Ben Lynch: G'day, good people. Welcome to the Grow Your Clinic podcast by Clinic Mastery. Here's what's coming up inside of this episode. This episode will be right up your Allie if you're looking to step back from the day to day and have your team step up. We're diving into the clinic ownership pathway. And trust me, you want to hear Hannah's take on why she decided to sell a piece of her clinic. Plus stick around for when we explore each of the steps Hannah followed to welcome a new shareholder to the team.

Hannah Dunn: What is a shareholder? What is their role? And they can sometimes mix those two together, but they are very separate.

Ben Lynch: Having a team member buy-in as a shareholder, what led to it? What felt uncomfortable at times? What were some of your fears and uncertainties?

Hannah Dunn: I'm going to brag, I have a really great culture at D.O.T.S where my team is very happy to tell me if they are going to go out and start their own business.

Ben Lynch: How many times have we had the conversation with the clinic owner that's like, I want to sell and I want to sell yesterday.

Hannah Dunn: The tag-on calls, which is something that one of the coaches picked up was missing from which was really good. We're in the numbers all the time, but we're really deep in the numbers. You're in numbers all the time? All the time now, yep. Oi!

Ben Lynch: Before we dive in, today's episode is brought to you by AllieClinics.com. If you're the kind of clinic owner who loves to feel organized and stay ahead of the chaos, you'll love Allie. Think of it as your digital clone. It's the single source of truth for all your clinic's policies, systems, and training. Test it for free at AllieClinics.com. And in other news, applications are now open to work with us one-on-one at Clinic Mastery. If you want support to grow your clinic and bring your vision to life, just email helloatclinicmastery.com with the subject line podcast, and we'll line up a time to chat. All right, let's get into the episode. It is episode 351. I'm again joined by Hannah Dunn, Director of D.O.T.S and OT Service in Victoria, spanning three sites and recently a new addition to the ownership team, which we're going to get into shortly. But first, what was your key takeaway from our most recent episode with Andy Wang from Clarico? We were talking about clinic evaluations and you seem to be pretty keen to unpack that.

Hannah Dunn: Yes. I think just in my coaching as well to get people ready for sale even if it's not part of their plan was really valuable just to be really clear on those numbers and what we're looking for.

Ben Lynch: It's a good forcing function, isn't it? We spoke about this like literally yesterday in the coaches training around good hygiene in people zero, you know, reconciling up to date, having a good profit and loss structure. And you kind of need that to happen to do the valuation. So it's like a good forcing function if you committed to a valuation to get your house in order to make that happen. So there's kind of a number of different benefits.

Hannah Dunn: Yes, absolutely.

Ben Lynch: Yeah. Well, before we dive in, welcome to Mitchell, who just joined the Business Academy. Melanie, who just joined us in Elevate. Elevate's for the smaller or early stage clinics, kind of from startup to maybe you've got three team members, four team members. and the Business Academy for the maturer, bigger size clinics. We do often get the question, how big are some of the clinics that you work with? I think probably one of the biggest is about 200 practitioners. I bet there's quite a dispersion once you get into the bigger size of clinics right through to startup. So depending on the stage of your journey you're at, it's likely that we've seen it. And if you're wondering if we can help, just reach out to Jack at clinicmastery.com. I was thrilled to see two very long-term members in the last two weeks send a DM on Slack, Deanna and Beck. They run separate clinics in separate states. Thrilled to hear the news that they've both just sold their clinics completely. They've been in the game for many decades and we're just sending their gratitude for reaching this very meaningful milestone for each of them where they've been able to hand over the clinic. We're going to talk about selling parts of your clinic today, but just a big shout out to them. I thought that was pretty cool news to hear.

Hannah Dunn: Yeah, it was really great. Bec shared it as a win on the Clinic Mastery wins channel as well, which was so awesome to hear a little bit about how that had progressed for her as well.

Ben Lynch: Yeah. Yeah. So awesome. I mean, that's a great result to get to. There's a lot of mechanics and steps and due diligence, conversations, negotiations. It can be a. emotionally charged time because there's a lot going on and you're just hoping for the best result. Today, though, we're going to talk about selling part of your clinic or making the option of your team members investing into the clinic part of their pathway. I think a lot of clinic owners say that they want to step back. Typically, it's clinically first, then maybe operationally second, and then maybe from a business perspective thirdly. And in doing so, there's also this fear, which is, I want to retain my team members while I do this, as I step back. And in doing so, you kind of create this vacuum where they can step up and step into that, and that looks like pathways. And one of those pathways is becoming an owner. I think you want your leadership team or your senior team members to think like owners, to act like owners, and to be invested in the long game. But at some point that actually becomes the real question. Do I actually invite them to become an owner? Not just like a reward or a bonus or a title, but perhaps actual equity. So today I want to unpack your story, Hannah, your journey towards having a team member buy-in as a shareholder. What led to it? What felt uncomfortable at times? What were some of your fears and uncertainties and sort of what's happened? for you, what's changed since that's happened. So perhaps take us back. Where did this all begin? When did this become actual something you were going to pursue?

