sessions with your, with your employees, or with or having some type of, you know, face to face to face interaction with people that have these types of emergencies. A couple of weeks ago, we my son banged his front tooth is four years old, and he was running around banging his front tooth and, and a couple of days later, it looked like it was getting abscess. So obviously, I had my dad come over and check it out. But then we did a FaceTime session with, with our dentists to to kind of take a peek and see All right, hey, let's get antibiotics. Let's see what we don't know, it doesn't look like anything too crazy, let's just keep an eye on things rather than just rushing to the nearest dental emergency place. But yeah, again, the face to face interaction and pieces, the tools, the technology tools, they're out there, and a lot of them are giving away the services and things like that for free. Google just came out again, I'm talking about their new their new platform. And so all there's a lot out there. And it just identifying, you know, what's the best fit when people like, you know, I use four or five different platforms for different meetings and calls, I'm doing, you know, 50, WebEx calls a week with with with clients and folks, so it's like, you jump from one to the other. And they're all They're all pretty easy to use and manage. And again, like I said, most of them are for free right now, or at least offering you know, 30 to 60 to 9090 days where these, you know, the vendors or manufacturers just wanting they want to help out, right, they want to help people have those face to face interaction. And again, if it makes sense, you know, to keep that product in three months when things are a little bit more back to normal. But at least for the time being, it does a lot to be able to do that on a day to day or week to week basis. But so
Phil Cole 17:07
awesome. Noah, getting a ton of people once again, now that, you know some of them have had landlords and so forth, given some forgiveness. But now that we're getting closer states are starting to open up now people are starting to call ask me. All right, what do I do in this situation? So I mean, basically a nutshell, what opportunities are you seeing that are currently available? For? You know, it's the leasing spaces available? Are those kinds of things opening back up?
Unknown Speaker 17:46
Yeah, I think that's what we've been occupying our time with, while everybody's been at home is what can you do to to, you know, conserve and cut costs, and maybe analyzing your lease is one of those things you can do right now. Right? So we haven't seen landlords get to a point of desperation themselves, even with maybe giving some rent abatement and things like that. But it is a great time to have a look at it. Explore the market, see where rates are, maybe you're high again, even if you can try to renegotiate even if it's early, extend your term. There's all kinds of things you can do. Because the landlord's looking for security too, right now. Right? So that's what we've been doing is just analyzing dentists leases, and seeing if we can't help them shave off a little bit of rent here or there. Again, we're sort of past that initial wave of conversations with tenants talking to landlords trying to get some reprieve. I've been advising people if you can pay rent, keep paying rent. And there's goodwill that comes from that right? The landlord's always keeping score, guys. So if you can, if you can afford to pay rent, keep paying it. If you can't, then I've found that most landlords have been reasonable, but again, have it your have a look at your lease, talk to a professional who knows the market? Find out. Now if you haven't taken time before how it stacks up, are you overpaying. And if you are, then it's time to have a conversation with the landlord, even if you're not due yet, if your if your release isn't coming up for renewal, even in a year, if you're under five years and you plan on being there long term, there could be an opportunity to to renegotiate just again, the trade off is that landlord gets that security for long term tenancy while while we're all sort of waiting for what's next.
Phil Cole 19:45
So Daniel, then when it comes to the finances once again, I had three phone calls with Dennis and they kind of all seem to fall into everybody's kind of category this morning or today and And, you know, Doctor is basically on the fear train of what am I going to do with my practice? And, you know, he has said that, you know, I got to start cutting all kinds of things, and he was going to do a project with his house. He was going to do, he was talking about certain things with stocks, I don't know exactly what it was, but I'm cutting all that out. And, and so what are some of the things just on a financial basis to kind of, you know, some things that they should do, just to make sure that, you know, you're not falling into two, I think what I see this last week is really starting to pull out the panic people versus, you know, the will keep moving along. What do you do, what do you do for the panic person?
