Membership valuation and BoomCloud

jordan what i want to do is before i talk about the next passive stream of income uh-huh i want to talk about how boom cloud directly affects valuations or practice could i do that or a subscription plan yeah it's good let's do that okay so okay okay so i'm one stream of income i'm going to talk about leverages off of these older dentists who have not started practicing again after covert okay yeah and so i'm going to talk about creating passive income with that but first

i'm going to talk about how a subscription plan like like boom cloud that of course utilizes a software to manage that how a subscription plan affects your valuation in your practice okay here we go so let's say your practice right now does a million bucks a year okay it does a million bucks a year um the average dental practice is worth about 72 percent of last year's gross revenue right so 720 000 is what your dental practice is worth but dental practice is because of this

dso component today a lot of them are valued at a multiple of ebitda sometimes six times uh ebitda okay uh is basically the profit margin in the practice after the doctor gets a modest salary and so one cool thing about subscription plan revenue every dollar that comes in is counted as ebitda so what's cool about that is your subscription plan revenue is not subject to the traditional way that you value practices subscription plan revenue every dollar that comes in on your savings plan goes directly to

ebitda which is how we've been transitioning into valuing dental practices so so isn't that cool jordan how that works yeah so the first the first one you said the 72 cents uh or the 720 000 uh uh typically a million dollar practice is worth that much that's called the discounted cash flow valuation is yes what i've been told and then the the what you're with the 6x there that's a multiplier evaluation and that's you want to be in the multiplier evaluation with anything that you do

because well it's going to make you more money yes yes and here's one more thing jordan and it ties into our next topic usually as you add another location and maybe another and have three locations you transition from valuing your practices from this uh discounted uh a cash flow methodology yep to a multiple right like heartland and all these big groups sell for multiple so what's cool is is this if you get ahead of the curve and get subscription revenue coming your practice and then you

multiply that in other practices you know if your ebitda number is way higher and you're getting an 8x or a 10x multiplier now you've double whammied it you've taken that subscription revenue and you've got a higher multiple as you grow so so uh it it can mean not just hundreds of millions of dollars but uh hundreds of mil hundreds of thousands of dollars but millions of dollars in the future by starting early yeah right so there's a there's a quote from uh there's a book that

i recommend everyone here read brady it's called the automatic customer it's a it's a building uh recurring revenue uh in any business and it's written by john warlow i can put a i'll find a link here in a minute okay um i highly recommend getting that book because it talks about everything we're talking about here in regards to valuations and what how recurring revenue through a membership plan in in this case um how that increases the value of a business over dental practice i think john

warlow says uh the recurring revenue can be valued between 24 times the monthly recurring revenue up to i think it might be 40 times i do have a slide on that so it's like 24 times the mrr so monthly recurring revenue so if you had like 45 000 monthly recurring revenue it can technically be valued at a little over a million to 2.4 million roughly is is kind of what i've seen according to this book here so automatic custer go automatic customer go grab that book

it's it it's uh if you like what you're hearing now you'll you'll love that book you know you you make a good point jordan not only just from the most empirical sense does recurring revenue increase that but in reality if you're going to value that as a almost a separate asset class which you should right and your accountant should or your valuation expert should absolutely absolutely then you're going nuts right with that right and just just to say it even more simply folks with your dental

practice when you cut that crown you do that crown you're doing it once and it's done right that's that's how we value it either with the discounted cash flow methodology or the multiple but with that recurring revenue right they know it's there every month and so it minimizes their risk right it does it minimizes their risk that's why they pay such a high multiple for that yeah if you and if you think about it any business owner or or if you if a court you know

a dso is buying your your practice let's say they want i mean technically they're buying it so they can make it a multiplier that's why most most corporate you know dental offices buy you know discounted cash flow and offices because they know that they can turn it into a multiplier but if you think about it if you think of real estate you were talking about real estate earlier um the beautiful thing about real estate is you get monthly cash flow coming in so recurring passive income

plus the increase of valuation of that of that building right over time uh typically real estate goes up and at least as long as i've been alive it's just kept going up and up right with some dips every once in a while but it still goes up nonetheless so that's a very good financial model now if you want to do this to your practice you need to build a recurring revenue cycle in the practice so you get that predictable recurring revenue coming in and then that

over time that valuation increasing so it's very similar similar to real real estate once you get that you know i i think what you're saying is huge because when i first made the decision to put boom cloud in my practices and to start a dental savings plan i was just thinking about the monthly money coming in right yeah correct and and and with real estate investment a lot of times we think of yeah the passive income that's great i can live off that sure yeah but

but when it comes time to sell an asset and you get a big check for two million dollars right or more then then that's a that's a that's a huge benefit and then you take that money okay and put that into another asset or two or three that produce more passive income and uh and so i i love it okay so all right let's go to the next topic this one's segue into your intro jordan let's do it okay so you know i met jordan many