Hannah Dunn: Yes. I think one of the benefits of clinic mastery is the retreats and hearing about what other people do and being able to hear those stories. And so originally Steph was not the person that we were talking to the first time that we looked at someone buying into the business. And, um, I remember really clearly at our first retreat and, you know, there are so many ideas that come up that you can grab onto anything. It was a real moment where I thought there's two people in my team who are not clinicians. We've got Lisa and Louise and they are part of our admin team. And they have really built this business with me. Like I was sort of at year five or six, they'd been with me for three or four years at that stage. And I felt like, oh, I really would love to reward them in a way that is different to just a salary or thanks or gifts or whatever it is. And so when I was at the CM retreat, I sat down with Shane Davis and really spoke through all of what that looked like and what that had looked like for him in his experience with his businesses, because some of his team were even at the summit who had bought in, and so that was really eye-opening to me as this being an option. And so with that process, we sort of got to the point of, and you know, I hadn't even spoken to them about whether that was something they would want. It was sort of, for me, like thinking about who would I want? Who's that ideal person that I would want doing this journey? Why them? Why now? And so I sort of worked on what the business was worth and went down the process of evaluation and how to look at that. And then sort of opened a discussion with them to say, would this be something you were interested in? And we sort of had some casual conversations around it, but ultimately it was going to be a fair chunk of money and potentially not part of their goals at that time in which they were looking at purchasing houses, looking at school fees, all of those sorts of things that may be not the right time. And that's totally fine. Like for us, it was sort of just a conversation. The other part of the conversation that was really valuable with one of the coaches was around is this is not the only way you can reward people. There is also bonuses that you could give at the end of the year, for example. Is a bonus equivalent to a dividend payout without them having to invest, is that a better way to reward at the moment? And that is sort of where we ended up that, you know, I could provide rewards through bonuses that weren't attached to maybe the KPIs that the OTs had. I learned a lot through that process, but it also was probably never a really serious point, but it was something that we were sort of on the journey and providing options and looking at how that would work. There was no OT on my team at that point that I thought, oh, you're someone that I can see that I would want to do this with. I did then have an OT. I have a really, I'm going to brag, I have a really great culture at D.O.T.S where my team is very happy to tell me if they are going to go out and start their own business and they'll tell me that as part of their goals two years before it happens because they know that it's not going to impact their employment. They know that You know, I feel super proud if someone can go out and start their own business. And so I had one OT, Tatiana, that had said to me, you know, this is my goal. Like I'm here, I'm invested, but my ultimate goal is to have my own practice. And so that's another time in which I think it's important to think about. okay, like how can we do this and what would it look like? At that time, I felt like I wasn't ready to have an OT buy-in and Tatiana was very young and whether I felt like I knew how to support that in the same way as supporting her going out and not having the same risk. And so I ultimately decided that it wasn't conversation we were going to have, but also supported her to go out and she's got a thriving business in the same area as us, which is awesome. And I'm super proud of the part, the role that I had in that, but it wasn't the right thing for me at that time to offer a partnership because we'd worked as sort of boss and OT instead of what I'd done with Lisa and Louise, which is really work on that same level, part of the strategic planning and things like that.

Ben Lynch: It's really interesting that you started with the admin function, the practice managers, Lisa and Louise. Typically we would see a lot of therapists, you know, be picked or selected in that pathway. But I think this is an interesting one to just unpack a little bit, because if you've got a good practice manager, it's night and day with how well your business runs. Like it is such an incredible function to have. Just let's go down that line. It sounds like you had started thinking about, how do I reward these team members? How do I show that I really value the contribution that they're making? Perhaps it's more than just gifts and little rewards here and there, but actually they could be owners of the business. So it sounded like you went through the journey of trying to figure out what that would look like first with evaluation and then going to them. Is that correct?

Hannah Dunn: Yes, but with Steph not that way, the other way around. But I think for me in my first time learning about it, it was important for me to know what would it even look like? How much would I be asking for? What would the cost of it be? What percentage of shares would that be? Right.

Ben Lynch: Let's go there then. How did you start to think about that? Because there are a number of different ways that you can actually achieve this outcome, if that makes sense. Like you were talking about, is it just a profit share? Do they buy in and they actually own equity? Are they purchasing like an income share? There's so many different ways that you can structure this and a good accountant will be able to guide you on that process. But just talk us through how you made some of those decisions once you became aware of some of the options.

