Checkmate! Business Strategies for Tomorrow
Laboratory executives with business backgrounds share critical approaches for winning
Different factors draw people to the dental laboratory profession. For many, it is a passion for artistry, craftsmanship, or dentistry itself. For others, it may be the lure of the family business. And for some, at least part of the allure of this profession is the incredible economic potential.
While consolidation, offshoring, chairside work, and several other challenges are very real, laboratory owners and executives with strong business backgrounds say the profession is thriving and has a bright future—for well-run businesses. Inside Dental Technology spoke to six laboratory owners and executives with business backgrounds about their personal journeys, how they have used their business acumen to address certain challenges with their laboratories, and what steps they are taking to prepare their businesses for the future.
Town & Country Dental Studios
David Lampert, MBA, had worked in the banking industry for more than a year after college when his father, Barry, approached him about joining the family business, Town & Country Dental Studios.
"He is an entrepreneur, an excellent dental technician, and a CDT," David says, "but he mentioned the challenges he was facing with the other parts of the business, and said it would be great if I would consider coming on board. I did not think twice."
Upon making the move, Lampert continued with his plan to pursue an MBA, but he also immediately began analyzing the laboratory's operations.
"It was a reasonably successful company," he says, "but they were not engaging in solid financial policies or using any good financial metrics that are needed to operate a business. They were caught up in believing that if you work really hard and have a really good product, then everything will work itself out. That sounds logical, but if you are not selling products at the right price, building good relationships with customers and vendors, creating a marketing plan, watching your cost structure, etc, you often find out that you are not financially stable. By working on implementing new systems and metrics, we began to see better financial performance. It takes time, but it is worth the effort."
IDT: How is the dental laboratory industry different from others?
Lampert: It is an active, dynamic environment with many variables that are out of our control. Not many industries have the customer supplying materials (such as impressions, scans, bite, counter models, parts, etc) or are faced with inconsistent prescription information that directly impacts the products we make. One way to take control of the situation is to be constantly working on improving your systems in an effort to increase consistency and minimize errors. For more on this topic, I suggest readers look into the concept of total quality management.
IDT: How have you used your business acumen in recent years to address challenges with the laboratory?
Lampert: One recent project was to better manage incoming and outgoing work. We installed several high-definition video cameras so we can capture and review, when needed, any case as it arrives or leaves the laboratory. Some years back, we observed and acted on certain trends in the industry, becoming one of the first laboratories in the country to engage with zircona materials and intraoral scanning technologies. We recognized early on that if we did not continue to participate in the technological shift then we would be left behind. Being proactive then is still paying us dividends today.
IDT: How are you preparing for the future?
Lampert: We are constantly looking for new opportunities, new products, and new technologies. We are founding members of the TEREC Group, which helps us see trends on the horizon. Right now what we see is continued digitization and the growing potential for 3D printing with different materials and capabilities. We continue to invest in our technical support team and other technologies where needed. We are approaching our 60th anniversary and still see a bright future for the laboratory industry.
IDT: How is the industry prepared for the future?
Lampert: There are thousands of hardworking technicians and laboratories across the country. We are a very important component of the dental industry. Still, our craftsmanship, skill, and knowledge are being underappreciated. Dental laboratories bring tremendous value, including service, support, experience, technology, chairside assistance, education, and of course, quality products. It is important that we charge fair prices for our products that allow us to support our staff and continue to invest in our laboratories. A simple first step for laboratories of any size is to spend a few hours each month reviewing their company financials and finding one thing to focus on for the next month to improve business performance or customer satisfaction.
Triad Dental Studio
Martha Martin did not know what a dental laboratory was before she met her husband, Matt. A successful investment sales associate within the banking industry, Martin learned quickly that Triad Dental Studio in Kernersville, North Carolina, was a well-established business that just needed some financial guidance.
"Matt is very astute financially," she says, "but he did not have the time to focus on that side of the business because he was busy at the bench. We would discuss the daily operations and finances at night, and I would think, ‘He really needs help with this.'"
Shortly after they got married, Matt formally asked Martha to become the laboratory's CFO. Martha estimates they were able to cut their steep accounting bills by approximately 75%. She also helped Matt design and build a new facility in Greensboro that they moved into in 2003, at which time Matt said Martha should become the CEO.
"I said the title did not matter to me," Martha says. "However, it has worked very well. Matt focuses completely on the technical aspects of the laboratory, and I focus on the management side—finances, OSHA, marketing, and our DAMAS quality system."
Martin says she frequently hears from laboratory owners who feel negatively about the state of the industry and how difficult it is.
"Matt and I have a completely different perspective; we're going strong, pushing our laboratory forward, and we are loving it," Martin says. "We are on board with new technology and embracing the challenges of owning a laboratory today. The way things have evolved in our industry is hitting us just right."
IDT: What makes the dental laboratory industry unique?