years ago and he was just starting boom cloud many many many many years right and he said he you want to try boom cloud i said i don't have a dental savings plan right now and uh you know what i uh i said let's do it so i started it and we got hundreds and hundreds of patients signed up it ended up being thousands of patients yep and that those tens of thousands and even more more than that just came in every month and here's the

side side benefit yes the passive income's huge but those same people were some of our best internal referrals they'd say don't buy insurance use their plan and they refer people buy the droves right and so that's number two number three they would do more dentistry it's really weird it's like oh we're discounting our dentistry that means oh we might get a take a hit no no no they on average at 80 percent more dentistry than the non-plan people in our practice so so it's been great

for me i think it'd be great for you jordan's awesome his team is awesome i'm gonna hop off so i don't hog hog the airwaves and uh you guys will have a good time with jordan but um if you're not on boom cloud already i basically uh say give it a shot i think it's the best one out there so thanks jordan for having me tonight thanks brady this is awesome man all right so we're gonna get started have a good one man we're gonna get

started i'm gonna show you guys how uh membership programs can be super successful in your practice uh for those of you that don't know me again i'm the ceo and founder of boom cloud been in dentistry for uh over 15 years i'm also the co-host on the navigating dental insurance podcast say no to ppos.com go check that out but today we're going to make it quick last few minutes here i'm going to talk about membership programs 101 for those of you that does anyone here have

a membership programs put m in the chats if you have a membership program or n for no in the chat just so i can kind of get an idea of what everyone's doing so put m if you have a membership uh n for no uh basically a membership program on on the oh awesome thanks perfect so membership program is an alternative dental insurance where patients pay your practice a monthly or yearly subscription uh to to get access to certain benefits in savings your practice it's very

very similar to amazon prime uh you know but built for your patients oral health care that's kind of how i define it there a good example of this is a membership program where patients pay you know a yearly or monthly fee so a yearly fee you're looking at 300 a year or more just it ranges depending on where you're at or 30 35 a month and the patients get these benefits here so you can take a screenshot of this so you can see that and save

it so you can kind of study it after but that's what the the typical plan looks like there's many pros about offering both a monthly option and a yearly option in fact i encourage both but here's what's going to happen here membership programs are going to help you build a patient loyalty system which no matter what will increase the value of your practice it'll generate predictable recurring revenue and as you heard passive income and that cash flow coming in helps increase the valuation and the stability

of your practice you're also going to it's going to help you reduce dependence on ppos which helps increase your profit margins which again all leads to building the value of your practice so uh membership programs are extremely powerful more powerful than i think most people realize um and and brady's a wonderful example of his practice that he used to own had uh used boom cloud to help manage their membership program and i'll show you some case studies here in a little bit um but wonder wonderful

way to grow your practice get some pretty low hanging fruit of passive income coming in and build wealth and valuation for your practice so this is the book that i recommended everyone get it was the called the automatic customer a wonderful read here so let's get to some stats about the opportunity um yeah you're good you'll you'll get the replay josh so make sure you watch it uh so over the uh according to the u.s surgeon general over 108 million americans lack dental insurance in 2012

that's a lot of people it's now estimated that around 180 million americans don't have dental insurance and i believe that number will continue to rise especially with this the unemployment of of this year so real a lot of opportunities for prac if you don't have a membership program this is something that you should really consider it's the easiest way to create passive income or recurring revenue in your practice without spending a ton of money buying real estate or other practices i encourage both i think they're

wonderful ideas of what what brady has mentioned i've am considering buying some dental practices as well uh because i've been in the dental industry for a long time so it's it's really fun uh so think of a membership program the practices that think this way grow their membership program uh and are more successful they think of it as a marketing tool a patient retention tool a case acceptance increase tool and a cash flow or a predictable recurring revenue tool so with that said i'm going to

go down to some example of some case studies here we won't go through all my slides because i have a ton so we're going to go through a few case studies i'm going to show you what pre some practices are doing in regards to recurring revenue we also found that i mean i have the benefit of looking at practices across the nation thousands of practices that have membership programs and we've found that members spend more and approximately member patients spend two to three and a half

times more than a non-member patient which also increases your your value valuation so this first example here this is a practice in california that actually started in the middle of the shutdown within a few months they signed up 281 patients to their membership program which resulted in in circle number one here on my screen resulted in in just under seven thousand dollars in monthly recurring revenue coming in um and uh down here in the yearly let me get here you can see my mouse uh in

the yearly revenue here it generated about eighty two a little over eighty two thousand dollars in yearly recurring revenue and that's just a few months in the this practice in fact all the practices that i've that i'll be showing you uh started out talking to their existing uninsured patients and tapping into that revenue stream getting recurring revenue and increased case acceptance and this is a screenshot of what boom cloud looks like our software that helps you manage all this systems help you scale is typically what