Unknown Speaker 20:53
Slowing down, slowing down, and, and really kind of reassess. And what we're spending a lot of time doing is just forecasting, you know, you gotta you got to relook at things and, and say, Do I want to feel this in retirement? If this if COVID 27 comes up when you go to retire? And we have the same type of thing? How much do you want to have in guaranteed income? How much do you need to have in safe cash so that you don't have worries about market downturns, even even up to a 50% market downturn. from Northwestern Mutual's perspective, they look at things they they tested their general portfolio out against 500,000 deaths, 50% market downturn and 0% interest rates from the Fed. And they have those kinds of testings. I mean, as a individual, that's that's kind of what you have to look at your plan now, and and test against that to say, am I strong enough financially, to be able to withhold withstand a 30% market downturn? And most of the time, it's the people that just have investment strategies. That are the ones panicking right now, because everything that they have is in the market? And they did not have they don't have a three to five year cash plan. So a lot of our conversations right now are built around how do we build a mid term long term safe cash bucket of money? To cover fixed expenses, long term, and also short term? Because a lot of us I mean, Chris, and I, and you see a lot of these offices that didn't keep enough cash on hand. So it's how do we how do we get the business to have enough cash on hand as well? Along with your personal budget, making sure that you have an emergency account, because it's not just dentists from that perspective, that don't have the emergency fund. It's, it's, it's America in general. And I would say right now, we're, we're strongly encouraging people to get three to six months worth of fixed expenses, put away locked away in a safe place where you're not going to touch it for this purpose in this purpose alone. That's
Phil Cole 23:36
kind of funny that as we turn around, and of course, Nancy can attest to this, because when we do our assessments and stuff, one of the things that we look at is break even point, Chris, I know that, you know, we talked about back and forth breaking points all the time with our clients. And it's very interesting that over the last week, I would say that I have had to have had phone calls with doctors. And I would say, I could safely say at least 30 Different doctors. And every time I've asked them, you know, because they have questions of how do I do you know, how are we going to handle this, how we're going to handle that. And then you turn around and ask them? Well, first of all, where's your cash flow? where's the where's your break even point? I think out of those 30. I had two that have done a breakeven point. And Nancy, I mean, with us doing assessments, I mean, how often do we run across when we're doing an assessment that you do not have somebody that knows what a breakeven point is?
Unknown Speaker 24:53
Here we go. Yep, thanks. It's a majority of the time they don't even even know what a break given point is or if they do know it, there may be setting goals for their practice, not based on it, and they don't have the money that they're actually paying out in incentives. And I think the the other category that I find in all of this is that the, the way that they're categories in their p&l, they're not, they had, what was one of them fill member, we had the maintenance, I think it was in the salaries, or just the categories are all mixed up. And so therefore, all the percentages are off as well. So that's something that has to be looked at, and there's opportunity there to to save as well, if they're not tracking, you know, where their new patients came from, for an example, and one doctor was spending $3,000 a month on sending out Groupons, these kind of cards that encourage new patients to come to the practice. But it was he was getting no return on that. And so by looking through the p&l, we start looking at some of these specific topics, and are able to help them even cut back costs. If so be it.
Phil Cole 26:13
Chris, you got any comments on on the breakeven point?
Unknown Speaker 26:17
Absolutely. And I mean, this is the ultimate stress test for your business and personal financial plan. I feel like in Dan, I mean, I know when you bring on a new client, or even a prospect, I mean, there's a risk assessment there. And so anybody that's, that felt like they were able to withstand the risk and have a 25% drop, and how did that feel this past few months, you know, and so is it, do they need to adjust their financial plan? You know, I'm, I'm waiting to just let the dust settle from this virus pandemic, to really evaluate, you know, what, what can we improve on from the business perspective? So we typically, you know, want to see 30 to 45 days of cash, you know, do we want to increase that to 60 days now? You know, it kind of depends on the cash flow of the practice. But, yeah, I mean, like you said, you know, I feel like accounting is really just the linchpin to everything, and we've got to have all this information dialed in, so that you can make good business decisions in times like this. If you're, if your accounting just isn't there, or you don't have the data, or the ability to analyze your business or cashflow, you know, you're at a big disadvantage.
Unknown Speaker 27:29
So I just, I just want to add one thing to I mean, I think a lot of these guys that we run into are using, in fairness, they're using accountants and stuff that are patients. And they're, they just don't know what the true value is. This is this is making everybody open their eyes to understand that they gotta get everything in order. And hopefully, it's a wake up call to everybody to make sure that they've got dental specific. People on their team that know this animal called demonstrate that it is because it's its own animal, it's, it's not necessarily like any other business. So you got to have guys that understand what's going on. And that's, I mean, it's like Christmas is good as what he is, and what he does, because he loves it. And breezes it along with the dentists. So if we can have clear numbers from a financial planning perspective, now, now we just got to match the emotion. And, you know, if we can match the emotion to clear understood budgetary numbers, it makes it makes the stress load on the client very, very, very low.
