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Increasing your business’ profit margin can be an incredibly difficult task – especially when you’re juggling bills, chasing down accounts payable, and working to develop your staff to their full potential. Well, we’ve had some time to experience the highs and lows of business ownership, and this post is our step-by-step guide to earning more while doing the work you love.

How to Increase your Business’ Profit Margin in Under One Year

But first – A MikedUp Blog Original:

“We’re on track to come up about $20k short…” As I said the words to my business partner, she was understandably irate.

“Excuse me? $20k… That’s a lot of k’s!!!”

You see, there are great advantages to being in business with your spouse, but explaining the fact that we are about to be broke and maybe not make payroll in three months – is not one of those benefits.

How we almost became broke business owners

June 30, 2017, was a monumental day for celebration in our family. We had succeeded in navigating the gauntlet that was buying our dental practice . But it wasn’t a spring day’s walk in the park to get there.

There had been a multitude of hurdles, fire pits, and sinkholes placed before us.

At first, it was finding a price that was agreeable to both sides. Which is not normally a difficult thing to do in the dental field. There are variables, sure, but most sale prices are within an industry-standard range that’s based on how much money the practice generates.

Straightforward, right? Not so fast!

Then, once a price had been agreed to – we ran into trouble with the landlord. And ultimately we couldn’t secure a long-term lease where the practice was located. By itself – not a deal breaker. But couple that “lack of lease” with the fact that the bank needed to know we’d have a secure place to do business for at least 5 years… And we had ourselves a bit of a pickle.

I found myself renegotiating the sale price with the seller who wasn’t interested in budging in the first place. But luckily for us, they did realize that whether the practice sold to us or to a different buyer – it was ultimately less valuable because it would need to be moved.

We were able to cut the price by a third. A crowning achievement, but…

Moving a dental practice is incredibly expensive

In the 30 days leading up to the sale, we had found and hired a broker, located an awesome new location, struck up a negotiation with the new landlord, and got very close to signing a lease. With about 5 days left until closing, we hired our contractor to build out the new location and they started drawing up plans.

With 4 days left, we finalized equipment orders for the new location, hired a moving company, coordinated our dental suppliers, and ultimately bribed our friends, family, and staff to help when the time would come to move.

And (I’m laughing as I type this) with 2 days remaining the negotiations came to a stand-still.

While multiple tens of thousands of dollars rested on the fact that we needed a new location and had roughly 40 hours to get the deal done – I lost every bit of leverage I had with the new landlord. If you’re not familiar, losing leverage during a negotiation can be crippling

We ended up getting the deal done with a few hours to spare, but the leverage lost on my part equated to dollars gained on the part of our new landlord…

But at least we were back in business!

If you’re keeping track of all the added costs above to move our practice, those costs quickly doubled the discount we had received on the sale price of the business. And before we knew it, we were underwater on the combination of our business loan, the build-out loan and all the cash we were hemorrhaging to lawyers, contractors, suppliers, and to our business to keep the place running.

If things didn’t change quickly, we were on a course to run out of money

The good news for us, though, was that we had 8 whole months to stay in our old location while the new one was being constructed.

There was certainty in what expenses we would have when those 8 months were up, but the one major variable in this equation – was income.

With the added expenses barreling toward us, I knew that we needed to increase our profit by about 15% in those 8 months to break even. If we lost traction or even kept our then-pace current, disaster was right ahead.

Now that we owned this dental practice we had every potential tool at our disposal to get more patients in the door and start earning a higher profit. It was an awesome freedom to have. But the dichotomy to that benefit was that we had zero room to make any mistakes. 8 months is not a lot of time to increase profit by 15%.

With the goal identified and in sight, we needed a comprehensive plan to grow our business’s profit margin quickly… And it 100% HAD TO WORK.

