Scaling Your Service Business: How to Work Fewer Hours and Grow Revenue with Ruth Mannschreck, DDS

0:00Hi, everyone. On the Builders Podcast, I interview CEOs, entrepreneurs, entrepreneurs, and leaders about building their business and career. And today I speak with Dr. Ruth Mantrek. She works with small businesses, mostly in private practice. Think about care managers, plumbers, dentists on how to work fewer hours and prep their business for sale. And she developed this process for her own dental practice when she had a family emergency. And she details that story in our interview. And now she works with other businesses. I'll call out a couple of previous episodes to check out that are related to this.

0:33Episode 68 is about outsourcing everything for scale. It's a different approach to roots, but it's wrestling with the same problem space about extending your scale. And then a more recent episode, number 87, about why some small businesses scale and others don't. That's with Leslie Hassler. Thanks a lot. I think you're going to enjoy this one.

1:00Hi, Ruth. How are you? Good to see you. Wonderful. Thank you. I'm very happy to be here today. I'm very happy to have you. And you help small businesses, professional service organizations, and private practice, anything from a plumber to a dentist, scale and sell. And we're going to talk about all that. But before we do, there's sort of like an adage I've heard throughout my career about like work smarter, not harder. There's the idea of the four-hour work week. et cetera. And I know one of the things that you've really honed in on is how to work fewer hours in your business, but still allow it to thrive.

1:37And I guess, I don't know if it's fair to say that you sort of learned that the hard way. Yes. I'm not sure I would have even gotten good at it if I hadn't been thrown, so to speak, into it. I had started my own practice from scratch. We had a family. I had two little boys. I was pregnant with my daughter and she had a very traumatic birth when she was born. She was in the hospital for weeks. And when she came home, she had to see eight different doctors every week. And it wasn't an option to just set my practice down and walk away. So I got together with my team and we redesigned everything. We changed our systems.

2:21We changed the way we communicated. We hired different people. we pretty much redesigned everything and we crammed five days worth of production into two and a half days now when you're talking about production just just a level set for the audience this is a dental practice right right and how how big how big was your team at the time when we first started we just had three people um and when we got back up to our original we had five people five people on our team. And we never went back to the five days a week. We grew it. We did our scaling at two and a half days. It was wonderful. Before you talk about the process and how you made this evolution, I'm curious.

3:04So when you went to dental school, do they have any curriculum about this type of thing? They had one class on business administration, practice management, so to speak. But it was only for seniors. It was one semester, no one took it seriously. And I was one of those that did not. I sat in the background, read the newspaper. I was not paying attention. I had no idea. But dentistry is blessed with some really great practice management consultants. And when I saw that I was over my head, which was way before we had trouble with the practice. I just went to one of them and said, okay, so I guess I need to learn how to run a business, you know?

3:52But yeah, we're other companies that I work with. Other trades are not so blessed with support from their associations as far as how to hire, how to do, how to do payroll, actually, how to, what kind of software do you, all those things. They just don't have much support. So I see a big need for how to efficiently run a business. Could you talk through some of those things, whether it's the first few weeks when you realize, wow, I've got to clear my schedule? Or as you were like, how did you actually develop this process? I have to talk about my team. My team is the reason that we made it work.

4:34The first thing we looked at were our systems, our operating systems. And we started with what I'm going to call the patient experience. So it starts with the first phone call, like who takes that first phone call? What do they say? How do you want your patient to feel or your customer to feel from that very first phone call on to scheduling their appointment, figuring out what work they need done, delivering services. And then in the dental world, we call it recall, where we bring them back up again and have conversations with them or procedures with them on a regular basis. Every company does that.

5:12They have some kind of a recall system. And that was the first process that we put in place was who's going to do each step of that process? Who's going to do it? Who's responsible for it? How do you communicate to the other people in the office? And the new one that we had never had before was how do we want our customer, our client to feel at each step? Because as your listeners probably know, most people that go to the dentist really don't want to be there. So we're dealing with very stressed people on the phone. And their feelings, their emotions are hugely important with how we handle them with kid gloves through the entire process.

5:59So that's where we started. It's interesting that you started with patient experience because I can imagine being in a situation where I need to condense my time or reshuffle my schedule. And I'm not sure I would go to the patient experience as the first thing. It's very smart. How did that light bulb go off for you? You know, always I have not believed in this thing we call time management. We don't manage time, to be honest. Time is this ethereal thing. Time manages us. It does. Time just goes on. We have absolutely no control over it. What we really want is to manage behaviors, ours and our teams.