Unknown Speaker 28:47
For sure, I mean, the stress level on clients that are flush with cash, and they've been prepared for this is night and day between the doctor that has low cashflow. And I mean, we've we've unfortunately, have both ends of that spectrum as well.
Phil Cole 29:04
So then the other question is, Jason got off with once again, another one of the fear mongers. And it was I'll never recover from this. When I brought up marketing, that person said to me, that's the last thing I'm going to be worrying about and spending my money on. But yeah, and once again, to me kind of that, you know, I don't think that you're realizing, you know, what, what you're going to have happen to you six months to a year from now, if you were to cancel it. What's your suggestion on on just the marketing aspect?
Unknown Speaker 29:47
Yeah, great question. We look at marketing from a couple of different angles. One is obviously the growth aspect of a practice. What can you put into motion to help a practice keep growing? We all So look at it almost like an insurance policy for times like these. Because if you're marketing properly, for an extended period of time and and Dan, to your point, dental is definitely a specific animal, so to speak as a business, and that applies to marketing it, there's a lag time for sure in how marketing efforts work. Because people make a decision, people make a decision on a dentist's maybe a couple times a year, as opposed to other businesses, they make decisions every day on a certain type of business. So that all being said, there's several different ways to approach marketing and to think about it. And it can be as simple as what can I do from a messaging standpoint, from a foundational branding standpoint, a bandwidth standpoint, to make sure that I have a solid foundation, I think hearing all Utah, that's something that keeps coming up is just centering your foundation and understanding where you're at what you can do what you can't do. In the same applies to marketing. I think messaging will be really important to your patient base in the next handful of weeks, especially as practices get the word they can reopen, getting something out to your current patient base, making sure that your your brand and your website and the foundation and the function of all those things is is operating the way it should, because there's going to be a level of I think consumer confidence that that's going to be in higher demand from people. So when they come interact with your website, or your brand, or your social media, is an inspiring confidence in you and your team and your office. So they come through those doors, or is it is it not? I think that's something to think about it take a look at. And then to the to the folks that are nervous about spending money on outgoing marketing, that's absolutely a valid concern. So any sort of outgoing marketing that that's being planned or thought about in the coming months, just needs to be really strategic. We see it a lot, where we have a lot of practices we talked to that are trying to do some serious marketing, but it's a lot of try this for 30 days and minute No, no, try this for 30 days, I think moving forward, really having a plan and a reason why you do certain types of marketing? And when are you going to do it, and how's it going to be executed and tracked, that is going to be more critical than
Unknown Speaker 32:34
ever,
Unknown Speaker 32:35
I think moving forward.
Unknown Speaker 32:38
Yeah, just to expand on that, you know, we've about half and half. I mean, we've we've got one half of our client base that has been really promoting, hey, we're doing this, we're implementing this air filtration system, this air purification, whatever those are called, you know, to really ease the concerns of patients and staff, and I mean, and everything. And it's, it's too early to really measure the impact of that, you know, for you know, for when when everything reopens. But I mean, I guess it really comes down to who can afford it as well. And so if you've, if you plan properly, and you've you are able to capitalize on these opportunities. You know, I tend to think that those folks that that are able to spend on those, those marketing efforts will come out ahead. But like I said, it's too early to measure that.
Phil Cole 33:26
Right. Yeah, I agree that I think it's too, it's going to be a little bit too early. But also, Nancy, you gotta agree with me. We've all we always say, right? Perception is reality. And, you know, right now, what presents What perception are you giving your your patient base if you're not reaching out to them? If you're not, you know, giving them maybe the updates or so forth? Because like I said, the doctor I spoke to this morning. He his comment was as Why do I want to reach out to my patients, because they're overloaded with all this fear mongering stuff, and in all this bad stuff, but yet, he's like, What am I going to do besides just turn around and tell him the same thing they're hearing on the news? Because I don't have anything good to say to him? And I'm like, well, that's, that's unfortunately, that's not how you want to have. That's not how you want to react to what is perception, right? It's like you are doing these things for your patients. And you're taking, you know, vantage of that, you know, Nancy, and you got anything to add to that.