Martin: Traveling to meetings, I have fallen in love with the people I have met. They are all faced with the same challenges that we face, and we have developed very strong networking relationships with colleagues from across the country. The camaraderie with these individuals has helped me through some difficult times, and I have been able to help them as well. It is like a big family; we are fierce competitors, but when we are at a meeting, the walls come down, and we are each other's best friends. There is plenty of work for everybody, especially with the baby boomer generation getting older and having ample resources to spend on dental restorations.
IDT: What challenges have you encountered in this business and how have you addressed them?
Martin: A laboratory owner will always deal with economic challenges and relationships with staff, clients, and vendors. The key is coming into work every day, ready to be at your best. We experienced difficult times in 2008 and 2009. During that period, I utilized creative financing to make payroll. Today, we are doing exceptionally well, but we never take it for granted. Even after a strong month, I always think about how to exceed our previous goals. It requires constant monitoring of our laboratory operations and making small corrections every day. In particular, as we have experienced steady growth over the last 4 years, the challenge has been to continue to produce a very consistent product but at a larger scale. Implementing the DAMAS quality system in 2008 helped us maintain that consistency. I like to refer to us as a "protique" laboratory; yes, we have production, and we are growing, but we still hang on to the boutique element as well, focusing on client preferences and maintaining a consistent, quality product.
IDT: How are you preparing for the future?
Martin: Embracing change is extremely critical. If you are not good at embracing it, you need to reevaluate and figure out how you can overcome this obstacle. I believe the constant change in this industry has discouraged so many laboratory owners. As we have experienced solid growth, we have experienced many changes that have forced us to work on our infrastructure. We took a step back approximately a year ago and decided to add additional management support. We have hired a Production Manager and a Human Resources Manager. These are responsibilities that Matt and I could no longer handle. We were wearing too many hats. This year is all about investing in people, reorganizing, and adding new technology.
IDT: What advice would you have for laboratory owners to improve their business acumen?
Martin: The first book I read about our industry was Peter Stein's Managing for Profit. It was written in 1989; however, it still provides basic business principles of dental laboratory management. Additionally, NADL University offers a great overview regarding managing different aspects of a laboratory. I have attended twice. It not only provides sound management practices but also encourages attendees to network. During both meetings, I developed relationships with laboratory owners and managers from across the country who have become great friends and resources.
Cornerstone Dental Labs
Jay Collins earned a management degree from Bloomsburg University and identified government contracts, banking, and the medical industry as the best opportunities to make long-term money. His uncle's laboratory was close enough to the medical industry, so Collins bought what is now known as Cornerstone Dental Labs in Bristol, Pennsylvania, and embraced the opportunity.
"I had been close to the industry for my entire life," Collins says, "but with a management degree I realized how free this market is. There are relatively few restrictions and regulations when compared with other medical-related industries, so I believed I could build something rather quickly."
Collins disagreed then with the notion that the laboratory industry was declining, and he remains firm in that conviction.
"I saw an opportunity because even though more and more laboratories closed their doors, the population kept growing. People need teeth. Basic supply and demand principles still apply," he says. "If I could figure out how to produce a quality product at a production standard, I knew we would have work."
IDT: What challenges have you recognized in your 12 years as a laboratory owner, and how have you addressed them?
Collins: Employee buy-in is difficult to achieve sometimes, but it is crucial. I need to digitize my denture department because my removables technicians are older, and I will still need to be able to produce dentures in 20 years. They are craftsmen, so they struggle with changing a process that is not broken. Similarly, my technicians sometimes do not like the prices I sell their work for, but it is my job as a business owner to know my manufacturing costs for each product and charge what the market dictates, because if I do not then someone else will.
IDT: How are you preparing for the future?
Collins: I purchased my own building. It is twice the size of our old facility, so we rent the other half out, but we have the ability to expand in the future. Overall, I want to build four pillars of cash flow. First, we want to continue serving the outsourcing market, which remains steady. Second, we have focused the past 36 months on becoming a production laboratory, because short turnaround times reduce remakes by limiting the amount of time for contacts and occlusion to change. Third, I plan to tackle the esthetic area, particularly implant-supported full-arch restorations. My technicians love working on challenging cases, and that market is flooded with laboratories that are overcharging, so I want to come in right in the middle. Fourth, I will expand into orthodontics, because with all the new clear aligners and other options on the market, dentists are asking for guidance.
BonaDent Dental Laboratories
Erin Bonafiglia was not certain whether she would join the family business when she started pursuing her business administration degree at the University of Hartford. Her passion for art ended up being what drew her back to the laboratory, and combining that with her business acumen has proven beneficial.
"The laboratory allowed my hobby and my education to merge into one path," says Bonafiglia, Technical Team Leader for BonaDent Dental Laboratories in Seneca Falls, New York.
The forces that have challenged many laboratories can be countered simply by growing as the industry grows and continuing to believe in the American technician, she says.
"We supply our dentists with the best possible products and know that they will see value in that," Bonafiglia says. "In particular, we have seen huge growth in the implant and all-on-four market. It surprises me every day how many people are signing up for these extensive treatment plans. We have embraced that growth."