Hannah Dunn: Yeah, I think it was really, yeah, absolutely talking to the accountant and then also meeting with Andy Wang and having just a secondary opinion from my accountant, having someone else and seeing what, and he was like, yeah, that's exactly what I'd be doing. And I was like, great, we're on the same path.

Ben Lynch: When you say that's what I would be doing, do you mean- What I was doing. Oh, okay, great. And that process was you eventually landed on people literally paying to own shares in the business.

Hannah Dunn: Yes.

Ben Lynch: Just like they could invest in property or the share market. They are investing in your business so that they can get some of the profits and also perhaps some of the appreciation in the value of the business.

Hannah Dunn: Yes.

Ben Lynch: That's where you arrived at.

Hannah Dunn: Yes. And at that time I was doing it more so for reward for them. And that, you know, I definitely wanted them and I wanted to keep them, but I also wanted to make sure I was really thinking about how do I reward them. Whereas where I am now with Steph, there was definitely a more selfish aspect of it as well. That was, I'm tired of doing this alone. And I want someone else to do this with me who has the OT brain, because Louise is still with the team and still on our team. And I've got incredible support from an operations perspective from Louise. I was on the phone to Lisa just before this podcast. She's not in D.O.T.S anymore but we definitely have a great relationship still and I can call her for advice if I need anything around finance. just feeling like I've got an incredible team of OTs, I've got a great team leader, but I just want someone who is invested and has some skin in the game to help grow this to a new level. And that is probably what came about this time with Steph that wasn't necessarily what I was expecting of That definitely expecting them to help with the growth, but not necessarily on the OT side of things. I felt like I had that covered. Whereas now I feel like I don't have that covered as much as I, I don't have as many hours as I want to do to create that. And I need another OT brain to be able to help me with that.

Ben Lynch: That's a really good distinction around understanding what are the driving forces for you. It was different the first time compared to the second. The first is more reward-based. The second is more around having someone help. I think that's a great distinction and often as part of our coaching, right, is people come to us with, I want to do this. And we're trying to first unpack and understand, okay, well, what's led you to that conclusion? And sometimes I think people have a solution looking for a problem. It's like, can we understand the problem you're trying to solve for? It sounds like you're really looking for someone else to come into the business and help you out. They're already in the business, but to be able to help you grow the business with the same level of maybe commitment or drive, literal ownership.

Hannah Dunn: The other thing I was just going to say, I think the other driving factor is now we have a pathway that the rest of the team are aware of, that if Tatiana was a team member today, potentially would have been a pathway that maybe she would have been interested in. You know, there still might not have been, it might've been something that she wants to do on her own and that's fine too, but just knowing that now there is pathways for people that have those desires to be business owners to continue in the practice that there was a ceiling before.

Ben Lynch: So I'm really interested, there's a couple of threads here for us to pull on. The first one is around… When you went through that process of finding out the value of the business and then determining, well, how much would I be looking to sell? What type of sale process would it be? What would they be buying? Just talk us through, and you don't need to go through absolute specifics, but just how you arrived at that. How did you arrive at knowing, am I selling 1% or 10% or 50%? How did you come to that decision? What was some of the thoughts that you had?

Hannah Dunn: Well, I didn't really know what percentage I wanted. I definitely wanted to keep the majority of shares, so I knew it was going to be less than 50%. Through the process of looking at what the valuation was and seeing how much a share would cost and how much the investment would be, I sort of came to a number that I sort of thought, well, this would actually have an impact on our financials and it would be worth it for me to have that much money coming in in one go versus creating that wealth over 12 months or two years or whatever it was. And so for me, it was a conversation. Once we'd had the valuation, we then looked at, right, the valuation is this. Steph had an idea of what percentage she wanted or how much she wanted to spend. And so that sort of guided us a bit as well. And so we gave her the valuation and we said, this is what we're looking at. This is the number. Now, some people would say, don't give them the valuation, just talk about that what you're offering, other people will say, absolutely not. They need to know, um, how to look at, you know, profit and loss and all of those things. And essentially the valuation is what came up with number of shares were able to be what percentage of the business she would own. And then that percentage just was like, well, how many shares equals that percentage? And so that's how we worked out the number of shares was based on the dollar amount, what percentage of that it was. And yeah.

Ben Lynch: The dollar amount that she was willing and able to invest. Is that what you're saying?

Hannah Dunn: Yeah.

Ben Lynch: So let's just use some round numbers indicative here. Let's say the business is worth a million dollars and you feel comfortable to sell 10% of that. Yes. So you kind of know how much you've got available. And then it's about checking in with that team member, how much they're willing to invest from a dollar perspective. And it might be 50,000, so they can buy half of that allotment that you put out there. And then we're starting to work through the mechanics of how that happens. So that's really useful, I think, as part of the process. What I'm hearing from you is for clinic owners to understand why am I trying to do this? What's the driving force or forces for me? I think a key one, as you just alluded to there, was it kind of actually allows you to realize some of the value that you have built in your business. Now, instead of waiting for some total exit, potentially in the future at some point, you're able to take some chips off the table, so to speak, and also provide a pathway for great team members.