Unknown Speaker 34:30
And even more so than not keeping in touch with your own team. There's some dentists haven't even reached out to anybody their hygienists or assistants, what are their fears, so that you can meet and expectation to return to work and make sure that you can meet that. But with the patients it doesn't even have to be anything about COVID-19 is just reaching out in a humanitarian way. You know, how are you doing is everything okay? In your home? So, really important for that to happen? I see Some dentists I know one dental office in particular, they have no plan at all, they're just going to wait for the call to open and then then you know what's going to happen? It's going to be, you know, the gonna hit the fan put it that way.
Phil Cole 35:14
Yeah, no doubt, no doubt about it. So, yeah, from a,
Unknown Speaker 35:17
I just wanted to add to all that from a marketing because in Ohio, their practices are supposed to be open tomorrow. So everybody's kind of scrambling to figure out what what is their plan going to be to keep themselves safe, their staff safe. Everybody, from a marketing perspective, in our opinion, makes a lot of sense to start communicating that plan, not only to your patients, but to potential new patients, because I'll tell you what, if my wife and I need to go see a new dentist or our son go to a practice, we will probably respond to practices that are putting out a message pretty quickly about what they're doing, with procedures and all that, to keep us all safe. So I think there's some marketing opportunity there once once the practices kind of figure out what their what their new world is going to look like, in the coming weeks. So
Unknown Speaker 36:15
I was I've got a dentist here locally that has been putting out video, you know, minute and a half just kind of keeping everybody updated in the community. You know, what, what's going on with their practice and stuff like that it's gotten, it doesn't necessarily have to do with COVID. But really, I mean, it's, it's getting your name in front, I'm just speaking from a patient perspective. I mean, I like it, because I see the guy I get to see the practice, I get to see the inside, I get to see how neat his desk is in his offices and see whether or not that's a guy I would want to go do dentistry with I mean, you know, that's, that's cheap marketing man to put pop it out on Facebook and just put a put a two minute video out there. Just and he does that one.
Unknown Speaker 37:08
Yep, that's great.
Phil Cole 37:10
So, question. So you're representing sellers, buyers for dental acquisitions, you said you have prior to COVID-19 practices were selling upwards of 80 85%, some even hit 90 is COVID basically going to make a an impact on the premium sellers. I think that basically, and you know, I think also include, we need to include real estate with that too, Noah is but my and Chris feel free to cut in. But my opinion on on whether or not the value of a practice is going to go down is still going to be mainly based off of what the practice is made up of, you know, is is the practice financials in good order. Not like what Nancy and I said were you when you're turning around and getting an A client that was working on the breakeven point, that they have their wages, and the repairs and maintenance all under one thing. So we can't, you know, you got to go through whatever it is to, you know, all the pulling of that out to find out actually what that practice is, which then returns when you're looking at that p&l, it also I guarantee you correlates to what the practice is doing. So once again, attraction to the practice, you know, do will the value go down? I think my personal opinion is it's going to depend on the bounce back of this COVID. You know, are we going to like Ohio is going straight back, right? Where there's talks and other states where they're going to let the doctors come back for a month and hygiene might not come back for you know, a month to two, those kinds of things are going to probably I well, they are going to make a massive impact as far as I'm concerned on the practice itself. But I think that it's the kickback that's going to be is going to be the major factor for that. You know, I know that there's a lot of conversation where doctors are sitting there talking about you know, I'm selling the practice now. Well, if you just let go with the practice now, I'm going to tell you that you're going to lose my opinion is is you're going to lose value on that practice because you are not allowing for the major thing in a dental practice is goodwill. If you're going to dump the practice right now, and you're walking away as the way these guys talk, right? I want nothing to do with the practice anymore. You're killing the goodwill of the practice. If you're not going to walk in that door again, it is going to be a what I would consider a true absolute walk away where I'm signing a letter to the patient saying And, you know, Joe Buck is taken over from this point. I just that that kills, that kills the goodwill. And so that really is going to affect to me the price of the practice. As Chris, you have any thing to add?
