We're in scary economic times and there's no doubt fewer patients are opting for expensive oral restorations, like cosmetic options and implants. While patients continue to take care of their oral health, removable restorations are less expensive alternatives and "drill and fill" is a substitute for crowns.
How a laboratory responds to these tough economic times determines not only its present survival but also its future success. When business is down, proactive laboratories reduce expenses, improve cash flow and boost sales. Here are 10 tips for doing just that:
Take an in-depth evaluation of your expenses and reduce them as long as they won't impact your level of quality or service--both are essential to maintain during tough times so you don't lose the customers you currently have.
Trim hours for all of your staff over a fairly short duration, like a period of one month, or ask if any employees would consider unpaid time off. While these strategies require a "buy in" on the part of your employees, when you explain your reasons--keeping the business afloat, avoiding layoffs, etc.--the options you're presenting may be easier for them to accept.
Improve collections. Doctors are having tougher times and may want to extend their payables, but your laboratory's cash flow is vital during periods of flat or lower sales. Insist that clients pay their invoices within 30 days. Collecting your receivables on a timely basis without losing your accounts is an important skill set. You have to make your payroll on a weekly or bi-weekly basis and your customers should understand your need to get paid within 30 days of invoice.
Unless there is an immediate return on investment, delay purchases of expensive equipment to conserve cash. Replace only the broken equipment you need for production and live with what you have until the economy improves.
Turn in your precious metal scrap on a regular basis and use a reliable company with a history of processing gold scrap. Maximize your return by applying the best recovery techniques possible, such as keeping carpets next to crown and bridge finishers to capture more precious metal dust and filings, and periodically cleaning out the ducts.
Review and intensify your marketing efforts. Cutting or significantly reducing promotional activities can be disastrous in a declining economy--you want your laboratory to stay visible and be on the minds of your dentist-clients. Evaluate the contribution of each marketing strategy; increase the sales efforts that pay off in more business and account retention, and drop the strategies that don't. For instance, some years ago at Dental Services Group we determined the response rate to a direct mail piece describing a new product was less than one in 100 dentists, and the resulting business didn't warrant the cost of the mailing. On the other hand, another piece that contained a discount incentive for new customers produced more than three times the response as well as strong sales. Thus, this promotion was expanded and the first piece was dropped.
Ask each customer to refer two dentist friends. Meet with these dentists one-on-one and present your best case as to why they should try your laboratory.
Analyze your existing accounts and try to get more of their business. The average dentist works with three or four labs: look at ways you can get a bigger piece of the pie from accounts with whom you already have a good working relationship. For instance, consider offering new products to your current customers through outsourcing. You'll increase your sales and profits without any additional investment.
Develop a sales plan with the goal of introducing your laboratory to several potential new dentists per month. For instance, have your delivery drivers stop at nearby dental offices, drop off literature and meet the office manager if possible.
Solicit ideas from your staff to reduce expenses and increase sales. Those intimately involved in day-to-day production may have valuable cost-saving input or insightful marketing ideas.