Hannah Dunn: Yeah, I think also just for some context, um, I think it's about how long that team member's been on your team as well. I think that's something that people definitely think about. And Steph's been on our team four years, coming up to five years, is currently on maternity leave. Um, there's a few moving factors there, but for full transparency, Steph and I went to uni together and we've been friends since we were 18. But that doesn't mean that she got that because we were friends. She has put in four years of traveling from Geelong to Werribee to work in a clinic that, you know, it was a big deal. We had chats about, um, what would we do if it didn't work? And if she was working for me essentially as one of my best mates, um, and there was never a promise of this will lead to shareholding or this will lead to anything, but just the way she's absolutely the ideal team member and our team knows why. She is the one that is there. And so I think when we're talking about us understanding our why, we also really want to understand their why, but also how the team will understand why it's them as well.

Ben Lynch: Great. So, does that look like you having some documented criteria or is it a case-by-case basis because it's a typically high dollar value investment? That doesn't mean just because you've been around maybe you're willing or able or wanting to do it. Yeah, what does that now look like? Have you documented literally a pathway for others to say, hey, could I kind of understand the journey here and what it means to me? Or is it more just an open door? If you're thinking about this, let's have a conversation and we'll work on it case by case.

Hannah Dunn: Yes, we have documented it and we have presented it to the team.

Ben Lynch: So we've shown the team that we would expect them to be working at… Essentially you're saying there's a number of criteria for you to meet for this to be a conversation that we have. And even if we have the conversation, it perhaps doesn't even mean that it'll be granted to you or offered to you, but you at a minimum need to tick these boxes.

Hannah Dunn: Yes. And I think what we really need to see from someone is that they're taking, that they've probably been in a leadership role because they have been part of the strategic direction of the business and that they're already doing the do. Like, I know that Steph was doing, coming up with ideas outside of work. I know that she was presenting them back to me. I know that she was showing initiative. I know that she was working outside of hours on a few extra projects, not because she had to, but because she absolutely loved it and that's what filled her cup. I know she's invested in D.O.T.S emotionally and that is where she wants to be. I think coming through, as you said, the process is a long one and we were really clear with each other that this is not going to happen overnight. Um, it was really valuable for me to have Mel Webber talking to me about her process with Gabby and what they had done there. And I think that's one of my key recommendations that you have a coach who has lived it and that you get support with it just to have different questions to what you ask an accountant and things like, you know, when did you tell your team? When did you let your team know these things? How did you do it? And so for us, we sort of introduced it as a option about six months ago. And we mentioned that Steph was looking at it as one of the options. And then at our most recent team time, we announced that Steph had been a shareholder since the 1st of January and that we were really excited for that. And I think what people get confused with is what is a shareholder and what is their role? And they can sometimes mix those two together, but they are very separate things in a business. So let's talk about it. Yeah. So Steph is still a team leader. That is her role. She's on mat leave. Um, when she's not on mat leave, she works three days a week and that is her team leader role.

Ben Lynch: Yes.

Hannah Dunn: Her shareholder role is that she meets with me, we look at finances, we talk a little bit of the strategy stuff, and she's expected to do four hours a week of non-build work, as am I. I am also expected to do four hours a week of non-build time that we then get paid for essentially in dividends when there is opportunity to take those dividends. And all of this might sound over your head if you're new to this, but it is what comes out in the shareholder agreement. And, you know, lawyers have examples of shareholder agreement, but also that's when those coaches come in handy. Shane Bennett's another one that was really super helpful looking at those agreements.

Ben Lynch: Yeah.

Hannah Dunn: Expectations, Tony, as well, like just reading over the shareholder agreement. And we had a lot, like, as I named people, there was a lot of coaches that provided support around it. And, you know, there's a lot of talking and working things out because there's a lot of nuances and differences that you may or may not want to include.

Ben Lynch: What were some of those that you choose to include? Because like you said, you can go to a lawyer and they're going to maybe have a template of here's a shareholder agreement that you can roll out. And what you're saying is essentially there are many ways perhaps to be right about this. You can really tweak it. So what were some of the decisions or considerations that you had about changing perhaps just the basic template?

Hannah Dunn: Yes. I think for us it was around how many hours do we expect to work on the business instead of in the business around restraint of trade. Like what does that look like if there was an exit? What does that look like? What's the reduction in like what would the amount be to pay back the share to buyer out or if it wasn't working?