Join Over 2,100 Other Team Members! Learn valuable skills to build wealth, achieve a higher level of fitness, boost your business' profits, and more... All in support of a healthier YOU! By signing up you agree to receive regular emails with exclusive content, deals, and more! Unsubscribe at any time - and it is my honor to NOT SPAM your inbox (I promise) This is that plan: Step 1- Keep or hire the right people We knew that with the way we wanted to do business, we were only going to be as good as the team we had around us. With that in mind, there were multiple levels of determining who exactly was a “good fit.” First off – every position in our office has a minimum level of either education, qualification, or certification that is required to do the job. That was “filter 1”. And that was literally half of our battle. who constitutes a good employee was – their attitude. We were only interested in The only other half of the equation that we used to determines. We were only interested in the driven individuals that gave a damn about the work they were doing. If they didn’t want it bad enough, we didn’t want them on the team. We started with the employees that we inherited and evaluated each and every one for whether or not they showed the potential to buy-in. Luckily for us, each of them did. However, we knew that in order to grow in profit, our team would have to expand to support that growth. We needed to hire. This became one of the most difficult and arduous tasks of getting the business set up in the first place. We needed to hire and avoid anyone jumping ship and delivering their 2-weeks notice This became one of the most difficult and arduous tasks of getting the business set up in the first place. On one hand, we needed someone in the door quick. But on the other, we couldn’t afford to hire the wrong person. To do that could disrupt our cohesion, hold us back, and ultimately bankrupt us if the situation had gone badly enough. No. That wasn’t an option. Our hiring process consisted of a minimum of 3 different interviews This wasn’t the norm for the types of positions we were hiring. So a vast majority didn’t make the cut. We interviewed more people for a dental assistant position than maybe had ever been interviewed before. And as the days turned into weeks, our employees continued to work harder and harder because the business was picking up but we didn’t have the extra hands to help out. So we bribed them with lunches, gift cards, and good ‘ole fashioned parties until finally – almost a month later – we found the final piece to our staffing puzzle. And as we’ve continued to grow over these last 14 months, that core group has remained with us throughout… Just with more new team members hired around them. Each one having gone through the same multi-step interview process. And because we were so diligent on the front end with hiring, we were then able to prepare for success with Step 2: Step 2- Institute extreme ownership with our Team Extreme Ownership: How US Navy SEALs Lead and Win is a book that’s made a tremendous impact on me and all the things that I have influence over. Myself , my family, our business, the relationships I have with friends and random people I meet. Everything. I first read this book about 2 years ago, right when our business purchase began. And for me, this book was one of those, “Just one more page…” and then the next thing you know it’s 4:00am. I couldn’t put it down and as the chapters and main concepts continued to build upon one another I started to see The Way – and understand what Extreme Ownership truly means. I’ll have much more on this book in the future, but for this post, just know that it was very influential to me. As I finished reading through Extreme Ownership the first time – I decided the book would be our business’ onboarding program That night, I ordered a copy for everyone on our Team. And when I handed the books out to our (entirely female) staff 3 days later (thanks, Amazon 😉), I got some concerned looks. My Team told me later, “When you handed us the books, we were pretty skeptical. We thought this was a very ‘Mike’ book for us to read, and didn’t think it would be any fun to do.” But I’d like to think that I had built up a little personal capital with the team in the short time that we had known each other… So they gave the book a chance – reluctantly. From that point on our days were spent growing the business and at night I’d cycle through 1-on-1 phone meetings with the Team. Discussing one chapter at a time with each employee individually. After discussing Chapter 4 (Check the Ego) four different times over 5 days, I thought I had taken everything I could from the book. But then we would hire a new employee with a new perspective and I’d learn something completely different from the same words. The process was incredible for our team and for me as an individual. A problem would come up at work, and someone would reference the same problem that we had all read about a few weeks ago. Then, normally with a single sentence spoken, everyone would know what the correct remedy for the problem would be. Our Team fostered a unified vision through instituting the principles extracted from this book. What is Extreme Ownership? I’ll let you get the book to receive the full context but to me – Extreme Ownership is taking full responsibility for your life. Responsibility for the goals you set for yourself, the problems that come up, and the solutions you put in place to overcome them. Extreme Ownership is taking a bold stance to get the most out of your life – and it’s the culture we instituted in our business In talks with the team a year later they all echo the same consensus to me about the book review process. “I’ve taken so many things from this book and applied it to my personal and professional life. It’s made me a better version of myself.” Business growth or not… The