Why do some businesses fail?

Kevin from Rose & Co gives advice on the dos and don'ts to prevent your dental business failing

Why do some businesses fail?


Well, beyond the quick answers such as not having enough patients, spending too much money and the ever increasing costs associated with legislation and compliance, is dentistry fundamentally different from any other business that is exposed to market forces, to supply and demand?

It’s tempting to say that it is, let’s face it dentists are subject to prejudices, bad press in the tabloids and the broadsheets and lets not forget that once upon a time dentistry was a free service for many, at least in the eyes of your patient’s anyway. Quite a lot to wrestle with then and for some it’s time to “hang up their loupes and sell out” as one dentist told me; but does it have to be that way?

For every story of decline, I’m having at least four conversations that are very positive, discussing year on year growth, full books, reduced reliance upon the owner to be the fee earner and dental teams that are taking ownership and responsibility. It’s not all doom and gloom and when you strip it right down, if there are 60 million people squeezed into one small island, all of whom have teeth at some point in their lives, why should it be doom and gloom?

Industries and professions have and always will go through phases. Dentistry is no exception to this and for every reason to believe that dentistry has become a victim of too many external factors, there are plenty of equivalents outside of dentistry and examples of businesses that have thrived rather than adopting (as my colleague Sheila Scott puts it) a “poor me” attitude.

Of course, we shouldn’t dismiss any of the challenges that dentistry faces or believe that a happy clappy attitude is going to make everything go away. But at an absolute fundamental level, why is it that some businesses simply don’t attract and retain enough of the right type of customers, sufficient to cover the bills, pay their taxes and have something left over?

In short, the answer is simply that too many business owners look at their businesses from the outside in rather than from the inside out. Let me explain.

Most businesses owners focus simply on what they do and how they do it. If you are in the business of providing something that isn’t that different from your competitors and is delivered in a similar way and at a similar price, then how is a customer meant to decide? Why would they choose you unless it’s simply a price based decision and you happen to be the cheapest?

You might get lucky by having a great location, a short term opportunity to differentiate yourself through your promotional activities, a new supplier that allows you to cut your prices and keep your margins in the short term, but in the end none of this is a reliable strategy, not when what you do and how you do it can be easily replicated and copied. Some businesses rely upon a get in fast and make a quick buck approach but I don’t really see how this can work in dentistry either.

Where I agree that dentistry is different is that it is very intimate. To be invited to put your hands into somebody else’s mouth, to be invited to put somebody in and out of both physical and emotional pain and to be invited to put somebody in a chair whilst you shine a bright light in their face, whilst you wear a mask and wave instruments of torture in their face, surely requires more than just a good website, prices and telephone manner? Add in the prejudices that you are up against and the antipathy towards the profession that is promoted by newspapers, stand up comedians and even at an early age from the parent’s of the people that you want to help, and you might even question why you become dentist in the first place.

So what happens when you look at your business from the inside out? In short, you get business success.

From the inside out, your business will look very different. From the inside out, well before you consider what you are going to do and how you are going to do it, you will think about why you are doing it and why your business exists.

It’s what the most successful businesses have always done. That’s why value investors trade long term in the shares of businesses that are fundamentally solid, not just in their balance sheets and EBITDA but their principles, purpose, creativity and ideas. It explains why the value of a business falls in the open market when any of those foundations are challenged. It explains why the tax policy of Starbucks in the UK changed the behaviour of those that would otherwise buy their early morning coffee fix from nowhere else…it was never about the coffee! Conversely, it explains why Apple has queues of people camping out at their stores overnight whilst Phones4You shuts all of theirs…it was never about mobile phones.

At an absolute fundamental level, the decision that somebody makes when they choose to become your patient is a feeling that is then rationalised by amongst other things, your website, prices and telephone manner. In other words your patient’s start with WHY before they rationalise what you do and how you do it. That is why an inside out approach works, because it positions your business exactly the way that you need to for your patient’s to make a decision that isn’t just about whether you are bit cheaper than the bloke down the road. If your WHY is in question and for that read TRUST when it comes to dentistry then good luck with with the small degrees of separation between you and your competitors, you will need it.

We all make purchasing decisions from the inside out, it’s hard wired in and it explains why building your business from the inside out is the only credible option in the long term.


  • Dhru
    Posted at 23:23h, 16 September Reply

    1. The photo of phone4u is relevant to this blog post and very topical in this weeks news . So well used. However, how many businesses have their 3 biggest suppliers cut off contracts one after the other in a period of 6 months. Boom!
    So how does it relate to this topic ..since the picture is up there, what would have been the “why” for phone4u and how would they have used this “why” to overcome this challenge ? What lesson can we learn that can be applied to dentistry ?

    2. Sometimes you have a very very strong “why” in a business. So strong that you deliver it as a passion. Yet the business doesnt work . People buy into your why, infact people look at your business and say what a great idea , but never part with the cash. I have seen businesses with that example. So where did they fail despite delivering the message and having a solid solid why
    I am in the business of top level patient care,,,thats all that matters. Making patients feel special, wanted , informed communicated and involved. My approach needs 2 hours for a consultation. How many patients will pay 250.00 for a consultation ?

  • Kevin Rose
    Posted at 12:46h, 18 September Reply

    Thanks Dhru, good to hear from you.

    As the original founder has said “it will take ages to untangle what has happened”.

    I did pause before I posted this blog, and in partiucular becuase of the picture and the implied link to Phones4U. Clearly this business was not able to surivive losing O2 and Vodaphone earlier in the year and most recently EE. You can have all of the values and whatever else in the world but if you haven’t got anything to sell then it as you put it BOOM! I suppose the question that we really need to answer is why did these companies pull out in the first place? Of course there was a change in ownership less than four years ago when a private equity company purchased it. They will have only purchased it for one reason of course, to make a return on their funds and there is nothing wrong with that but perhaps the expectations of the new stakeholders were different from when this business was foudned in 1987? Had the business moved too far away from it’s original purpose, and lets face it, there were hundreds of independant phone stores back then and in the early 90’s of which few survived, so Phones4U must have got something right to have been sold for £600m less than 4 years ago.

    Have the suppliers pulled out because the relationship with Phones4U was profitable, was operated in a way that was consistent with what they expected, I doubt it. Or have the expectations of the private equity shifted the focus away from what it did once thrive upon? Let’s also not forget that the main suppliers could have just chosen to take further control of their supply chain and retail distribution network? On balance, it just seems bizarre when in the same 7 days we have another round of global hype for Apple and Phones4U dissapears from our high streets!

    With regards to your second point, all very valid Dhru. A great idea, passion, values and all of the “new paradigm business” stuff does not negate sensible pricing and a sound business model. I can’t give you an email diagnosis any more than you can check the size of any pockets in my gums without taking a further look. However, as you well know, I have a client who is making similar numbers work. I don’t think fundamentally that anybody would pay for a £250 consultation until appropriate expectations have been agreed. My guess and it is just a guess for you Dhru is that somewhere further back in the decsion making process there is a blockage with regards to communcating how you will help them (and I know that you are capable of doing that). Feel free to give me a call if you would to discuss this further.

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