Ben Lynch: I'm not sure if you chose this, but the point you're raising is a good one. It's typical that the valuation might be frozen for a period of time really to discourage someone buying in and then exiting in a year or two years, maybe it's frozen. Yeah, two or three maybe around the mark. Because there's a lot of fees, legal fees, accounting fees, tax you have to pay on the sale there. So if you have to buy it back, we've been through that experience. And that's why you have those clauses in there. So that's a really good point. Yes. What else?

Hannah Dunn: Things around whether I could just choose to have another shareholder come in or whether Steph would be part of that decision even as a minority shareholder. Around who has first right over a few, like if she wants to sell her shares or if let's say we had someone else because ultimately the shareholder agreement is not just for Steph, it's set up for anyone who buyers in to essentially have the same shareholder agreement. And so we had to think further forward around, okay, well, if someone else had shares, we would get first right to purchase those or does Steph get first right to purchase any more shares that we were willing to sell? Up until a certain amount of shares, you know, you can choose to cap that at a certain amount or to have that unlimited. So there was decisions around those sort of nitty gritty things and also around, well, what happens if I am no longer here all of a sudden and what happens to the shares then or to the company then? And then the other thing to, the big thing that we were looking at is if I was to sell the company, what happens to Steph? Does she get the same terms that I get? Which absolutely she does. And so there are all the sorts of things that the lawyer and accountants will talk you through and good coaches will work through with you. the tag-on clause, which is something that one of the coaches picked up was missing from our agreement initially, which was really good.

Ben Lynch: Typically, yeah, called the drag-and-tag clause where basically a small shareholder can't have the power over the major shareholder or shareholders. And so you raise a number of questions, which are fantastic. And for those that haven't been through the process, there is going to be a lot of support from the lawyer that you choose to engage for the sale documents and these agreements and your accountant. And also being able to have someone else available to you that's been through that experience can just offer alternative perspectives because maybe there is the out-of-the-box playbook, but you can essentially agree to anything. So, you can tailor all of these elements in different ways. That's why we often say, and I'm interested in your timeline and timeframe, you said it does take a while, we'll come to that in a moment. Because there are so many of these things to think through and maybe the second and third order consequences of them, as you speak to timeframe and timeline, just give us an indication as to how long it took from the first conversation through to it getting done and if that differs at all from what you've seen other clinics do or other stories you've heard.

Hannah Dunn: Yeah, it took us about 12 months and I would say 12 to 18 months if you're new to the business and if it's your second or third time, it might be seven or eight months, but it might be quicker. I think the things that slowed us down were us being mums and just slow out with us getting back to lawyers and accounts. But also thinking about the entity in which Steph wanted to purchase in, was it going to be her as an individual, her as a company, her with her partner? Like what does that all look like?

Ben Lynch: Getting financing potentially as well in other cases. I'm not sure if she paid cash or how it all played out, but those things take time.

Hannah Dunn: Yeah, and I think you raise a point around finances. There's so many different ways to do that. Is it that you're going to go half-half? Are they going to purchase the whole amount? Are they going to be able to pay that back with dividends? Is it upfront? What does that look like?

Ben Lynch: Yeah, you can essentially be the bank in vendor finance. They could pay you or they could get a separate loan. Maybe they got a house and they're able to draw some equity out of that, potentially use that. And again, that's where having an accountant support them through that process and a lending provider as well can be really useful plus just the conversations with you, the owner.

Hannah Dunn: I think one of the other things that I haven't spoken to yet, so if you've got anything else Ben on those, is around the partner of the person that you're going into business with. One of the pieces of advice I got was bring them into that first conversation just so that they've got, and if you feel like that is the right thing to do, it's going to be up to you to judge that with the person you're going into business with, whether they have a partner or who that partner is. But I think it was really valuable for us to have Cam there for one, for the first conversation and just to allow him to understand and ask questions. And, you know, like he's one of our good mates, but it was still good to have. him there in a professional sense. And then, and Warwick was there as well. And then we- Your husband, yes. My husband, yeah. And then from there forward, it was just me and Steph. And then they had questions they asked us, but they don't really. But you know, I think you want to bring their family along for the journey because it's a big investment for both of them.

Ben Lynch: It is.

Hannah Dunn: And then, um, yeah, I just think that was really valuable. And then the way we celebrated with the team, I think that timing, I think as directors, we are over sharers with our team sometimes. And so I actually found it really hard not having that conversation earlier. And I did feel like I was sort of portraying a couple of the team members because I felt like, you know, there's people who are in higher positions and stuff. We've got, um, you know, Belinda's in a principal. uh, late team lead and Steph's in a team lead role. So that's the difference. Louise has been on the team a long time. Michelle's been there for eight years. Like there were other people on the team that I felt it was important. I had one-on-one conversations with, which they were all awesome and supportive and, um, wasn't necessarily on their desire statements. And so I just think thinking about how you share the news is really important and not doing it too early, um, or too late maybe.

