The £2 Million Practice Myth Deserves a Proper Burial

The trophy

Picture the moment, because you have probably witnessed it. A conference stage, good lighting, a principal being congratulated — sincerely, warmly — on building a £2 million practice. There may be a slide. There is often a slide. The audience applauds, partly in admiration and partly in private arithmetic, because everyone in the room has quietly compared the number to their own.

Now notice what the photograph excludes. The bank balance is not on the slide. The normalised earnings are not on the slide. The owner’s hours are not on the slide, and neither is the fact that she personally produced a large share of the £2 million with her own hands, at the chair, across a year she does not especially remember. The slide shows the one number that required no adjustment, no context and no audit to earn its applause. That is precisely why it was chosen.

This article is not against growth, and it is not an argument that every £2 million practice is weak — some are superb businesses that happen to have a large top line. It is against the measurement habit: the decade-long convention of treating gross fee income as the scoreboard of private practice. The convention deserves a burial, with a short service and no flowers, because busy is not the same thing as bankable, and the gap between the two is where most owner-led practices spend the decade after they hit their stride.

How the number got its publicists

Turnover became the boast for understandable reasons. It is simple. It is comparable across practices without anyone having to show their accounts. It grows when you work harder, which flatters effort, and it never goes down when costs go up, which flatters everything else. It is also the number an entire ecosystem is paid to celebrate: the coaching programme sells the journey to seven figures, the conference panel is titled for it, the awards entry asks for it, and the social post rounds it up. Nobody’s webinar is called Normalise Your Add-Backs. One understands why.

The trouble is that turnover is a gross concept being worshipped as a net one. It measures what passed through the practice, not what stayed, and certainly not what would survive a transfer. A practice is not a turbine to be admired for throughput. It is, if the owner is lucky and disciplined, an asset — and assets are priced on what they reliably keep.

What £2 million actually conceals

Begin with what the profession’s own accountants can see. NASDAL’s latest benchmarking of UK dental practice accounts puts average net profit per private-practice principal at £198,291 — a genuine recovery on the prior year.¹ The comparison is not like-for-like — the sample contains practices of different sizes and ownership structures — but that is precisely the point. A top-line milestone tells us remarkably little about what any individual owner ultimately earns. The same benchmarking series recorded practice expense ratios climbing above seventy per cent of fee income in recent years, with staff costs a significant driver.² The British Dental Association’s evidence to the pay review body makes the same point from the owner’s side: roughly two-thirds of practice owners’ gross earnings are consumed by operating costs, and ninety-two per cent of owners now name increased practice costs as a major contributor to stress.³

And the cost base has not finished. NASDAL’s analysts were careful to note that the latest figures pre-date the April 2025 rise in employer National Insurance;¹ since then the National Living Wage has risen again, to £12.71 an hour from this April.⁴ Every one of those pressures lands on the practice long before the top line is troubled by any of them. Which is the quiet scandal of turnover worship: the number keeps rising while the thing it is mistaken for — what the owner keeps — can fall for three consecutive years without the slide ever noticing.

So the £2 million figure conceals, in no particular order: the payroll that consumes a third of it; the laboratory and materials bill; the premises, compliance, insurance and finance costs; the discounting that nobody documented; the marketing retainer that crept; and — largest and least discussed — the fact that the accounts may not contain the full market-rate replacement cost of the clinical and commercial work the principal personally performs. How that work is remunerated differs with structure — drawings for a sole trader, salary and dividends through a company, profit shares in a partnership — and none of those figures is interchangeable with the market rate a buyer will insert. A practice can be magnificent at generating fees and mediocre at keeping them. From the stage, the two are indistinguishable. For a buyer, they are the entire subject.

The buyer’s arithmetic

A buyer does not read the headline. She reads the fine print, the footnotes and the pages at the back where the adjustments live, and she translates what she finds into two numbers: normalised earnings, and the multiple her confidence permits her to apply to them.

Normalised EBITDA is not an accountancy trick; it is a simple question asked seriously. What would this practice earn if every clinical role in it, including the principal’s, were paid at market rate, and if the expenses that would not survive a transfer were removed? The adjustment that matters most is nearly always the principal’s own compensation. An owner producing £850,000 of the fee income personally, whose remuneration — through salary, dividends or drawings — sits below the market cost of replacing that work, has been quietly subsidising the practice’s headline profit. The buyer will price that work properly: associate-rate replacement for the clinical days, an allowance for the commercial oversight. In the owner-led practices I have observed, the adjustment is frequently material; the precise figure belongs to the practice’s accountant, broker and eventual buyer. This is not the buyer playing a trick. It is the buyer identifying a subsidy that leaves the building when the owner does.

