- The Tortoise, The Hare and the Sins of Success
There is a famous Aesop’s fable about a race between a tortoise and a hare. The race starts and the hare races ahead and soon leaves the tortoise far behind. Confident of winning, the hare takes a nap towards the end of the race and when he awakens, he finds that he has lost the race.
I find myself thinking of this fable often when selling dental practices. What happened to the rabbit in this fable is what happens all too often to dentists in practice ownership. In their final years, many dental practice owners take a metaphorical nap (just like the hare). Sure, they still turn up to work, but, burnt out by years of working hard and confident that they have a successful practice, many practitioner owners (too many) start to perform different combinations of the following business sins of success. They:
- work far less hours per week, less weeks per year
- are far less frugal with expenses than ever before, giving pay-rises to staff well above industry benchmarks and regardless of the fortunes of the practice
- over-capitalise, buying equipment that they hardly use
- don’t chase opportunities
They figure that they are comfortably ahead and that whatever the above indulgences cost, it is worth it because of their increased level of comfort in their practice. They figure that there is enough time left in the race to make it all up.
When they decide that it is time to sell their practices and retire, these practice owners “wake up” to the realisation that:
- they are way behind where they were at their peak
- the above indulgences didn’t just cost them in annual profit, but also in practice valuation and
- they don’t have the energy, time or inclination to rebuild
The result is that what they are able to achieve for their practice has been compromised by fatigue and over-confidence in the final stretch of their career.
There are two main points that any business owner should take from the story of the tortoise and the hare.
1. Keep your eyes on the finish line
When you are looking at selling, buyers will not judge you based on how good you were as a grad coming out of university, or how far ahead of your peers you were at the halfway mark of your career. When you are looking at selling, you will be judged harshly by your performance in the final stretch (the last few years) of your career.
A business owner should exit plan with a vague timeline in mind of how long they will own the practice and pace themselves, so that they can make sure the final years are a close reflection of the practice’s usual ability.
2. The business owner (unlike the hare) has the ability to draw the finish line wherever they want
If a business owner is in the final stretch of their career and becomes fatigued, if they feel like slowing down or taking more time off and are worried about the impact these changes will make on the fortunes of the business… if they see the business’s fortunes deteriorating for other reasons and don’t have the time or inclination to turn it around….they can simply choose to sell sooner while they are still ahead and work post sale in their practice as a non-owner.
The business owner has the ability to move the finish line to wherever they slow down and declare themselves the winner BEFORE they take a nap!
If the hare had this same ability, it could never lose!