6:39And I think, because I'm a mom, I think I realized early in the game that my production, my productivity was so tied to my team. If my team was happier, healthier, working faster, my life was better and I got my hours back. We were kind of in an extreme situation to cut my time in half. But I think most business owners, if they took our process and applied it to their business, what if they got an hour and a half back every day? That's almost a full working day every week that you would get back. Purely based on behaviors and how your team can set you up as the owner to be successful. I like owners to focus on one thing in your business that you are really good at, you love doing, that you are the rainmaker or the promotional person, whatever you are in that company, but stick to that one thing and then build support all the way around you for all the other things that keep you from doing that as much as possible.

7:47And that was the rule. That was the rule. While we were doing this, my team said, if you don't need a handpiece, our drill, you don't need a handpiece or your dental license, you're not allowed to do it. We had very definitive rules. And it's not like we came up with one system and it worked beautifully. This was a lot of trial and error went into figuring it out. But the maintenance of the process are pretty simple. There's four or five steps to it. and it covers the whole area for what you need to think about in order to get your life back. I like the notion that's really similar to what I learned about an Amazon where everybody has certain superpowers.

8:31And the idea is to be able to use your superpowers as often as you can, because that's when you're like highest and best use. You know, I'm curious as you were doing this And you ended up getting back to your original revenue in fewer days and then beyond that, scaling beyond that. Was that something that you did based on faith, meaning that once I get the experience right, I know that these things are going to go up? Or was it at the very beginning, were you tying these very specific things to increments of revenue and efficiency and that sort of thing? In the dental world, we know exactly, like I know what my overhead is per operatory per hour.

9:13So I know what my production has to be per operatory per hour, depending on different producers in different rooms. So my little brain is really attuned to details, but it doesn't have to be that way. You can do it either way because not everyone judges their success based on revenue. I find all kinds of definitions of success in my clients that I coach. And it doesn't matter to me how you define that as long as you have a really good definition of where you're headed and your team is fully engaged. And that's one of the parts of the process is to make sure you have the absolute right people in the right seats on the bus, so to speak.

10:00And that actually came from Henry Ford, who, as you know, from here in Michigan, never even graduated from high school. You know, knew he didn't. He had this one skill set. He was good with mechanics, but he didn't know anything else about running a business. So he surrounded himself with experts in all the other things. And whenever a question came up, he would just ask somebody else. And he ran an empire based on that idea. And that's what we did. We hired the best that we could in each category in our office. And some of my clients that come, they say, well, I can't afford an expert. What do I do?

10:42And all you need is someone to champion, someone who loves doing that area. It could be marketing, could be sales, could be business development. Whatever the area, find someone. And we have a real simple little test. Your listeners will enjoy this. We do what's called an ABC skill set. We just have people, you take a piece of paper, divide it into three columns. A are all the things you or your team member love to do. Like if I could do that all day long, I'd be a happy camper. Bs are things, kind of, I can do them. I don't really enjoy it, but I can get it done. C's are things I really hate.

11:23For me, it's bookkeeping, not a fan. So what we tried to do is get rid of everyone's C's, give those to somebody else so that your team is just focused on the A's and the B's. It makes for a much happier team and a better work environment. Yeah, a very cool and practical way of doing that. Ruth mentioned you live in Michigan. I was born there. Since you brought up Henry Ford, I've just got to say last time I was there, I think it's the Henry Ford Museum. Is that right? I recommend that to anybody who is in the Detroit area. It is awesome. It's really awesome. Wonderful. So clients come to you and they may not...

12:03To me, it sounds like you have a very natural affinity to process. It just comes naturally to you. But many of your clients, that can't be the case. And so you gave one of the areas that you start, sort of who's on your team and what skill sets, what things you like and not? What are other processes you go through with someone who's just starting out to be a client, to wrap their head around, how to get them out of the challenge they have? Right. The systems is the first thing that we do. And the next thing is actually communication. in many, many businesses that I'm asked to come in and observe, their worlds are like silos.

12:49They have a marketing silo and they have a sales silo and they have a service delivery silo. And they don't communicate except at the top. I don't know if you've ever seen silos on a farm. I'm married to a farmer and they connect at the top. And in business, you need it to connect at the bottom, these processes need to communicate with each other from the bottom all the way up. And when you start, like when I started my practice, having one silo talk to the other just meant that Susie had to lean over and talk to Karen, who was sitting right next to her. I mean, it's kind of simple in the beginning, but the more people you add and the more ways there are to communicate, it gets really complicated and messy.

