Editor’s note — Dr. David Phelps is Founder and CEO of the Freedom Founders Mastermind. He is an expert at assisting dentists with the diversification of their wealth outside their dental practices. We are honored to have David as a guest columnist. You can also see him interviewing our CEO, David Harris, here — http://dentistfreedomblueprint.com/ep-139-david-harris-is-your-practice-leaking-money/
Are You Replaceable? By David Phelps, D.D.S.
At first glance, that question may sound like a threat. If I’m replaceable, then what is my real value? If I’m replaceable, where’s my leverage? Who needs me?
I can hear your answer. “Me, replaceable? Heck no! I’m the owner! I do the work. I’m highly trained and have years of experience doing x, y, z. I have specific relationships with our clients or patients – it wouldn’t be possible to replace me without severe damage to the business.”
“I’ve worked hard all my life to get where I am.”
And exactly where are you?
“At the top of my game. I have a practice (job – ed.) to go to every day of the week. I can’t take time off because I am so busy doing the thing I spent so many years learning. I still have a ton of debt to pay off, and I don’t see any way off this hamster wheel. But life is good. Someday I’ll be able to enjoy it.”
Hmmm…sort of a Catch 22. The better one becomes at “doing the thing,” providing the technical labor, the less freedom there is. Trading time for dollars, no matter what the hourly pay rate, is not a path to freedom.
Being ‘replaceable’ seems contrary to everything we’ve been taught over our lifespan – that being replaceable is a bad thing. We’re told to shoot for the stars, create goals to exceed, accomplish great things, make a mark, develop a skill-set that creates high value.
But as a business owner or entrepreneur, not being replaceable is actually a problem…a huge problem!
When we focus on how well we “do” something…when we go to school many years to obtain degrees and professional licenses, when we earn accolades because of a specific skill or expertise, we are applauded. We are held as important, valuable, worthy of acknowledgement.
With such achievement, society also promises a better than average income, a lifestyle without needs, security and peace of mind…or does it?
The problem with irreplaceability becomes a trap. If you’ve built a business or professional practice that is dependent to a large degree on your physical labor and activity on a daily basis, you’ve created a job. Very possibly a well-paying job…but nonetheless, it’s a job.
Let me take this one step further – EVERYONE in your organization needs to be replaceable! A tough conversation to have, but you need to be the leader and show your vulnerability first.
Sure, you’re the boss, so you have assumed security, but, you’re no different than your employees. Your customers, clients or patients are ultimately your boss and if your team and business don’t serve, in a capitalistic society where people have choices, you and the business will suffer – you may become obsolete.
So, are you ever really secure? I say, “no.”
In 2004, my daughter Jenna underwent a life-saving liver transplant at age 12. The year-long recovery was physically and emotionally draining. I was absent from my practice about 50% of the time that year.
Was I worried that my patients might see and even prefer my associate dentist?
Was I concerned that I might not be the needed “top dog” in the practice?
No – not at all. I was grateful that in my absence my associate, staff and even our patients continued to do business…without me. No longer did everything revolve around me.
This was the most freeing moment of my life. It was no longer believed the myth that I had to “do it all.” I now had the option to change my life. So, I did.
I vowed to continue to be an absentee owner (a real business owner) and eventually sold the practice in 2010 (not without one failed sale attempt in 2007 – but that’s a conversation for another time).
Fast forward and peek inside today’s Freedom Founders Mastermind Community. At our February meeting, one of the questions or concerns from our members was, “What happens if something happens to David?” That is, what if I become in some way incapacitated?
If I am “the business” and no sustainability plans have been created, then the business might fail in my absence. I don’t want a business that is solely dependent on me – I’m all about building a legacy that will survive me.
After our mastermind meeting, our leadership team also finished our first quarter Level 10 meeting (see the book “Traction” and Entrepreneur Operating System). One of our next quarter Rocks is to deal straight up with the issue of “anti-fragility” (see the book, “Anti Fragile” by Taleb).
Our mission is to identify our company’s weaknesses, vulnerabilities and to create off-setting plan B’s or redundancies against future unknowns, uncertainties and volatility. It’s about handling to the best of our ability as many of the “what-if’s” that we can.
One of the first places we began was with our leadership team – today, there are four of us, including me. The question we put forth was, how can each one of us be replaced? If something occurred which took any one of us out of the business, either temporarily or permanently, what back-up plan is in place and how viable is it? How fragile is the company if a key team member is lost?
Most business owner/entrepreneurs are visionary…or want to be visionary.
You’ve got to be always re-inventing yourself and your business. But you can’t do that when you’re down in the trenches doing the work, providing the fulfillment each and every day.
What are the benefits of becoming “replaceable?” So far, we have only addressed the importance of being replaceable to negate the downside of one’s incapacity or loss. Are there any positives to being replaceable? Absolutely YES!
As soon as you can put away the ego and pride, this is what you will discover in becoming replaceable in your business or practice:
- Security and Peace of Mind = less stress.
- Real Freedom – being able to do what you want, when you want and with whom you want to do it.
- A more valuable company – any business with a high degree of dependency on key person is not a highly valued company. For instance, dental practices sell at no more than a 1-2 times multiple of net income. Most real businesses sell for many times that multiple. Why? It goes back to a real business vs. a self-employed job. The more irreplaceable you are because “nobody else can do what you do” provides for a great deal of self-esteem, but is a ball and chain against the path to freedom.
- Vision and Significance – the opportunity for you as the owner to work more “on” the business which will allow you to better lead your business, innovate and create legacy and significance.
So, what’s the plan for my replacement? I know a lot of people…I’m well-connected. We already have a Board of Advisors (Trusted Advisors) within Freedom Founders who play a large role. My leadership team handles all the company operations. I am already at a distance from the daily operations of the company. To replace me would require another visionary with connections to the entrepreneurial business world, professional practice and real estate.
I know and have already identified a small number of first choice people who would be willing and very capable to step in at my absence – either temporarily or in some cases, indefinitely. The right person could step in and replace me with little upset to the company and its member clients.
Each person on our leadership team has also created a replacement or succession plan for themselves, with full documentation and training – plug and play.
Instead of feeling vulnerable about replacing yourself, embrace the process! It won’t happen immediately, but if you have expressed this need to your team and they have bought in that everyone needs to be replaceable, you will find that the business will take on a new level of performance (and reduced stress).
For you as the owner? You will be able to step away from the day to day operations and experience real freedom as a true business owner – not a slave to a business as a self-employed worker.
Replaceable = Freedom
You can contact David through his website at https://www.freedomfounders.com