Unknown Speaker 40:21
Yeah, I mean, I tend to agree with you, you know, it would be ideal to let this settle, but at the same time, you know, what, we're gonna have to see how everybody responds or patient is going to come back. You know, are the new protocol is gonna prohibit the patient flow coming in? I mean, are you going to be able to see as many hygiene patients and so but overall, you know, I think if, you know, if you're if you're a dentist, and you find the perfect practice, I mean, there's no perfect practice, but I guess a, a great practice for you, and you've been searching your entire career. You know, yeah, this is a this is a blip in the, in the dental economic world. But, you know, I
Phil Cole 41:03
don't know that I would let that prohibit you from moving forward, we do have sales that are in the process, and that, you know, the sellers are giving some concessions, more so now than before the virus, you know, just to just to get this deal done. And I think the big thing is to is, is I'm sorry, no, other than I'll let you mentioned real estate. But I think the other big thing, too is is this comes back into some of the things when it comes to the you know, the value of the practice, or what you're going to look at the practices is one of the big things is retention, you know, like Chris just mentioned to are all the patients going to come back, you know, so what was the practice before, and even when you buy it, and a buyer is doing the due diligence on that practice? That's one of the things that you definitely should be looking at, right? What's the retention, because it doesn't really matter how great of a marketing program that Jason puts together, if he's bringing in 40 new patients, you know, a month, or 60 new patients a month, but the practice is losing 45 every month on the back end, then once again, that retention really starts to play a part in the value of the practice, because there's no you're really not closing the back door. So but as far as real estate, no, do you feel as though any thing on that order is going to going to change
Unknown Speaker 42:26
against the wait and see with some of these landlords and sellers. Obviously, if the dentist owns the practice and is selling, I think that, you know, we'll see maybe their level of desperation, if you will, in terms of how they're dealing with the practice, maybe that would mirror what they want to do with the with the building. But I'm in a situation right now, where I'm working with the buyer practice has asked me to help with lease negotiation. What's really hurt this particular doc, is that the selling doctor just signed was pressured by his landlord to sign a new five year extension. And it's taken all of the the young buyers leverage away. Because he's basically saying, Well, I want to expand this practice right away after I buy it. And the landlord's basically holding firm, we don't have a lot of negotiating power, because he can't move that practice even if he wanted to. Right. So that's just kind of a side note for anybody who might be a seller who's who's listening here is you know, if you can help it try to wait and allow that purchasing doc to, to negotiate a lease with the landlord that suitable to them, not just signing one yourself and then and then getting out of it or assigning it to that, that purchaser you're putting the purchaser in a tough spot. But aside from that, I mean, there is still leverage, again, that not much has changed in terms of how we might negotiate either a purchase or a lease. My experience with a few people that I'm working with currently has been that they know these are long term plans, right. So there are I am working with some folks who are buying real estate now knowing that if they're going to be holding it for 2030 years, and they could weather, multiple economic storms, rates are still low. I know right now some of these banks are on hold, but if you're in the system, so to speak, then they're still approving those loans to the best of my knowledge.
Phil Cole 44:38
So Joe, since you asked the question and you do work with buyers and sellers and and working with all of the the transaction itself, what are you? What are you finding?
Unknown Speaker 44:53
I'm finding that both buyers and sellers are cautiously out there mistake, the deals that I had that are that are going on or are somewhat delayed and on hold. I mean, they're not, no one's really walking away at this point. We're just trying to wait to see where things open up again. But in terms of, I've got a few new engagements over the last two or three weeks for buyers. So I mean, that's, that's a good sign. Again, the closing on the deals, probably going to happen a few months from now. But no one's really walking away from this completely. And I think I don't think that'll change.
Phil Cole 45:40
So then I guess this is for every, it can be for everyone. One of the questions that I've I've gotten personally to, and since we're all kind of dealing with the doctors, do you think this is going to this with this? COVID? Do you think that there is going to be an uptick in startups period? Who wants to take the first who wants to start that one? Joe? I'll go with you.
Unknown Speaker 46:07
It's a good question. I don't know. I mean, I'm still like I said, a lot of these new engagements that have been getting or people buying they want to buy right now they're not, they're not interested in the startup. So I don't know, it'd probably be the appropriate one to ask for that. I, you know, I?