Ben Lynch: So how did you make that call about where you felt the Goldilocks time was?

Hannah Dunn: I felt like the Goldilocks time was when Steph and I were a hundred percent going ahead. We had signed share holders agreements and there was, she had finance sorted. So there was nothing that was going to fall through at that point. And that was the time in which I then had individual conversations and they, part of the, they're all part of the leadership team. So it was important. They knew that from the 1st of Jan, that's what had happened. And then the others found, I announced it to the team on our team day, which was in Feb. when we were all together. And so the timing on that was just based on when the team were next all together, which was really exciting. And Steph was able to come to that day. So, yeah.

Ben Lynch: Great. Well, I imagine as well that, as you mentioned with some of those other team members that have been there a long time, perhaps it wasn't on their desire statement, there's always going to be the first one. And I imagine in you doing the first one with Steph, It's probably the clunkiest it's ever going to be. It's only going to get better and easier, maybe quicker. And it sets a bit of a blueprint for those other folks to go, oh, that's a possibility I didn't see and gives you confidence to know, oh, yep, we're happy to revisit this in the next one to two years again. But I think it's a wonderful way to, yeah, realize the value. of the equity that you've built, retain key team members by giving them a meaningful pathway to ownership. And also, I think, have that extra help, like you said, around you, someone that carries that mentality. It sounds like she already did prior to that.

Hannah Dunn: Yes.

Ben Lynch: I'd be interested in your experience, you know, in six and 12 and 18 months from now, if you also see that kind of get further refined and go to a new level as you've got skin in the game. Steph has skin in the game. It presents a number of really great second and third order consequences in a positive sense, I think. Then we get to around the Ops role. Does anything change there? I know you made that distinction between these are the expectations of you as a shareholder and these are the expectations of you in your leadership role. Did anything change? Did you consider anything changing in that sense or you kind of separate them quite clearly?

Hannah Dunn: Separated them really clearly and it's really around her having more visibility on the numbers and what that money is going to. There's really nothing else that has changed. She was already in her team leader role focusing on that Geelong expansion and so that is continuing to be what her time is going into. I think the biggest change and something that maybe I wasn't as prepared for as maybe I should have been is the change to my available dollars that previously I was just paying myself, if you're the tax department, I don't know if this is right, but I was just paying myself minimum wage for the hours that I was working and then doing drawings. And so those drawings were higher than what, but when you have a shareholder, you need to be paid a salary at market rate so that we're not just, this is very clearly not legal or accounting advice, but my understanding is that, you know, it's cleaner when you have your salary set up. So I am now a salaried employee. year as well to D.O.T.S, which previously I was relying on those drawings. And yes, my salary is not no longer minimum wage, but it means that I have the same amount coming in each fortnight. And I'm not in a position to just be like, Oh, we've got that extra thing. Let's just take some more drawings and then we'll work it out at the end of the year. And that'll be part of my salary. So my salary is reduced to what my salary plus drawings was. But then as Steph and I work together by the end of the year, hopefully that will all even itself back out.

Ben Lynch: I'm interested in two things here. How did you decide on what the change frequency of distributions was going to be? Because it sounded like you would do a version of as needed for yourself. Correct. Maybe you did it periodically. So dividend sort of frequency, how you came up with that. And then secondly, it ties into this is Often a lot of clinic owners, if they own the business by themselves from the beginning, will be running a lot of things, home expenses, potentially through their business, their accountants being creative. You spoke to it a little bit about in the last episode with Andy Wang and the clinic valuations. and essentially tidying up the books to make it look like if this, you know, if we don't run personal things through here, which often folks do, did you have to make many changes there in terms of how you were operating?

Hannah Dunn: We're a paediatric OT practice and I have three kids and so I think you've got to think about that, yeah, you're not doing any of the personal buying of any presents or anything through any businesses that I've heard other people have done.

Ben Lynch: And I guess through the process of valuing the business, anything like that will be identified and considered when putting the value on the business.

Hannah Dunn: Um, yeah, I think that did draw attention to me though. Like we forget that if the end goal is to sell, then maybe we shouldn't be doing these things that devalue it and save us tax because in the long run it could actually shoot ourselves in the foot.

Ben Lynch: Yeah. make it reasonably messy. And it's like, how likely is it that you will sell your business? I don't know, maybe it's an individual decision, partially or fully. I know a lot of people kind of just think, oh, that's, I don't know, 10 years away, 20 years away. I see myself doing this for ages, but you just never know. Life changes, right? And hopefully you're never forced to sell, but how many times have we had the conversation with the clinic owner that's like, I want to sell and I want to sell yesterday. And then you're like, well, I don't think I've seen that deal basically go through any shorter than 12 months. I'm sure it could, but it'd be a very challenging period of time because it is a bit of a emotional rollercoaster. And while you're dealing with that, it totally distracts you from the running of the business as well. which you kind of need to keep happening in order for the valuation and the potential buyer to give it the premium that you want it to have.

