The Initial Reactions
Despite the mixed feelings about Brexit for dentists, we are on our way to exiting the EU.
The initial reactions were pretty considerable, and the drop in the pound value has not shown any sign of a strong recovery – yet. Dropping from a pre-brexit value of around $1.55 to around $1.31 as I write this guide.
The appointment of a new prime minister, whilst helping ease the uncertainty, is only the first of many changes we can expect to see over the next couple of years.
We expect many changes to arise as the UK exit’s the EU, some will be imposed whilst others will have to be negotiated with our European counterparts.
Almost all small businesses will be impacted by Brexit, but rather than consider Brexit as a disaster, I would urge you to look for the opportunities, as I anticipate there will be many for those shrewd and sharp enough to find and seize them.
Now more than ever, Darwin’s theory of evolution applies to those going through Brexit.
“It is not the strongest or the smartest that will survive, but those that can handle change.”
Following this section are some points to consider when trying to grow your business in this fast changing economic environment.
The Squeeze on Margins
One of the immediate effects of Brexit has been the weakness of the pound.
Overnight the cost of purchasing anything not denominated in sterling has increased by approximately 15%.
Whether it be a dental chair, materials, overseas laboratory costs, it is likely that if you are buying direct from overseas you may have seen an impact immediately. If you are buying from a UK based company who imports such items, whilst a price rise may not have occurred yet, if the pound stays at such levels, it is quite likely that prices for items you purchase which are imported in to the UK will rise.
The question you then have is, do you absorb the costs and accept a reduced margin or pass the increase onto customers. In the short term it is likely that you may be able to absorb the cost rises, however, longer term these cost rises may need to be passed on via price rises to customers.
I feel the impact on margins and profits will vary from practice to practice, so please seek advice from our team if you need to discuss a suitable strategy.
Whilst fear maybe perpetuated by the press, this is not something you, as a business owner should yield to.
You may feel it is safer to sit on your hands and not spend and wait for things to happen, but invariably your smarter competitors may see this as an opportunity.
My advice, is review your future investments, perhaps cut back on some but most definitely go forward with some gusto to keep growing your business.
For those that keep a focus on growth, I am pretty certain that they will be winners out of the changes Brexit brings to the UK economy.
Building a business made out of bricks and not hay
Brexit brings an opportunity to strengthen your business and perhaps change to the differing economic conditions. I would urge you to sit down with your advisors and think about what you need to change and focus your efforts on.
Higher value cosmetic treatments may not be the thing to market, but in fact run of the mill high quality general family dentistry. Your patients maybe feeling the pinch, so re-design your offerings so people still want to come and visit your practice, ensuring a regular stream of income in your practice.
Leaders are made not born
I am a huge advocate of taking the bull by the horns. Your patients, your team may feel worried, it is your opportunity to lead from the front and lead them to a positive future, one that is promising, exciting and one that shows you care for them.
Whilst you may feel this time of change is challenging, your leadership skills are now needed more than ever to show others the path.
In times like these, you may need to make some difficult decisions, and be decisive. This is your opportunity to shine, and take your business forward.
Planning for the changes
The press have already reported some larger businesses are already looking to move some or all of their operations to mainland Europe.
However, for most small businesses, including Dental practices, this is not a choice you have – I cannot imagine most of your patients flying to Spain to come and see you!
As a business leader in these times, you will need to continuously adapt to the many changes occurring, the changing regulation, administration and fluctuating markets – in such times you will need to be stoic, agile and most definitely demonstrate true British resilience even in the face of adversity.
Now more than ever, a stiff upper lip is needed.
Protecting your team
In the last few years, we have seen many EU and non-EU migrants enter the Dental workforce – Dentists, as well as Dental care professionals. Many of the larger Dental corporates rely heavily on EU national dentists too.
In my small team alone, I have team members from across the world, something that makes a great working and team environment.
In my opinion, this is one of the huge benefits of running a business in the UK. Without my team, my business would not be where it is today, likewise, many of our clients value their teams enormously and go out of their way to protect them and their livelihoods. I have yet to meet a business owner that does not take their responsibility lightly when it comes to ensuring their team are paid and looked after each month.
Don’t forget, people are what make a business.
Whilst it may be a little while until we know what the changes of status will be for those EU nationals living and working in the UK, I think we should refrain from any knee jerk reactions.
Without doubt, the UK economy has already been impacted by Brexit. The housing market has stalled with the number of transactions occurring dropping significantly, and the weakening of the pound has seen overseas companies look to buy good quality businesses in the UK on the cheap – for example Arm Holdings.
The most recent recession of 2008 is pretty clear in most business owners minds, so most owners will feel they have a pretty good idea of what they need to do in these times. Being prepared, confident and leading on the front foot will be what most business owners will need to be doing.
The Bank of England’s recent drop in interest rates to 0.25% above base rate is an unprecedented act to try and stimulate the UK economy. It’s quite likely that we may get a further cut to try and stimulate the economy further.
In addition, the Autumn statement from new chancellor will in my opinion, be less pro –enterprise, so some tax rises may well be there.
Planning an exit – Is it time to sell your business?
I have always advocated, always be ready to sell your business. Whilst some people may want to grow their business further in these times of change, it may also be an opportunity for others to seek new pastures and sell their business.
Your personal circumstances may change, or someone may come knocking at your door with an offer you cannot refuse, or the changes likely from Brexit may be an opportune time for you to think about hanging up the drill.
This maybe the perfect time to sell your dental practice. The key will be to get your house in order, and plan how you are going to maximize the sales value of your business.
If selling is something you are considering then seek advice from our Practice Sales Experts.
Your Brexit Strategy
Procrastinating and waiting for what will happen is not a strategy we advocate.
Being proactive with your team and clients is key in this environment, rather than waiting to see what happens. We have listed a few key action points we think you should consider in light of Brexit:
- Safeguard your team members and inspire them to success
Your team are critical to your success. Helping them in these changing times will reap rewards in a massive way. Lead them in the direction you want to take and inspire them to help you achieve your business goals.
One of the key reason’s cited to leave the EU was the red tape. Whilst in the short term we expect this to actually rise, we would recommend you are fully in compliance with all legislation and you have a plan to manage the many changes we expect to see.
- Put a growth plan together
Review your performance, see what has been working thus far in your business, then write down some specific goals you want to achieve, and put a simple actionable business plan of what you are going to do to achieve those goals.
- Review all agreements and funding
This is a perfect time to review all agreements in place, and your current financing arrangements. As interest rates fall, it is quite likely you could re-negotiate better terms for financing.
The vote has happened, and there is no turning back, so embrace the changes Brexit brings. Your emotional state and attitude play the largest part in success in business, make sure yours is strong, and ready to face the changes.
Brexit for dentists: How we can help
Building a Healthcare Business: Further Information
To find out more about building a successful healthcare business, check out our Learning Centre, full of articles and webinars covering how to buy, start, grow and sell a medical health company, or book a free, no-obligation consultation with one of the team.