13:30So we designed very intentional ways to communicate based on who it is and what we're communicating about. But that's almost as important as having those systems set up. Because if you don't communicate well, people get very frustrated with the progress being made or not in those systems. No doubt. As you're building these processes and they may take, I don't know, three months, three years to implement. How do you coach your clients to sort of like stay the course? Because it's probably going to be bumpy. It is. And I'm a great fan of being transparent with your team. It really, when you take on a project like this, it's not helpful to puff up your chest and say, okay, this is the way we're going to do it from here on out because it goes so much more smoothly.

14:23If you embrace your team, bring them into the process of especially sitting up systems and just utilize their perspective. Your team members, your employees have a great perspective on your business that we as the owner do not have. They are the customer facing part many times of our company. they see what goes wrong. They see where people get upset and they see what parts of your systems don't work or the communication falls apart. So I like to set the whole thing up as being, this is a test and see. This is how we're going to do it forever. This is, let's try this, throw it out there, make it the best we can.

15:08We'll come back in so many weeks and say, did that work? Can we tweak it? What do we need to do? In the beginning, you have to be very scheduled about it. But once your team gets on board and they start to see how it actually does make their lives easier, the communication and the tweaking happens much faster. In the beginning, it's a little stilted. You have to say, okay, we're going to talk about it every Tuesday afternoon. We're going to sit down and say how we're doing. But after a while, it actually improves the culture, the working environment, because they're starting to work together like they haven't before because most business owners don't ask their employees for their opinion about how things are going or how would you do this?

15:53I wish it was. I wish we all as business owners would ask our team, is this working for you? But we don't. That old model of leadership that says, I'm in charge because I have knowledge that puts me in charge. And so you just do what I tell you to do. That doesn't fly with today's young people. They are not interested at all. Thank goodness I have kids because I have four millennials and they taught me. They're not interested in that. They love to solve problems. So bringing them into this whole thing of rebuilding your systems and letting them be creative and say, what would you do? How can you make this better for us?

16:32That's awesome insight. And I want to actually shift gears for a second about how to apply that insight when an organization is more mature. So I'll set this up. Many of recent episodes have been around investors, venture capitalists, about where to invest, how to buy, the type of businesses they're looking for, et cetera. So I think talking to you and your experience is really interesting to kind of flip that around and say, if you're a business owner, How do you prepare your business to exit whenever you're ready? And so it could be a dentist practice. The dentist that I went to for 20 years, his plan, his daughter became a dentist and he passed the office to her.

17:26I'm not sure what she's going to do with it, but he had a very clear plan about exit. I imagine that many folks do not. Oh, so many do not. You know, it starts with a really clear picture of what you as the owner want. Like, what are your non-negotiables? Like, do you want to be done? Like my, my non-negotiable was I wanted to be retired by the time I was 55. I don't know where I got that number. That was what I said. And dentists sometimes have a number. It's like, I'm, I'm going to hit 70 and I'm out of here. Or they want a certain price. You know, like I have to have this and then I'll be happy.

18:01You need to know what that is because that helps you determine who's your ideal buyer. Most businesses think, I have to make my business as big revenue as I possibly can because then I'll attract the best buyer. And that's not true. Yes, if you have a big revenue, you're going to be more attractive to a certain kind of buyer. They're all different kinds of buyers. So it's kind of like Goldilocks. You just have to decide, what do I want? What's non-negotiable? And then what have I got that's attractive, that's irresistible to a buyer? Like what's competitive advantage is one. What's my competitive advantage?

18:43Like why would somebody purchase my practice as opposed to the dentist next door? You know, what have I got that I need to start telling the world that I'm so good at this? This is my competitive advantage and you should use this to pick me instead of somebody else. And if you get good enough at that, it doesn't even matter. You'll find a buyer, even if you're not. You could be a medium-sized business. There's going to be a buyer who just wants what you've got. It's different than saying, oh, I hope somebody buys my business. But to say, this is what I've got. This is what I want. And I think this makes me better than the next guy because I've got exactly what this kind of buyer is going to want.

