I’m naturally a “lets get on with it” sort of person. I make decisions quickly, without gathering a lot of information and once I’ve decided on a strategy or tactic, I want to benefit from the promise this change can bring as soon as possible.
Some of the clients I have worked with over the last 15 years are not like this. They like to investigate and get facts and weigh up the arguments for and against and then wait and see what the others will do and then potter along slowly. Maybe it’s because they don’t trust their intuition or gut feeling. Maybe it’s the fear of it turning out badly, or the belief that there is a “right” decision.
Many researchers have demonstrated that we all make decisions by intuition, “gut feeling” or with our heart and then later, we rationalise the decision using our rational thinking to support and justify our intuition.
As a coach, I know that when people think they are in the process of deciding, they are actually not; they are in the process of deciding when to decide! Making a decision is easy to put off and when it comes down to it, making a decision really takes no time at all! (You could make all those decisions you are currently putting off within the next five minutes if you chose to…).
Many folk decide to decide slowly and then execute their decisions slowly too. A sort of double whammy in terms of the amount of time spent.
For many years, I agreed to support my clients in these behaviours. However, awhile back, I started calculating the real cost of making decisions slowly and then implementing them slowly. In business-speak, this is known as the “opportunity cost” and this article describes some of the opportunity costs in slow decision making and implementation in a dental practice.
Here are five everyday examples from our client base that demonstrate the opportunity cost in going slowly:
1. Having 2 Associates working four days/week grossing £850/day instead of grossing £1100/day
At £850/day, 4 days/week, 46 weeks per year, gross fees = £156,400
At £1100/day, 4 days/week, 46 weeks per year, gross fees = £202,400
Tactics required: Sales Training, Diary Zoning and keeping a written day book in real time
Opportunity Cost = £46,000 gross fees/year X 2 = £92,000 gross fees
2. Employing an associate a year later than the practice could have/should have done
New 3 day/week associate grossing £1100/day for 46 weeks per year = £152,000 gross fees
Tactics required: Move 600 patients from overly full principal’s diary to new associate’s diary.
Opportunity cost = gross profit (after deducting associate pay, lab and materials, equalling 60% of gross) = £61,000
3. Not spending enough on effective marketing for a year
Existing new patient numbers, 25 new patients per month at an average new patient value of £600 each = £15K gross fees /month
Potential new patient numbers, 40 new patients per month at an average new patient value of £600 each = £24K gross/month
Tactics Required: Effective marketing. Cost of acquisition of additional 15 new patients/month = £100 each, £1,500/month.
Opportunity cost = Additional gross net of marketing costs = £7,500/month or £90,000 gross fees/year
4. Not getting a Facial Aesthetics service going fast enough
Potential revenue in first 12 months from new service, 6 patients a month at an average spend of £350/patient = £25,200 gross fees
Slow start, 2 patients/month at an average spend of £350/patient = £8,400 gross fees
Tactics Required: effective marketing and effective sales process
Opportunity cost = £16,800 gross fees
5. Not having a computerised patient record and management system
One staff member required to file all records for a 3 surgery practice for 20 years, average receptionist salary £21,000/year X 20 years = £420,000.
Computer and software costs amortised per year circa £8,000/year X 20 = £160,000
Tactics required: install computerised dental management software and train whole team
Opportunity cost = cost of not computerising for the last 20 years: £260k or £13k/year.
I accept that these are broad brush examples and that they don’t tell the whole story. However, they do make the point that going slowly might feel comfortable but there is a price to pay for this comfort which most principals fail to take into account!
It’s not just financial either. Making changes gives everyone a sense of progress and success and keeps the business interesting and alive and possibly future proof.
Of course, decisions don’t always work out for the best. (Look at the divorce rate!) However, I’m a big fan of Richard Branson’s mantra ”Fail fast”, which in practice means if it isn’t working don’t go for a long slow retreat, change it quickly. A characteristic of successful entrepreneurs is that they make more decisions than the average Joe and they change their minds when things don’t work out. Failing slowly is an opportunity cost too!
Going slowly often feels ok at the time; a nice leisurely pace, pay for the changes out of cash flow, no need for a loan etc. However, the opportunity costs in doing it this way can be really significant.
Slow implementation is often down to not having enough resources to make the changes. If you want faster implementation, you have to resource yourself properly too (or give up on your evenings and weekends).
If you would like some help with making the right choices and implementing change in your business or life, contact me for a chat!
m. 07770 430576