There is a market-data illustration of why normalisation matters. Christie & Co reports owner-operated margins of 33.2 per cent against 23.7 per cent for associate-led models.⁵ Those percentages should not be treated as directly comparable without understanding how principal remuneration, case mix and operating structure were handled. What the contrast establishes is that ownership model materially changes the shape of reported earnings — which is precisely why a buyer normalises the accounts rather than accepting the percentage at face value. The associate-led model, meanwhile, is the one buyers increasingly prefer — sustained appetite, with London multiples as high as 7.7 times — and the one whose multiples Christie & Co expects to hold or rise.⁶

Here is the whole journey in one table. The figures are an illustration with stated assumptions, not a valuation — but the shape is the shape.

Line	Amount	Running total
Turnover — the number on the slide	£2,000,000	£2,000,000
Staff and associate payroll (31%)	−£620,000	£1,380,000
Laboratory and materials (12%)	−£240,000	£1,140,000
Premises, equipment, compliance, insurance (14%)	−£280,000	£860,000
Marketing, finance and professional fees (7%)	−£140,000	£720,000
Profit before market-rate principal remuneration — the number quoted at dinner	£720,000	36% margin
Market-rate replacement of the principal’s clinical production and commercial oversight	−£390,000	£330,000
Normalised EBITDA — the figure the buyer actually prices	£330,000	16.5% margin
Assumptions: a private UK practice; the principal personally delivers £850,000 of fee income; the cost lines are an authored illustration informed by general market evidence rather than derived from NASDAL or BDA data; replacement priced at prevailing associate rates plus a commercial-oversight allowance. Change the assumptions and the numbers move; the normalisation principle does not.

The multiple is a separate argument, governed by the buyer’s confidence in the durability of that £330,000. The point here is simpler: no multiple rescues the wrong earnings base. Whatever figure the eventual negotiation produces, it will resemble the turnover only by coincidence. £2 million was never the practice’s value. It was the practice’s throughput, wearing the value’s clothes.

Two practices, same turnover

Now run the comparison the conference slide cannot show, with the same health warning: illustrative, assumptions stated, directionally honest.

Practice A is the trophy above: £2 million of fees, £850,000 of them produced by the principal, informal discounting, accounts that arrive four months after the year they describe, normalised earnings of £330,000 and a buyer who has noticed that most of the machine is one person.

Practice B turns over exactly the same £2 million. Its principal produces £400,000 of it; three associates and a therapist produce the rest at documented rates with a written discount policy. Payroll is two points higher than Practice A’s — everyone is properly paid — but the drift lines are watched monthly, and normalised earnings come out at £460,000, a twenty-three per cent margin that survives the buyer’s adjustments almost intact because there is very little subsidy to remove. Practice B’s owner works fewer clinical hours than Practice A’s. Her practice earns forty per cent more in the only currency a buyer recognises, and would ordinarily sit higher in a buyer’s risk assessment, all else being equal, because its earnings do not walk out of the building with her.

Same turnover. Same slide, if either owner wanted one. At the same multiple, the £130,000 earnings difference is multiplied directly into the completion cheque; if the less dependent practice also earns a stronger multiple, the gap widens again. And only one of these owners could take August off.

Quarters and halves

Where did Practice A’s missing margin go? Almost never anywhere dramatic. Andy McDougall of Spot On Business Planning, whose thinking runs through the book behind this article, calls the mechanism quarters and halves: a percentage point on payroll here, half a point on laboratory costs there, a discount creep nobody documented, a supplier contract that renewed itself with an inflation clause nobody read, a marketing retainer that drifted from nine per cent of attributable revenue to twelve.⁷ Each is individually defensible, usually at the moment it was allowed. Collectively they compound into the profit the principal cannot account for — the reason the business feels busier than it is rewarded.

The arithmetic deserves stating plainly, because the whole argument depends on it. A £2 million practice at a fifteen per cent operating margin produces £300,000. The same practice at twenty per cent produces £400,000 — a third more profit on identical turnover, flowing through to the valuation at whatever multiple applies. On £2 million of turnover, each additional margin point adds £20,000 to annual earnings. When those earnings are capitalised in a sale, the effect is multiplied again. That is why a buyer studies the cost architecture at least as carefully as the revenue line: revenue shows activity; margin reveals discipline. A practice whose revenue has grown at twelve per cent a year while its margin has fallen is not a growing practice. It is a busy one. A buyer knows the difference, and the principal should get there first.