IDT: What challenges have you faced in the laboratory, and how have you addressed them?
Bonafiglia: As a business grows, you need to adapt. We are at a size now where we have needed to implement a lot of leadership principles and business strategies that we did not really need when we had 15 to 20 people.
IDT: What makes this industry unlike many others?
Bonafiglia: I had a professor who had worked at Starbucks' corporate headquarters, and he taught me a lot about how different industries work. We are all in the manufacturing business, but there is a face to what we manufacture in the laboratory. To relate the two is really important and makes our industry different from most. Every case is a little different, but you still need a streamlined process.
IDT: How are you preparing your business for the future?
Bonafiglia: We always try to stay on top of trends. We read trade journals and take as many continuing education courses as possible. We listen to what our dentists want and make sure to be the very best at giving them what they need.
IDT: What advice would you offer to other laboratory owners and executives considering formal business education?
Bonafiglia: Whether it is a 4-year degree, a 2-year degree, or even just a course at a local college, anything can help you learn to scale your business properly. Just like we take continuing education courses on layering or esthetic dentures, you also need to continuously educate yourself about your business model. Whether you learn how to better manage people, to be a better leader, or to streamline your workflow, you can become a more successful laboratory owner.
ROE Dental Laboratory
BJ Kowalski has a finance/economics degree from Ohio Northern University, but he says on-the-job training from his father, Bruce Kowalski, was what really shaped him as a businessperson. The elder Kowalski also had a business background and was not involved in producing restorations as the owner of ROE Dental Laboratory in Independence, Ohio, before his son took over the business in 1993.
"My father taught me the business of dental laboratories while I was learning the trade," the younger Kowalski says. "I got that unique perspective, and now I organize my time to focus on the business of the company."
Kowalski reads extensively about business to improve his organization and participates in a CEO peer advisory group with other owners and executives.
"I learn a lot from people in similar positions because many of our challenges are constant across various industries," he says. "Our business can be profitable if run properly. Like any business, there are many challenges with price pressure, increasing costs, and competitive options for our clients such as in-office milling and offshoring. But, clearly it is a good business—better than most, which is evident from the private equity and venture capital investment into dental laboratories. It tends to be more recession-resistant than others because, since we are in the medical industry, people have needs in good times and bad."
IDT: What challenges have you recognized since taking over, and how have you addressed them?
Kowalski: The biggest challenge has been the transition to digital. We got into it early because I saw a real opportunity there. Funding that equipment was challenging, but I made it a priority. Perfecting your systems can take a long time, and being an early adopter allows you to go through the learning process and be prepared when the technology and materials reach a certain point so you can be a dominant player in the market.
IDT: Is that why you have been a leader in digital dentures?
Kowalski: We wanted to get into digital dentures early because I see a real challenge with the labor pool of skilled denture technicians, particularly setup technicians, who are difficult to train quickly. The technology can help compensate. For now, we position digital dentures as an economy product, but I am optimistic about the future.
IDT: How else are you preparing your business for the future?
Kowalski: I have invested a lot in the infrastructure of our company, as well as in putting the right personnel in place, including marketing, sales, and human resources. You need to have that structure in place in order to grow. You need the ability to bring on new people and handle growth.
R-Dent Dental Laboratory
Daxton Grubb never wanted to work in his father's dental laboratory. He planned to go to dental school, but a brief stint in the laboratory to help his father turned into a career, as he is now President and CEO of R-Dent Dental Laboratory in Bartlett, Tenneseee.
"My father's business needed some restructuring, so I agreed to help," says Grubb, who had earned an undergraduate degree in economics. "I was not expecting to thrive as much as I did. Running the business came easily, and while I never enjoyed working with stone or porcelains, I was able to help grow the business with technology. The challenges were rewarding and fun."
Grubb added a removables department to the laboratory within a year and incorporated CAD/CAM technology early.
"We have experienced lots of growth and challenges by trial and error," he says. "We beta-test a lot of products, and while there have been plenty of flops, the dentists in our region have come to know us for being out in front with technology."
IDT: How important was your college education?
Grubb: My success in this industry has had everything to do with my education. Many laboratory owners are their own worst enemies; they do not have the economic fundamentals and principles on which to base their decisions, so emotion drives everything. If business is slow, they drop their prices. They do not know how to plan or even budget, so everything is reactive. My father would tell me, "You don't understand. These are technicians and this is a dental laboratory." I would respond, "These are people, this is a business, and there are customers. These things do not change because it is a dental laboratory."
IDT: Is a formal education necessary, or are there other ways to improve your business acumen?
Grubb: Some people can gather the necessary principles outside of a college education, but it is more difficult. That challenge is definitely an issue today in our profession.
IDT: How are you preparing your business for the future?
Grubb: We have always tried to think multiple years into the future, but this is more important than ever right now because both our industry and the clinical side are changing so quickly. Forward thinking is crucial for the decisions we make, the equipment we buy, and the vendors we partner with. Laboratories need to be looking at every part of the business very closely and not letting any part sit idle.