After reaching a 40-year high by mid-2022, inflation finally seems to be cooling. Core consumer prices are growing at almost normal rates and overall inflation has fallen to 6.5 percent from a high of 9 percent.
This is good news! But does that mean the dental industry is headed toward calmer waters?
Well, not quite. We recently spoke with Ken Kaufman, CFO at Nuvia Dental Implant Center and author of DEO’s Financial Secrets to Grow Dental Organizations, who urges practice owners and dental group leaders to keep a close eye on one more key metric: unemployment.
So far, unemployment rates have stayed remarkably low. Despite the recent flood of high-profile layoffs in the tech industry, total unemployment hasn’t broken 4 percent since November 2021 — and is sitting at a healthy 3.5 percent today.
A little movement up or down is normal. But what if the Fed continues to raise interest rates and businesses respond with additional rounds of job-cutting?
Well, if we see a steeper climb — past, say, 5 percent — then Mr. Kaufman suggests that dentists had better be ready to buckle up for a bumpy ride. The additional unemployment will make recruiting easier, but put a real damper on new patient growth.
“We won’t have a challenge anymore with finding talent,” he says, “So we’ll be excited about that. But the question is, can we get to a place where people feel comfortable buying? I fear that people are going to shy away from the opportunity to see the dentist.”
This makes sense to us. When money gets tight, we all look to cut costs wherever we can, and no one is going to prioritize dental care over rent or food.
Fortunately, however, dentists can be proactive in preparing for any future rise in unemployment. Mr. Kaufman suggests that practice leaders make sure that their marketing funnels are running as smoothly as possible.
“You have to look for every leaky spot in your funnel, anywhere there’s too much friction,” he says. “Otherwise you’re just giving people reasons to step out of the process.”
That’s music to our ears. Sloppy, inefficient marketing is a waste of time and effort even in a booming economy.
But when the going gets tough, a well-oiled new patient funnel can be the difference between scraping by or coming out ahead.
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