Phil Cole 46:26
What do you get to know? Yeah,
Unknown Speaker 46:28
I mean, I think, you know, I'm involved in a lot of startups, certainly. There's probably way more startups going on, and people realize sometimes, but Swisher might be a good one as to but I think it depends on Are there going to be fire sales of practices? Right? Are people I mean, fill those who aren't under advisement of practice brokers and such? Who aren't taking any professional advice? Are there going to be panic, sales and people just saying, you know, I went through a downturn, 10 years ago, I'm out of here. I'm not going to do this. Again. I've heard a little bit of that mentality going on out there. But I think, you know, a lot of part of the reason people start off is because they gave up trying to find the practice. Right. So I think a lot of that depends on how many practices are out there. Because right now, in Metro Detroit, for example, you know, I've heard a number like for every practice that's for sale, there's there's 15 people buying for it, you know, so what is that going to look like? So I think for half of the people who are looking for starting a practice, those people gave up on trying to buy trying to buy a practice, because they just lost too many opportunities and said, I'm just going to start four, then the other half is those who are just entrepreneurs who said, you know, I'm tired of working for somebody else, or this is a dream I had. So the interesting thing will be to see is, what do interest rates? How did what did they do? They're gonna maintain, or they're gonna go up? How much will the market be affected? Will construction costs come back down? Because there's less work? And that's what's gonna, that's the wait and see part of this. Construction costs are so high right now. You know, and then also depends on the practice. Is it a practice that you're going to buy for $500,000? And it needs another 250 of equipment and technology? I mean, that's a tough question, too. I think it can be case specific. But I'm wondering the same thing. But those are just my thoughts. I guess I am somebody who works with a lot of startups. The ones I've been working with who have sort of pushed pause, haven't changed their minds, I think, you know, as I've communicated with them, they intend to sort of pick up where we left off, or they know, it's going to be 12 months before their businesses open. And there they have the confidence that, hey, we'll have even though it might not be exactly as it was, in March, when all this went down. There'll be a new normal and people will still be getting, you know, hair.
Phil Cole 49:08
Jason? I mean, what do you think?
Unknown Speaker 49:11
Yeah. We're worse still seeing a lot of Doc's out. So we do demographic studies, we have this special real time demographic data we run as part of our marketing, and we do it to help doctors find areas to start practices. We're still seeing a good amount of doctors out there, still going through their process of trying to find places to open a dental office. We're still getting a lot of those requests. We've got a lot of clients that we advise leading into buying a practice, helping them look at the marketing of that office and what needs updated in that office, from a branding perspective and all that. We've seen some of those have been delayed. I think there was Joe, you were mentioning that earlier. We're seeing some closings on that stuff getting pushed back a little bit. But nothing's really canceling people are just the process of going through is not moving as fast obviously, as it normally would. And it's delaying a little bit. But projects are still we're still seeing that they're going to happen. And we're still seeing the practices, they're going to be purchased. And it's just maybe delaying a little bit.
Phil Cole 50:23
Chris, are you getting any uptick on people asking with just accounting purposes that, you know, should I, you know, do a start up instead of, right?
Unknown Speaker 50:34
Yeah, that's a that's a great question. And we typically don't deal with a whole lot of startups, mainly ours are just the tenured tenure clients or buying existing cash flow. Not to say that we can't, it's just, it's just not just doesn't happen for us necessarily, not that we can handle it. It's just we don't deal a whole lot with a demographic. But, you know, like, you know, like Noah said, I mean, I think that it's kind of a wait and see on some of those costs. Are the construction costs gonna soften and so forth? And then what, you know, what kind of tolerance are people willing to, to take with, with the unknowns at this point, but, you know, those startups have such a long runway, and I, myself, am cautiously optimistic, I think just the dental industry as a whole is, is going to rebound. People still want to go see the dentist. It's just going to be, you know, just different moving forward. You know, but I do think it'll bounce back. And so I, myself am optimistic.
Phil Cole 51:38
Well, we have hit our our once again, and I want to thank everybody, for all my team members here, my partners for coming on board and answer any questions that the two doctors that are on if you guys have any other questions, you can reach out to any of us. And I will sit there and send everybody's emails so that you can reach out to them individually and ask any further questions that you may have, if they wanted to be personal. So once again, thanks, everybody for joining, and we will talk to you guys the next time in about a month. All right. Thanks. Thanks. Thanks,
Unknown Speaker 52:22
guys. Take care