19:26When we decide to sell our house, we're just going to stick something in the front yard. We're going to get a real estate agent. Same with a car. I think you can probably still sell a car that way. But it doesn't work like that. You know, you wouldn't put a sign in the office of your dentist practice saying for sale. I don't think. How many years prior to somebody getting to want to sell, should they be really seriously starting to do the work? Do you want to know what they do or when I want them to? Both, I guess. Okay. So what happens is three or four years before they want to sell, they come and say, so are you a broker?

20:06Are you going to help me put it out there? I really want them to start long, long before that. You know, um, there are a lot of things that you have to accomplish. Um, one of them is you have to like remove yourself from your business. If your business is huge and you have great revenue, but you're working 80 hours a week, you're selling a job. You're not selling a business. You know, I want my clients to get to the point where, in fact, somebody just told me this the other day, my business runs better without me than it did when I was running it. I love that. that that's like my new, Oh, I just made my heart sing.

20:45Um, the other thing is people don't always look at the parts of their business. There's an intellectual property that people overlook so much. Um, and I love helping clients take this one thing that they have figured out beautifully and offer it to the market separate. You know, they can rent it to themselves while they own it. And then they can have the new buyer rent it to them or rent it to the new buyer later on. But those things take time to plan, to put together and plan. So I like them to get serious and have conversations like with their team, in dentistry anyway. It's a big thing, boy, don't tell your team until after the deed is done.

21:28The Monday after you sell it, you walk in and the morning huddle is, here's the new owner, which is a horrible way to do it. Why can't we go back 10 years early and say to the team, how can we do this? I want to make this business so good that whether I'm the owner or not, they're going to want you to stay because you run it like a high-performance automobile. They're going to see that y 'all fit here beautifully and they're not going to want to tinker with it. They just want you to keep doing what you're doing. because you take that fear, that scarcity, the lack of security for your team. They know they're not stupid.

22:10They watch their owners get older and they know, boy, someday she's going to sell it and I'm going to be stuck. So I like bringing them into the conversation early, working on it together so you're not surprising them. You're not shocking them. They don't feel betrayed. and you haven't lost control over whether the new owners keep them or not. I'm really interested in what you're saying earlier about a process, a procedure, a product that can be licensed or sold. Could you provide an example? Because one's not obviously coming to mind for me and the plumbing industry is an example. One of my clients is a care manager.

22:51and so care managers come in and they provide, like they'll make sure that your mom gets to her doctor's appointments. They'll take notes at the doctor's appointments and they keep the family up to date. We used one when my mom lived in Colorado. I couldn't go to her appointments. But this company also had a program where you could hire college students to come in and if your parent liked to go to movies, they'd take them to the movies. Or if they wanted them to read a book, they would read a book. So it was, they called it thoughtful engagement. It was not medical care, but it kept, uh, and the research on it is fabulous.

23:30It really does help keep them engaged, keep the elderly, um, going, keep their brain working. You can play bingo. You can take them bowling, you, all the things, whatever they like to do. And so she had it all, a beautiful system. So she turned it into a franchise. And she sells it and she has a coaching program that goes with it. So she teaches the new owners how to use her program. But she would never have thought of that if we hadn't had a conversation about how this is like a business in a box. I said, you have all the parts. You have the marketing. You have how to talk to people. You have the scripts.

24:09She had everything. So it's just like new eyes looking at. So look at, tell your listeners, look at the things that you do better than somebody else. And how could you monetize that? How could you license it? It's very almost similar to your own story where the process that you developed might have been more valuable than the practice itself. And you've gone on and helped other people with that. That's really cool. You have a quiz, I think, on your site about is someone ready to sell their business? What are some of the more provocative or maybe questions someone might not expect you to ask related to that?

24:51Well, a lot of it is many things that we've talked about already because most people have not. Because we talked about increasing the value of your business. But the other big step is to decrease the risk in your business. because buyers look at situations and they see risk. If one of your employees is your main producer, if you have 30 or 40 % of your production comes from one employee, that might set off red flags for a buyer because that employee walks after the sale, they're sunk. Or if you as the owner are the rainmaker and you're the personality that the community loves, When you walk out the door, they've lost that big chunk, that big hook for their marketing.

25:41The other piece that I would say is if you have a customer or two or three that make up the bulk of your revenue, that's going to send off flags. So there's a lot of ways to decrease the risk to make it more attractive to any buyer. And ultimately get a higher multiple. I love that. Well, Ruth, thanks so much for joining me today. For folks who want to hear more, learn more about your business, we'll put all that in the show notes. And thanks so much. Great. Thank you so much. It was great to be here.

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