above is good enough for me. Step 3- Design every aspect of the customer experience Now that we had the right people and we all shared the same vision, the task was to channel that into providing the best experience for our customers. We took a painstaking approach to design every aspect of how we would interact with our patients. How would we communicate with them, what phrases would we use, how should someone feel when walking into our office, what would it smell like, how would we treat them, and when they left – we wanted to make sure they felt a part of our family. I don’t care who you are, you can’t fake that You can’t just want someone to feel completely comfortable in your business, you have to design it, institute it, and actually believe it yourself. Straight up – you have to actually care about these people. And then you have to care for them. We put ourselves in the shoes of the patient and decided what that would look like – then we did it. Anything was on the table. And as we’d bring patients in, we’d see some things working well and others not so much. Then we’d adjust course and continue moving forward. Eventually, we found a great template of what works best for us, in our area, with our patient base. You have to decide what your customer wants, then give that to them. Step 4- Get the customer in the door It’s all well and good to plan to treat someone incredibly well, but it’s another thing to have the opportunity to do so. We had some major holes in our daily schedule. So our #1 goal was to get more people in the door. To do that we hired some professional marketing help. With some “big guns” in our ranks, we first took a look around to see what our competitors were doing As I assume may be the case in many industries, we saw a spectrum of results. There were some new businesses crushing it with their online presence, some more established folks that weren’t very present online, and everything in between. We also saw billboards, direct mail campaigns, and local partnerships with other businesses. We didn’t have the budget to make a significant mark by sending out mailers so we decided to focus on 2 main things: Personal referrals and online presence (via Google, Facebook, and through our own website) Because we had focused so hard on Steps 1-3 above, generating referrals wasn’t too difficult The majority of our patients loved us but the only issue was that there weren’t too many of them. I knew that this approach would pay in multiples over the long-term (which was great) but we also needed some people to fill our appointment times for the coming days. To get people in the door ASAP we attacked with an aggressive online presence This is where the marketing team came to play. They coordinated all of our online business listings across over 150 different platforms (think Google, Bing, Yahoo, Yelp, …) to make sure our information was accurate… This was especially important because of the upcoming move. Yeah, 150 listings – I was surprised too. We also fine-tuned our website for SEO (Search Engine Optimization) so that we would be found when a prospective patient searched for, “Dentist near me,” or, “Tooth pain,” for example. I went to work on the Facebook page and made sure that we were interacting well with our patients and community. With all of these tactics (and a few more) working toward a common goal, success was bound to follow soon – right? Well, for the first 3 months we had some steady growth… But nothing earth shattering. Think 3-5%. The marketing team kept reassuring me that SEO took a few months to take hold and that the traffic would come. I hesitantly believed them as I poured over our financials wondering what in the world we were going to do. We literally needed to come up with a high 5-figure number soon – or we’d be in trouble! It was in month 6 when we noticed that the phone started ringing more often. Then more patients came in the door. And as we received more patients, that foundation we had set months before got to show its best stripes. The majority of people continued to love us – and now they were growing in number Step 5- Perform better than any competitor your customer has used It wasn’t enough to set our process early, design the customer experience, and just coast. No. We needed to find out what the competition was doing, decide if that would work for us, and then do it better. We monitored our mailboxes for mailers, dissected websites, and talked to friends in the area that had been using competitors for a long while. Finally, we asked our Team what they had learned working for other offices in the past. As all of these inputs would come in, we’d examine, filter, and implement. Then we’d monitor the progress. This approach helped us build on the foundation that had been set. And as our plan began taking shape, the positive feedback loop took hold. Join Over 2,100 Other Team Members! Learn valuable skills to build wealth, achieve a higher level of fitness, boost your business' profits, and more... All in support of a healthier YOU! By signing up you agree to receive regular emails with exclusive content, deals, and more! Unsubscribe at any time - and it is my honor to NOT SPAM your inbox (I promise) Step 6- Say thank you and get the customer excited to come back We made a point to thank each patient for coming in. “Hey, Mr. Smith. We know there are a lot of other options out there and we just want to say thanks for choosing us.” Sure, we did that and some patients appreciated it. But that’s not all that I’m talking about. We thanked our patients just like you’d want a business to say thank you – we gave them free stuff! Gift cards, coolers with all the gear you’d need for a cookout in July, holiday decor in November, flowers in May… You name it. If it was in season, we’d have a drawing to give it away. This approach was great for so many reasons The patients got free stuff