i say all these practices you know we've been able to help them scale their membership program and generate a lot of passive income the second practice here they used both uninsured existing patients and facebook ads to get the word you know word about their membership program i believe marketing is extremely critical if you want to grow this passive income stream you gotta market and get the word out so patients know uh that you have one this practice if you look at uh circle number two on

this this dashboard here this practice has a little over 1100 active membership patients that are providing over twenty six thousand dollars in monthly recurring revenue for this particular practice again they used facebook ads and tapped into their existing uninsured patient base that they weren't getting much revenue from because patients weren't showing up i'm sure most of you here have heard you know this many times i i can't go to the dentist because i don't have insurance uh you know that's a big problem with the mindset

you know with of an uninsured patient so by promoting your membership program to your uninsured patient base you'll tap into this revenue stream this practice uh three over three three hundred and sixteen thousand dollars in annual recurring revenue uh for their practice that comes in whether they do dentistry or not you know which is a a wonderful benefit brady talks about working with your hands a lot and trying to minimize that as as you grow your practice or at least build systems to help you do

this this last practice here they have just under 2 000 patients in circle number two two thousand just under two thousand patients which generates almost fifty thousand dollars in monthly recurring revenue that automatically comes in whether they do dentistry or not whether they're in florida or hawaii or not right on vacation or hopefully not this but during a shutdown this practice was generating this revenue during during the shutdown so just just over a half a million dollars in in annual recurring revenue uh for this practice

they use direct mail marketing and their existing uninsured patient base so you can see that the power of your your a membership program can bring a lot of passive income in and this is i think this particular practice this is about two years in and all these practice started a membership program from scratch right like brady said you you buy low sell high right starting something and creating something from scratch is a form of buying low um and obviously this provides a wonderful cash flow stream

for your practice every month this particular practice every month they start their month with just under fifty thousand dollars in their bank account think about that most practice owners they close you close the month let's say you had your you you closed a hundred thousand dollar a month let's just say for just to keep it simple you close it on the the 30th of uh the last day of the month the the first of the month you start at zero and you got to build and

work your way back up again the beautiful thing about recurring revenue through membership programs is that it gives it you start each month with whatever your your monthly recurring revenue base is or you start each year with the annual revenue here you can see this this practice over 500 thousand dollars in annual recurring revenue when i say recurring revenue i mean it's automated coming in it's automatic coming in automatically right uh so those are some examples here of practices that have done really well with their

membership programs and utilize a tool like boomcloud to help grow um and scale their membership program keep key mistakes that practices make uh one not automating your membership program to putting it in a binder or or uh relying on an office manager to keep the the concept and management of the program in his or her head you know if if you let let an employee go or they they quit and they're the ones managing your membership program most likely it crumbles and it it does not

provide a stream of passive income for your practice so this is why a lot of practices are using boom cloud so that they can have that reliable income and not rely on on on people to manage those systems or or automate those systems um so a couple things here i got a book specifically on membership programs that i want to show you guys and we'll we'll let you guys go unless you have anyone have any questions about membership programs i know i probably went real quick

on it i have a ton of content and webinars that go real in depth with with membership programs and how how to scale them how to grow them how to how to everything from a to z uh but i wanna i want to offer this this book for you are there any for cosmetic facial surgeons great question uh christine uh do you have any type of maintenance that you do for your patients like hygiene or perio or anything like that in your practice laser tightening how

long is that that maintenance program for is it like a six months or is it is it kind of like a lifetime thing that they have to do the lifetime yes so you definitely could do some type of membership program based off of that i'd love to learn more actually on what what what you're thinking here and i can help you understand okay understand how to create a membership program that the t oh cool botox yeah you definitely you could do a membership program as long

as you have maintenance that you can that patients are coming back in um you know every every six months or every quarter or whatever the cadence is you can turn that into a subscription program that that generates passive income uh yeah that's very true christine i love it but i what i recommend you guys do is check out boom cloud what we're doing in the dental industry i've been doing this since 2014 um for dental practices across the in the nation uh this is my free

ebook here you can get it at slash boomcloudapps.com uh and then i recommend going to boomcloudapps.com and scheduling a demo with my team to understand how boom cloud can help you create passive income through membership programs and help you not only get that that passive revenue income stream in but increase the value of your practice and help you increase uh case acceptance by two to three three and a half times from your from your uninsured patient base so this is my email it's jordan boomcloudapps.com go

download this ebook and schedule a demo on our site to learn more about our software you and again you're not just going to learn more about our technology my team is they're trained to be consultants and help you understand how to implement this in your practice and and get the details there so yes thank you christine congrats to both of you for making fun of profitable careers for yourself yes and you know what i enjoy more christine is is helping others uh create profitable careers as

well like like brady said the mentorship is always fun helping people uh with these business concepts um no you're not you're not the only one still on you're just the one that's chatty so those of you that are still on go check out this book here i'll be sending everybody a replay but i really appreciate you coming on brady appreciates you coming on uh to our webinar today and we hope you have a wonderful evening rock on everybody you