Our economy is going through a permanentchange.Our culturehas swung away from individualism towards "good of the group" thinking. Marketing is undergoing a revolution of its own from the advances in media forms, the internet, the changing culture and the economy.
In the earlier three parts of this, I spoke about these changes. Here I will review what this means in regards to your work habits, your outlook and your case presentation.
But first, this: unfortunately, those dentists who were previously riding the wave of a good economy will be forced to change and change in a big way. Our economy is going to get worse before it gets better (There is a platinum lining here that I'll speak to later.)
Let's start with the work environment, hours and attention.
Dr, you will be forced to roll up your sleeves and get busy, W-O-R-K-I-N-G in and on your practice.
You now need to pay greater attention to your practice than ever before. Frankly, you will need to spend less time away from practice in leisure pursuits.
This is true foreveryonein this economy. You and each member of your team, included. Intensity will have to increase. Results must be insisted upon. It is time to rise to the occasion. Foreveryone. Sometimes it won't be considered "nice." You might not even like the tenor of this memo.
The truth is that if you resist this, it will cost you big time. Not acting when you should, let's everyone down including the very team members that make your practice work – the ones that go above and beyond and can be counted on to get results; that take care of your patients and take care of you.
Non-performers will have to be shown the door. (I would say you, too Dr, except you own the practice.
The entity relieving you will be a bank or financial institution that closes you out because you kept on acting as if this whole thing will blow over. IT WON'T.) Our economy has changed forever. This is the new economy.
More real estate problems will emerge as people "game the system" to get bail out help. Already people who could pay their mortgages are not, waiting the obligatory four months and then seeking federal help. The government's plan to reduce mortgage balances by judicial fiat will cause a deadly ripple effect throughout the real estate industry.
Imagine the seller or real estate investor who often provides financing for real estate sales. This is a huge part of the real estate business. Some estimate as much as a third of all sales involve individuals providing financing. What happens to our poor investor or regular selling homeowner when a foreclosure looms? Not only will they lose legal costs, but also the principal amounts of the mortgage loan itself! Who wants to put themselves at the risk in the hands of a judge with marching orders to reduce mortgages to 31% of the buyer's income! Seller financing will dry up. Real estate investors will leave in droves. It has not happened yet, but it will. This is a huge government boondoggle that puts the power in the hands of the buyer who did not pay. It rewards the behavior you don't want in the name of being "fair." Unfortunately, it undermines the entire system. Once again, the government bureaucrat without a clue about business is setting up rules that have unintended consequences.
There is farmore here with our current economy and the bailout. While I hopeit will work, you and I must prepare like it will not. It is the only prudent thing to do.
How's that for giving you some dark clouds of worry?! Just what you needed, right?
It is ironic isn't it, that this is one of the BEST times to be a dentist…if you are prepared. Some dentists will go under.
I've got some ‘splaining to do.
When economic times are bad, how do people respond?
They conserve. They tighten up spending. They hesitate. They use what they have. They budget more carefully. They pay off debt. They save more. Un-necessary spending gets put on hold. Clothing, trips, re-modeling, re-carpeting, second homes, cruises, vacations, etc. get cut.
The question that everyone asks: do I need this? Can I live without it?
Couple this with the changing demographics and you have a sure-fire recession. Why? There are too few people for the number of stores and purveyors of goods and services. The population is not growing except for immigration. This zero or negative population growth is happening in all developed countries. The US is population neutral. It takes 2.1 children per family to maintain a population and 3 kids per family will grow a population absent war, disease or pestilence.
Virtually every economy in the world is built on the assumption of population growth. Uh-oh. Trouble is looming for the future in all developed countries, including Canada. The U.S. is in better shape than most. There are countries in Europe and Japan that will have 1/3 to 1/2 fewer people by 2050.
The reality is that the US needs its immigrants to grow.
The buying binge the country went on by using home equity is gone. The re-financing of homes twice a year to buy toys and take trips is gone. Home Depot and Lowe's grew fantastically during these binge years. Now that the home equity based ATM spigot is turned off, they have lost as much as 35% of their sales volume and up to 60% of their profit.
The population of the US that is affluent is mostly boomer age and older. The problem is that these groups already have plenty of stuff. There is a limit to how many cars, televisions and the like one needs. So the very group that could afford to buy now is not purchasing. If anything, consumption is down in this group.
Conspicuous consumption is now totally un-fashionable. So much so that the stores on Rodeo drive in LA now deliver the high priced goods and clothing to the buyers home rather than the buyer be seen carrying around a bag from Gucci or Prada or the like.
So we have a population that isn't growing and we have those who could buy holding off. Bad for the economy in general.
But good for you!
Okay, Charley. Just tell me.
I agree.
Two factors are going on that can tip the scales in your favor. They already have for me. In just the past two weeks, I have had three patients say yes to very big cases. Two were in six figures. The other was in the high eighties. One prepaid, the other two put down deposits.
These two factors add up to create the phenomenon of Thoughtful Spending.
So what are these two factors and what is thoughtful spending?
Factor one: When times are tough, the decision to buy is based more on what really matters.A second but paradoxical decision to buy is based on pleasurable small items and vices – alcohol sales are likely to go up as will lottery playing. To some degree, "sinful little things" sales will increase.
One's health and teeth qualify in this category of things that matter. People look to spend from the stand point of "what is in it for me." Self-preservation moves to the top of the list in times like these. "I will invest in myself "is the thought.
Factor two is the dearth of predictable places to invest one's extra money. The stock market is likely to go down further – maybe to bottom at 5,000. The real estate market is in a long term slump that could last ten years. Capital is setting on the sidelines, looking for a place to go.
Thoughtful spending is the decision to spend money where it can have the best effect in these uncertain times. The affluent are looking to spend wisely. Where else can they spend their dough? The thinking goes: My health and longevity are important. Getting my teeth fixed and healthy can help me live better and longer. And that is valuable.
Right now, the low end of the market is doing well as shown by the surge in McDonalds' and Wal-Mart sales and profits surging ahead. Those are not the places we want to be.
The middle of the market is in real trouble. The mid-priced franchised restaurant business has seen declines of 30-50%. The middle markets of most things are in trouble. Middle market dental practices have been hit the most in this economic downturn. It will get worse. Being "just another dentist" is starting to look like a real disaster.
The high end of the market is still spending money. The way they are spending though is based on thoughtful spending. That is good news for us. Most dentists have considered their competition to be other dentists. Not so. It is all the other places of what the public considers discretionary spending. Since those spending places are now thought as un-necessary, this is your golden opportunity to bring your patients up to speed about the value of dentistry to their health, looks and longevity.
Even demographics are working out for us as the very population with the most needs is growing. Awareness of health and longevity issues grows. People want to keep their teeth for their lifetimes. They want to live full and complete lives.
See, the truth will not only set you free. It will give you big profits in these uncertain times…if you capitalize on it.
This leads to "how do I do this?" that is the subject of your next conference and next week's message. Does your marketing and case presentation need to change? And if yes, how? What other opportunities will come along? Are you ready?
Best,
Charley
P.S. You definitely want to be at the next conference. I will go over what I have changed to get these big cases to yes in these tough times. Case presentation is definitely part of this. Move heaven and earth to get here. It very well could change everything for you and at least prepare you for the coming changes so you can prosper.
Copyright 2010 Charles W Martin
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