Hannah Dunn: Yes. And particularly those last three years is what we were looking at. And I think that's pretty common that it's three years.

Ben Lynch: Which is so interesting that you bring that up because if you're like, oh yeah, I want to sell my business, but maybe we've had, you know, the last two years have been a bit average, this year is going all right. You need to perhaps be aware that those things will be considered or today you go, hey, we're not in the best shape but I could see myself making this a possibility. Maybe I need to sharpen up on a few things over the next 18 to 24 months so that we can sell in three years. Dividends, let's come back there. Because you were just talking about, okay, personally, obviously these changes happened. I would just kind of use the business like an ATM, which a lot of clinic owners do. I just need a little bit of money, take it out here, use it there, figure it out at the end of the year. I think it's good management if you can put some of these things in place anyway. Like you said, whether you're planning to sell or not, I think it's just a good business practice. But anyway. How did you think through the dividend frequency? Is it monthly, quarterly, annually?

Hannah Dunn: It's quarterly to start with and we felt like that worked with our rhythm of paying out rewards to our team and we're really in the numbers all the time. You're in the numbers all the time? All the time now, yep. All the time. I've even, yeah, just been looking at some CM resources to even level me up again. Oh, I love it.

SPEAKER_00: I love it.

Hannah Dunn: Yeah, because that's the advantage of having so many coaches that take on my members and I was like, oh my gosh, I have not seen that. So, we decided on quarterly with the expectation that it's a learning curve for both of us and we will reassess as we go along. But that's because that's the way our rewards are paid out and so it'll be a clear indicator of how much we're paying out to other team members and what the cash flow is like.

Ben Lynch: Tell me this, prior to this, or maybe because of this, were you doing like the account buckets we've talked previously about influences like the profit first model?

SPEAKER_00: Yeah.

Ben Lynch: It's a reasonable book and framework. There's a few things that we disagree with. I'll park that because we have talked about that a number of times, Jo, being myself on previous episodes. But, perhaps one of the key practical takeaways is around separate accounts within your bank account so that every dollar has a purpose and imagine it kind of flowing into these different buckets so that you don't co-mingle funds and you go and spend a bunch of money and you go, well, actually, part of that was for my tax liabilities or insert anything else. Do you have like this is our little bucket to put some of the funds at the moment? How are you managing that so that you build consistency of these dividends over time?

Hannah Dunn: Well, that's the other thing to think about before we agreed on the amount the shares worth and what assets were in the business, there was an overflow account of, um, reserve money. And it was, um, a reasonable amount that was in there that was probably too high that we needed not to have that much in there to run the business. So it was about what are we going to leave in there and have step by into. versus what we'll take out. So yeah, we've definitely got like the tax account and all those sorts of accounts and then the other account being the flow over account of a rainy day account essentially. And so that is a set amount that we will review each quarter and just make sure that we feel comfortable with where that's at. And I think with changes with you know, changes with thriving kids, you might want that bucket to be higher to cover a period of time in which there might be uncertainty. If we're thriving and there's no changes coming, you know, maybe that's in 12 months, let's all hope that's in six months, then that might be lower. You might feel like you've got a little bit of freedom there, but you might have a minimum and that might go up or down.

Ben Lynch: Yeah, better to be looking at it than looking for it, isn't it? And that's where you're talking about, hey, maybe some of the practices that we have of how we treat our business of, yeah, just take distributions, money out of the business as I need for our family use. and you don't have some of the tracking in your zero, you don't have some of that structure set up, you don't have some of the bank account structure set up that ultimately leads to this oversight or confusion and then financial stress So imagine being able to look at your bank account and say, oh yeah, okay, we've got the rainy day fund or the zombie apocalypse as Andy Wayne calls it. I'm very much a looking at person.

Hannah Dunn: We've got the school fund account in our personal life sort of stuff as well.

Ben Lynch: And you can start small, right? Sorry to interrupt you. Some people are like, oh, you know, maybe I've got… $50 to $500 to do it. It's like, well, just start and you build some confidence over time. Anyway, where were you going?

Hannah Dunn: I was just going to say, I actually, so even though Warwick and I were both doing drawings out of the business when he was working in the business as well, We had it actually set as a regular fortnightly amount that was going into our account but we were definitely doing other things and then it was getting tracked on Xero as a drawing for us. And so I think if you are doing any of that stuff to make sure that it is automatically going in as a drawing and being allocated and that it's not just getting lost because that's when I think you get the tax bill shocks when you've taken money out but it actually looks like that money is still in there. Yes.

