Question Answers

    Mark Jackson, RDT

    Owner at Precision Ceramics Dental Laboratory, CT Scanning & Implant Planning Center

Here is an old article I did for a magazine way back in 2000. It shares parts of our 1998 business plan. Many, many things have changed, and i kind of laughed at what I did 14 years ago, but it gives you a basic idea of who I look at business plans. Hope this helps. “If you don’t know where you are going, you will probably end up somewhere else.” Define the task with a business plan. Too many dental laboratories make business plans only when they have to. Unless a bank or investors want to look at a business plan, there isn’t likely to be a plan written at all. How much time do you spend putting out fires? That’s a subject that might come up when you sit down and start your business plan. A business plan will look at where you are, where you have been, where you want to go, and what you’ll need to do to get there (including installing fire sprinklers if those fires are keeping you from reaching your goals). The content and detail of a business plan is largely dependent on the audience for whom the document is prepared, and what you expect them to do. If the plan is primarily for your own use as a means to get a better handle on your laboratory, you can keep things fairly simple. Obviously things will be much more complicated and detailed if your goal is immediate capital from a bank or other institution. The bibliography at the end of this program will give you some suggestions for help in preparing a number of different business plans depending on the purpose of the plan. For example, you may want a business plan for an existing company, business plan for a new company not yet started, or a regular plan for business review and course direction. If you can’t measure, you can’t manage Once you’ve defined your goal, broken it down into manageable pieces, and established a time line for accomplishing them, you’ll need measurement tools. A carefully prepared business plan will not only define your objectives, but map out a time line for measuring your progress in reaching those goals. Following is a copy of my labs 1998 business plan. This is an example of an informal plan used as a business review and for course direction. This document was prepared for internal use, but was also given to a number of respected professionals for their opinions. At the time this document was prepared in November 1997, we were facing a number of challenges for the coming year, however we had an aggressive plan representing 32% growth for 1998. Note how the spreadsheet gave us mileposts to measure our progress, and how the sale objectives reflected typical seasonal fluctuations. PRECISION CERAMICS 1998 MARKETING PLAN Introduction Established in 1981, Precision Ceramics is a full service dental laboratory dedicated to providing quality products and unmatched customer support to dentists and dental laboratories across the US, and abroad. The Business Precision Ceramics has suffered from a number of significant events during the past five years. In 1992 our laboratory in Denmark was closed in an abrupt and unexpected manner when we entered into litigation with the Danish labor union and the US Department of commerce. With close to a 50% reduction in business we were forced to implement a number of “lifesaving” changes, some of which affected morale, profitability and quality. The departure of one of the founders in 1994 dealt another blow, resulting in further losses of business and profitability. Quality suffered, and sales dropped by another 50% while the remaining owner tended to another business entity. During the period from 1994 through mid 1997 very little was done in the way of marketing or sales, and no price increases were implemented. With the return of the departed founder in mid 1997, we face the coming year with real leadership and renewed optimism. The past several weeks have been spent remodeling the lab, replacing and repairing equipment and establishing quality standards and procedure manuals. We have readjusted our operating budgets to reflect continued improvements in quality and training, and investments in new technology. New products to be added next year will be priced at cost, plus 20%, and all new accounts will be brought on board with a price list reflecting a similar philosophy for ALL other products. Among dentist customers, our strengths are customer service, communication and strong technical support. We are a one-stop dental laboratory providing most of the popular dental products and services, or are in the process of adding them. Our lifetime guaranty is a popular attraction, as are our implant services. Among dentist customers, our weaknesses include average or only slightly above average anterior cosmetics. Consistent quality from our denture department is a problem. Additional training (or more drastic approaches) is planned for these areas. Among laboratory customers, our strengths are customer service, communication and strong technical support. Additionally, for those laboratory customers interested in our assistance we offer the best marketing and sales support of any business to business laboratory in the country. Good relationships with our vendors, and articles published in journals reinforce our quality and technological position. Our weaknesses include a lack of a second shift to accelerate turn around time which is important to laboratory customers, and managing the wild fluctuations lab work seems to produce. We will be researching ways to improve throughput such as splitting shifts, automation or copy milling. 1998 Sales Goal Add $343,960 in additional sales by December 31, 1998. Strategy 1. Price Increase 2. Add new products (IPS Empress, Targis, possible others) 3. Retain existing clients 4. Acquire and retain new customers Rationale Price Increase: At $67 per unit, our prices are well below market levels in the areas where our clients are concentrated, and in the areas we will be marketing to. Since we have not had a price increase in several years, I believe a well orchestrated increase could add 3.5% (based on a 5% gross increase, some clients excluded) to next years sales without any appreciable loss of current business. ($85,000 per mo +3.5% =$87,975. Difference of $4150 x 12 = $35,700 added to next years sales.) We will also implement a completely new price structure for all new customers, moving us to $90 plus gold and shipping for Ceramco, and $139 for Omega 900 porcelain. Add New Products IPS Empress and Targis should bring in the remaining $49,300 by adding just 2.1 units per day (at $90 per unit avg.) to our unit count. This could be work our current customers may be sending out to another laboratory, or bring back customers we may have lost because we are not offering these items. Incremental new business should also follow. As of the summer 1997 there are NO other laboratories offering IPS Empress or Targis on a sub-contracting basis (according to competitive ads in LMT). Retain Existing Clients Efforts to retain existing customers will include regular activity from our sales and service representatives, three issues of our newsletter, Occlusal Concepts, and special holiday gifts and cards. Our ongoing quality control improvements will be an integral part of our customer retention and satisfaction program. Add New Clients We will need to pick up the balance of additional sales ($255,015) through new clients. Having this forecast in mind, we can calculate the number of new customers we will need to reach our sales goal. We used conservative numbers, such as an average account size of $750 per month to come up with this number. In reality, the top 20% of our customers average more than $2000 per month. (Since the list we purchased from D&B is based on the profile of our top customers, we could expect them to have similar sales.) Based on information gathered from Dun &Bradstreet’s business services group, and through other research, we can expect a .5% response to a single mailing to a prospect list. This return jumps to 3% by the third mailing, and can pull as high as 5% when combined with telemarketing. We have purchased 6678 names and addresses of highly qualified leads in desirable market areas. Our plan is based on a rotation of the mailing list whereby we send one half of the list a direct mail piece with an integral reply card. Each half of the list will receive the same piece three times, and then receive a second, different piece three times. Additionally, they will each receive a copy of our newsletter three times during the year. Each prospect will be hit a total of nine times. A five percent return on 6678 would give us 333.9 new leads. If half of these try us out, and half of them "stick", we have more than our 68 new accounts for necessary growth. The results of a campaign probably will not take affect until Q2, however a price increase and some new products will produce some immediate sales. Please note that the PCDL Sales Analysis reflects a very slow growth curve in Q1, with no new customer activity until the beginning of Q2.  2000 Mark Jackson

Posted June 13, 2012