Wednesday, June 9, 2010

Isn't working with family great?

Hey all,

First I wanted to tell you about that Remember I told you that they claim to get up to 50,000 hits on your website in three months.
I told you that in 2 years I have got 3500 hits to my website.
Well in the two weeks I have had this company, I have had 4000 more hits to the site.

Are you kidding me? What the heck?

I asked my people up front if they are seeing the phone light up more because of it or if people are calling saying they are they saw our website.

They say NO.

So 4000 hits and zero calls. Now maybe that is a product of having a website that doesn't have a lot of flair or zing. But I have to tell you I am pretty surprised at the results.

Now they talk about getting hits from the three zip codes you desire. Are all the hits coming from my area? I don't know.

Okay I am not going to get into all the gory details but I want to talk to you about some of the stuff that is going on with me and my partner, my dad.
This may turn out to be a series because it could get pretty involved.

Let me back up and give you a brief summary of the past.
I, young and dumb, got out of dental school in 1995. I became my father's associate for 2 days a week. I worked at other offices for about 3 years as I built up my (our) practice. At about 3 and a half years out we felt the space we were working in was.

At the time my father was leasing out space that was attached to his office to an MD. He was on a month to month lease and knew the end was near. My father told him it was time. He left and we had the office renovated to what it is now - 8 rooms and about 3400 square feet.

I was still an associate at the time and I stayed that way for more 4 years. I was asking to be able to buy in since about year 2 but it wasn't ever "the right time" for my father.

In 2003, 8 years after I graduated, I bought into 25% of the practice, and in 2005 I bought in 25% more. And I kind of talk tongue and cheek about it being the "right time" for my father but that is the way it was.

By the time 2003 came around our office was humming along pretty good. I was making an associate's pay, which I think was 30% of my production, and that was it. I was involved in the employee bonus pool. Now my father and a lot of his colleagues have this practice and until they have to retire.

Now I am not talking bad about him it just is what it is (or was what it was. He put 5 kids through private school from kindergarten to 12th grade. Then he paid for 4 of us to go to college. That, folks, is a ton of cash.

So, he is 60, the office is humming along, he is finally making a ton of cash, finally putting money in his 401k as fast as he can, funding his savings account, he even bought a new house, and I come to him and say, "It has been 8 years I want to buy in".

And he says, "it is not the right time".

Let's not forget that practice was part of his retirement plan. So giving it to me was totally out of the question. He needed the money to retire.

And you thought it was easy working with a family member.
I totally can see his side of the coin, but like any associate that has been promised the office, I wanted mine.

He didn't want to let me in. I thought about leaving but only in thoughts. He has been good to me and I really did have a lot and was doing fine. What we are talking about is a guy making $150,000 and complaining. I wanted mine. But you have to admit that being an associate for 8 years is a long time.

Now lets talk about the buy-in. I talked to friends and there buy-in looked like this:

No cash exchanged. The agreement was that if the associate had production goals and if he met them the owner would be making a certain amount of money. And he kept his production up for the allotted time that was enough for the owner.

I asked my dad about this and he said, "YEAH RIGHT". Okay, maybe that was asking too much.

So I asked him if I could buy in and he hold the note. He says, "Okay let me get this straight, one day we sign some papers and you are 50% partner? So you get all the benefits of owning the practice but you haven't given me any money. But you are going to pay me over time." NOT GOING TO HAPPEN.

So in 2003 I went to the bank and asked them if I could borrow money to buy the first 25% of the practice. And in 2005 I did the same thing. I am now 50% partner.

So like all old school guys, and I don't recommend this, everything was kind of on a hand shake. We didn't get professional help when it came to a transition. So now we are partners but we don't know a thing about the details. Such as payment. So we make it up.

Lets both get the same amount of pay and if the production is ever swayed way to one side we would talk about. Not real precise is it?

Now as you can see that was a disaster waiting to happen. One of the main issues was the changing of the computers. In 2006, we changed management systems. When we changed my father became the provider on all patients until they were manually changed. And we felt like we were changing the provider over to me most of the time until you would look at the day sheet and it would say that my father produced $1200. No problem except that my father didn't work that day. So you know things were not all real precise. And we are still working on this.

So at the end of the first year the difference was 8%. Knowing that the numbers that we were getting are not that accurate and it would be a small nightmare to figure out the correct number we decided to just get paid the same. Same salary, same bonus.

At this time, though, everything was even. We both worked 4 days a week, we both took the same amount of time off, we both had about the same amount of patients, everyone was healthy.

For the next couple of years he would out produce me but it wasn't that much. 8%, 3%, 3%, 8%. During the years he started to work less but still kept up his production so it wasn't that big of a deal.

Now don't get me wrong, he is 65 years old and he deserves to work less. I am excited for him and I want him to take time off and travel the world. I want him to be able to take the time off and throw a dart at the map and say, "This is where we are going this weekend."

Last year, totally different story.....he took 7 weeks off and he only works 3 days a week. And I out produced him by >20%.

The tide is turning and we haven't talked about it.
And the things we did talk about he doesn't remember.
I think it is time to call in the professionals.

Anyone going through something like this? Or did you start as an associate and have everything written down?

See you Friday,


Anonymous said...

I feel sorry for you. No matter what you do it will end badly and feelings will be hurt on both sides.
I strongly suggest you both agree on a number and buy him out NOW. He can then work as an associate based on production. You can supplement his income buy making payments on the buyout. It will be better for him in taxes if he takes it yearly in payments rather than at once. It is better if you pay him all at once.
No matter how much you pay him it will never be enough and he will resent you for taking HIS practice away from him and kicking him out the door. I believe you have a step Mom and she will make it even more difficult for you. Heed my warning and cut the ties ASAP.
Seen what happens in this type of situation before. Let me know if it gets serious and you want to talk.

Anonymous said...

I was in somewhat a similar situation, having associated for almost 9 years with 'a couple of buddies' of mine. I actually started the practice appraisal process and as I had to buy in to two offices (they owed two and I worked at both) it took a long time to get the details and numbers right. In any case, we realized at the beginning that any number we agreed upon was going to be too high for me and too low for them. I felt that how could I have to pay an elevated fee for a practice I helped build -- but in reality I was compensated handsomely for that growth as an associate. I paid their price. We are now partners (myself and another associate who is a close friend of mine bought 25% of both practices together) for almost 5 years and things are fairly smooth. We divide everything by 25%, even though we don't always bill evenly as we don't want any destructive competitiveness between us. None of us are greedy. But our purchase, sale and all other clauses were iron clad. I would strongly advise you to get this sorted out by the professionals or else YOU will ruin this relationship inadvertantly.

Just my two cents, good luck.


Anonymous said...

I know someone who paid his Dad 1 million dollars for the practice. The Dad still to this day thinks he gave the son the practice and that the son kicked him out the door.

Anonymous said...

aaahhh.... biting the hand the fed you will always end badly... ungrateful brat is what I see JMO

gatordmd said...

Brat? Brat?!!!
Come on, I can understand how you might disagree with me but I don't think I am a brat.
I think I am telling you this story not to make anyone look bad and be mean spirited...
I want to communicate with my dad in a way that is fair to both of us.
But I think not communicating is like putting our hand in the sand.
And I also don't think I am biting his hand.
I appreciate everything he has done for me and the practice. I think he is a pillar in the community, in my life and his grandkids life.
I just want to talk.


acne treatment said...

My dad was also a dentist but his love for teeth never run down in our family. I am in line with computers and businesses, my sister on hotels. We miss him actually. It's been 17 years since he left the earth to be with the Creator. Well, just sharing since you talked about your dad. You reminded me of him.


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