Ben Lynch: Really great point. If anyone's needing help with their accounts, their financials, just reach out to jackatclientmastery.com and say, I need help with an accountant or bookkeeper. We've got the lovely team at Clarico we can connect you with, or there's probably a few others as well. Okay. I feel like we've covered a lot of great ground here around what was some of the reasoning for you to make this parcel of the business available, how you went down the line of getting it independently valued, knowing what you wanted to sell, what Steph wanted to buy. bringing Cam, her partner, along the journey as well. It taking, you know, 12-ish months to make happen. And a few things that slowed you down as well. There's a lot of documents, there's a lot of decisions, even small decisions, right, that you have to make. So that's where it can slow you down.

Hannah Dunn: And a lot of jargon, like a lot of words you won't understand. It takes a lot of time to process and make sure you know what you're signing.

Ben Lynch: You mentioned something earlier on about helping team members to start their own business. I don't think that's a common belief or desire of a lot of clinic owners. Just tell us a little bit more about how you got to that position.

Hannah Dunn: Uh, I've had, I think six team members go out on their own and I'm super proud of five of them. Um, one was the way that, you know, it's a car crash, you know, there's secrets and all that sort of stuff. But when people do it well and you have a culture. that creates a space to talk about it and there's a landscape where there's an abundance of clients. I feel like it's easy to support people to do what you've done. I think the fear comes in when there's scarcity and when there's not the amount of available clients and things.

SPEAKER_00: Yes.

Hannah Dunn: An example of that being that, you know, for the five that have gone out and we had awesome relationships and we actually said to them, you tell us which clients you want. and I will hand them over to you. And I think that in itself is very unusual. But I knew they were only going to want, they were only going to be doing a day or two. I knew they'd only want three or four. And that ultimately is what they wanted. And so I know these clients are going to try and follow them. And so I want to do it well where the clients they don't want, we're saying to them, they've left. You're staying with us. He's your new therapist. We're not telling them anything about the fact we gave them other clients. then they take that how they want. But the four or five that are going to them, we call them, we say, hey, they're going out on their own. We really value supporting your journey. We want you to go with them. Here's some paperwork to fill out so we can transfer your file if you want to do that. And most of the clients have decided to go with them. Some decide to stay because it's going to be a different service provision. But I think when you feel confident in what you're offering and confident in your relationships with other people, your referrers and things, then it's easier. But I completely understand that we're heading towards a time in the NDIS space where abundance is not going to be what we have. And so whether for full transparency, if someone came to me today and said, can I take clients? My answer might not be the same today because there's just not the same abundance that there was during those times. And that's okay too. It's not that I wouldn't support them to go out. I'd absolutely support them to still go and do what they want to do. But that next level of providing clients might be a bit different. And I think people are going to do it anyway. I'd prefer to know about it than not.

Ben Lynch: Yeah. It always helps. And that's one of like your core values. Yeah. Good communication solves everything.

Hannah Dunn: Yes.

Ben Lynch: Is that how you state it?

Hannah Dunn: Everything can be solved with good communication. Okay.

Ben Lynch: There you go. I want to get the slogan right. And perhaps as well, I'd be interested if it changes for you as well, because now you've set the precedent, you've got the example of Steph buying in. Again, there's a number of criteria to meet and a fit to be had between you and the relevant team member. But I wonder as well, if that also changes the conversation moving forward that, well, you could go out and do it on your own. But there's all these industry changes. It's probably going to be a little bit harder. Why don't we do it together and build something greater. Plenty to ponder, plenty to think about, but what I love is. We love talking about, we love thinking through, we love building amazing places to work. And as part of that is looking at the pathways for team members. And this is a pathway, a very meaningful commercial pathway for the right team member. And I think there's so many benefits for the owners that have toiled away for many years with the stress of building a business to realize some of that commercial value and also have someone maybe quite literally more invested in taking the business to the next chapter. Is there anything else that we've missed?

Hannah Dunn: No, I think they're the main things.

Ben Lynch: look at us. We weren't sure if we would make it, I don't know, 20 minutes, 30 minutes, but there's so much to unpack here and I'm sure folks tuning in have got even more questions and if they do, just email through to the pod and we'll have a chat for members as well. Just send a question through on Slack in one of the Team Pathways channels and we'll gladly follow you up. Well, for Episode 351, we might put a bow on it. You can head over to clinicmastery.com forward slash podcast for all the show notes and previous episodes. And we're literally just three weeks away from the event, the GYC Summit in Melbourne. I'm very excited.

Hannah Dunn: Yes, I'm excited too.

Ben Lynch: It's going to be great. All right. Well, Anna, I will see you on another episode very soon. See you.

Hannah Dunn: Bye.