What to measure instead

If turnover is retired from the scoreboard, something has to replace it. Eight numbers, one page, monthly — this is the dashboard a buyer would build, which is exactly why the owner should build it first.

Measure	Why it earns its place
Normalised EBITDA (£)	The core earnings figure most buyers will normalise before discussing value — and the honest base for every other decision
EBITDA margin (%)	Reveals discipline; survives comparison in a way turnover never does
Principal-generated revenue share (%)	One of the largest levers on transferability — and on the owner’s own week
Payroll as % of revenue	The largest cost line, read by role rather than as one blunt number
Laboratory and direct clinical costs (% of relevant revenue)	Where quarters and halves hide first, and where site or associate variance hides longest
Enquiry-to-consultation conversion (%)	An early warning of commercial drift, visible months before revenue admits it
Recurring and continuity revenue (%)	Membership, recall and staged treatment that make next year’s income an asset rather than a hope
Operating cash conversion (operating cash flow ÷ normalised EBITDA, %)	Whether profit is becoming money — the last honest test of all the numbers above it

None of these will ever headline a conference slide. All of them decide the cheque, and — the quieter point — they decide the owner’s Tuesday long before any buyer appears.

The burial

So let the myth have its service. £2 million was a fine number. It paid the wages, filled the diary, impressed the room and told us, in the end, almost nothing — not what the practice earns, not what its owner keeps, not what it would fetch, not whether it could survive a fortnight without her. Turnover is not a strategy. It is a number with good publicists.

The measurement habit that replaces it is the subject of The Exit Discipline, published in 2026 — Chapter Two, Turnover is Vanity, Buyers are Real, takes the buyer’s arithmetic apart line by line, and Chapter Nine follows the quarters and halves home. Read more about the book or download the opening chapter.

Applaud the £2 million, by all means. Then ask the room the impolite question: what was left after everyone, including you, was properly paid? The silence that follows is the sound of the myth being buried.

Gregory William Gray is the author of The Exit Discipline (Summit Communication Group, 2026). He has spent more than twenty years working alongside owner-led private dental and plastic-surgical practices in the United Kingdom and Australia.

Source notes

1. NASDAL (National Association of Specialist Dental Accountants and Lawyers), annual Benchmarking Report for the financial period to 5 April 2025, compiled by Humphrey & Co from accounts of some 650 principals and limited companies: average net profit per private-practice principal of £198,291 (from £161,910 the prior year); the compilers note the figures pre-date the April 2025 rise in employer National Insurance contributions. As reported by Dentistry.co.uk and The Probe, 2026. ↩ ↩
2. NASDAL annual Benchmarking Report for 2023–24: practice expense ratios rising from 69.5 per cent to 73.3 per cent of fee income, with higher staff costs a significant factor. ↩
3. British Dental Association, written evidence to the Review Body on Doctors’ and Dentists’ Remuneration, 2026–27 round: roughly two-thirds of practice owners’ gross earnings taken up by operating costs (para 5.9); 92 per cent of practice owners citing increased practice costs as a major contributor to stress (paras 1.5, 6.22). bda.org. ↩
4. UK Government / Low Pay Commission: National Living Wage of £12.71 per hour from 1 April 2026; employer National Insurance contributions at 15 per cent above a £5,000 annual secondary threshold from 6 April 2025. ↩
5. Christie & Co, “Pricing trends in the UK dental market” (2025): owner-operated practices reporting EBITDA margins of 33.2 per cent in H1 2025; associate-led models at 23.7 per cent; single-site and group multiples converging; buyers focused on underlying profitability, operational resilience and clinical sustainability. The margin figures are reported as published; no conclusion about the composition of either margin is attributed to Christie & Co. ↩
6. Christie & Co, Dental Market Review 2025: associate-led practices in London achieving EBITDA multiples as high as 7.7× on average, with multiples for associate-led practices expected to remain stable with potential for upward movement; 68 per cent of accepted offers in 2024 at or above asking price. ↩
7. Gregory William Gray, The Exit Discipline (2026), Chapters Two and Nine: the normalisation doctrine; the “quarters and halves” formulation credited to Andy McDougall of Spot On Business Planning; the margin arithmetic at fifteen and twenty per cent of a £2 million turnover. Authorial doctrine and observation, cited as such. ↩

The £2 Million Autopsy and the two-practice comparison are illustrations with stated assumptions, constructed to show direction rather than to predict any individual practice’s figures. All multiples and market observations are indicative and non-predictive.