Justin Leigh discusses the importance of having a business development plan for your lab and the key steps to making one.
In the competitive landscape of dental laboratories, many labs operate without a clear business development strategy. These labs often rely on a steady flow of work from existing dental clients, focusing primarily on maintaining client satisfaction through the quality of their work.
This approach is actually the most common way for a lab to operate, but it overlooks the critical role that proactive business development can play in long-term growth and success.
The status quo
For many dental labs, the concept of business development is limited to maintaining current relationships with dentists and hoping for referrals. This passive approach often works to some extent, as satisfied clients may recommend the lab to their colleagues.
However, these referrals typically happen organically, without any deliberate effort from the laboratory. While maintaining high-quality standards is essential, relying solely on this strategy leaves the lab vulnerable to market fluctuations and client attrition.
The dental laboratory market is currently experiencing a shortage of available labs and technicians, which may lead some to believe that business development is unnecessary. With a surplus of demand, it might seem that labs can afford to sit back and wait for the work to come to them.
However, this mindset can be a trap. The labs that are truly thriving in today’ market are those that have recognised the need for a proactive business development strategy.
Proactive business development strategy
So, what exactly is business development for a dental lab? It goes beyond simply improving the quality of work and maintaining client satisfaction.
Business development involves a comprehensive approach to growing the laboratory, which includes:
- Enhancing the laboratory’s operations: continuously striving to improve the quality of work, fostering a collaborative team environment and ensuring that all team members are engaged and motivated
- Client relationship management: while maintaining strong relationships with current clients is crucial, it’s equally important to have a systematic process for nurturing new relationships with prospective dental clients
- Risk mitigation: a proactive business development strategy helps mitigate the risk of losing key clients. If a significant client reduces their workload due to retirement, reduced working hours, or other reasons, the lab could face a sudden drop in revenue. A well-developed strategy ensures that the lab is not overly reliant on any single client
- Growth and sustainability: labs that prioritise business development often find themselves in a position where they have more work and clients than they need. This surplus allows for strategic growth, including the ability to raise prices, improve profitability, and reinvest in the laboratory’s operations and people.
The risks of ignoring business development
Ignoring business development can leave a dental laboratory exposed to several risks. One of the most significant risks is over-reliance on a few key clients. If a lab loses one of these clients, it could lead to a substantial drop in revenue, potentially threatening the lab’s viability.
Additionally, without a pipeline of new clients, the lab may struggle to replace lost business, leading to a drop in revenue, stagnant growth and an inability to invest in improvements.
Seasonality can also impact labs during periods where their clients are away and revenue reduces. A business development plan could predict these slower periods and plan for them with the laboratory team taking time off during quieter periods and engaging prospective clients for ‘trial work’.
Moreover, without a focus on business development, labs may miss out on opportunities to expand their services, enter new markets, or adopt new technologies. In an industry where innovation and adaptability are crucial, staying ahead of the curve is essential for long-term sucess.
The benefits
On the other hand, a structured approach to business development offers numerous benefits. By actively seeking out and engaging with prospective clients, labs can create a steady flow of new business. This not only ensures a stable revenue stream, but also allows the lab to be selective in the clients it takes on, focusing on those that align with its strengths and values.
A well-executed business development strategy also allows a lab to create a situation where demand exceeds supply. When a lab has more clients than it can handle, it can raise prices and choose to work with the most profitable and rewarding clients. This scenario not only boosts profitability but also positions the lab as a leader in the industry, known for its high standards and quality of work.
A focus on business development drives internal growth and improvement. As the laboratory grows and revenue increases, it creates opportunities for team members to advance in their careers, invest in new technologies and continuously improve the quality of their work. This positive feedback loop fosters a thriving, sustainable business that is well-equipped to navigate the challenges of the market.
Implementing a business development strategy
To reap the benefits of business development, dental labs need to implement a structured strategy. Here are some key steps to consider:
- Identify target clients: consider factors such as location, the types of services they offer, and their patient demographics. By focusing on a specific target market, you can tailor your business development efforts to meet their needs more effectively
- Develop a value proposition: clearly articulate what sets your lab apart from competitors. This could include the quality of your work, your turnaround times, your customer service, or your use of cutting-edge technology. Your value proposition should be compelling enough to attract new clients and retain existing ones
- Build relationships: business development is about building and nurturing relationships. Attend industry events, network with dentists, and leverage your existing client base for referrals. The more visible and connected your lab is within the dental community, the easier it will be to attract new clients
- Create a follow-up process: don’t just rely on initial contacts; have a follow-up process in place to keep prospective clients engaged. This could include sending follow-up emails, scheduling meetings or offering to visit their practice to discuss potential collaborations
- Monitor and adjust: business development is not a one-time effort. Regularly review your strategy to see what’s working and what isn’t. Be prepared to adjust your approach based on feedback, market changes or new opportunities that arise
- Invest in marketing: a strong marketing presence is crucial for business development. This could include a professional website, active social media profiles, and regular content that showcases your lab’s expertise and success stories. Consider creating case studies, testimonials and before and after images to highlight your work.
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