We had some awesome pictures of sweet giveaway items to promote across our online presences

We made videos and theatre of the drawings to choose the winners

As the thrilled winner came in to claim the prize, we’d have more pictures to promote of happy smiling patients… It was a constant flow of positive emotions going out to the world throughout the months… And all it cost us was $50-75 for the gift. When prospective customers found us online, they were shocked at how happy we seemed and how positively our patients spoke about us. (We heard that constantly in months 6 and up). Step 7- Ask for an honest review For the first 6 months in business, we simply put the above plan in place and then asked for a review as the patient left the office . Nothing awkward, just, “Thanks for coming in and it would really help us out if you’d leave a review!” The plan was implemented and incentivized like all good plans should be – with free food. For every 10 reviews earned, we would buy our staff a free lunch. How do you think that went over? In that time we earned 50 reviews (48 were 5-stars and 2 were 4-stars) and five lunches. Not bad. In month 7 we started deploying some tech as backup Per the suggestion of our marketing team, we bought a tablet and started using it as our check-in system. Just name, email, and phone number were all that we asked the patients for as they entered the office. Then they were: “Checked In” They would go on with their appointment, leave the office, and resume their lives. And then 2 hours later we sent a “Thank You” text or email asking if they would leave an honest review. This was especially helpful because as our workload increased, it became a little tougher to manually ask every patient for a review before they left. The texts were our safety net – and they brought in a huge catch. During the last 6 months of Year 1, we earned another 100 reviews! 5-stars: 95

4-stars: 4

1-star: 1 There’s one in every crowd, am I right? No, I’m not – I’m 100% wrong!! I received that 1-star review in my email inbox, immediately dropped what I was doing, and started to investigate. I ultimately found out that there was a discrepancy between what insurance should’ve paid for the treatment vs. what we thought the insurance would pay. I had made a decision earlier in the day that was the wrong one, the worst case scenario happened for the patient financially, and then surprise…! They let us know about it. Time to get on the phone and argue, beg, and bribe the patient to remove the review? Not quite… I called to simply admit my mistake and apologize. I put my hand up and said a virtual “My Bad” over the phone. The patient immediately stopped the offensive attack that was planned. And by apologizing up front, I earned some respect back. We talked on the phone for about 10-minutes as I explained what happened, how it went down, and (MOST IMPORTANTLY) what we were going to do in the future to make sure this never happens again (btw – this is Extreme Ownership). Then, while we said our cordial “Goodbyes” the man said, “Thank you for calling to explain and apologize. I am going to go take that review down now.” I hadn’t asked him to do that. I had just simply called to do the right thing, take extreme ownership, and truly care for our customer’s well-being… Edit: 149 total reviews😉 So – Did the plan to increase profit margin and earn reviews work? I’ve been writing the 3.5k words above all about how we created and implemented a plan to increase profit… And I didn’t mention profit once outside of the introduction… An oversight? Not quite. Our philosophy was that if we treated our staff and customers in the best way possible, rewarded and thanked them for a job well done, and then strategically asked for some feedback – then the numbers would take care of themselves. (Fast forward to 3 weeks ago – the day our final round of payments were due…) “I’ve been avoiding this conversation with you because it’s been stressing me out. But I need to know… Are we going to make it?” Monica could barely suppress the “brace for impact feeling” that must’ve been overcoming her body. “You know, if you would’ve asked me this question a month ago, the conversation would’ve been much different. A month ago it didn’t look good. But I made the last payments today, and we’re still in a great place with what we have left over in the bank. We’re gonna be just fine!” (She ran and jumped into my arms while smiling from ear-to-ear! And we twirled as the camera panned upward into the sunset… Roll credits 😉) Back to reality As Monica and I sat down at our kitchen table, finally with this huge weight removed from our shoulders, we went on to do a full mission debrief. I recapped the 149 reviews and the 5-star average that we had earned. We looked at total expenses, overhead, and all the relevant numbers. And when we got around to profit for Year-1, I was so thrilled to report that we had grown by 18.5%. Despite the move, the chaos, the stress, and all the rest, our team had created an excellent plan, kept a unified vision, and ultimately succeeded together. We took a calculated risk that ended up paying off in the positive. 18.5% is not setting the world on fire. But, it’s what we needed in order to earn another year. And for that – we were damn proud. Reader’s Input Have you tried any of these approaches in your business? Or, if you’re on the customer’s side, what’s your opinion? I’d love to hear your thoughts in the comments below! Thanks for reading! If you’re interested in discovering a better version of yourself – whether with fitness, finance, or family – then subscribe below to MikedUp Blog’s FREE newsletter and let’s improve together! I’m glad you’re here. Thanks again and talk soon! – Mike