For a “virtual corporation,” as Audigy Group (AG) Founder and Managing Member Brandon Dawson characterizes the company, AG has definitely turned some heads since its official launch in May 2005.

And considering Dawson’s track record, there’s good reason. He founded Sonus in 1993 and ran it until investors took control of the company, selling it to Amplifon in fall 2002 for $38.4 million. At the time, Sonus had 87 company-owned retail offices and 1,400 licensed network affiliates, with more in the pipeline.

AG is a member-owned consortium of hearing care professionals who say they have taken it upon themselves to do nothing less than “transform the economics of hearing instrument distribution.” Moving beyond the benefits of a traditional buying group, AG’s focus is on redirecting profits to strategic investments that create new value for the Group and its suppliers. That could mean anything from underwriting member office expansions, buying out retiring members, covering losses of a member in the event of a natural disaster (as was recently the case with Hurricane Rita), or investing in new equipment and supply systems.

In an era of accelerated forward consolidation, the company says that consumers—not hearing aid manufacturers, dispensing professionals, third-party payers, or the government—will determine the future composition of the hearing industry, and AG therefore sees practitioners and suppliers as bearing direct responsibility for both the quality and cost of patients’ hearing care. This means that, in order to survive and thrive as independent practices, a fundamentally different kind of working relationship between all the parties involved in the hearing aid delivery system needs to be promulgated.

Audigy Group Director of Marketing Stuart Lyon; Member Ram Nileshwar, MA; President and Member Brendan Ford; Founder and Managing Member Brandon Dawson; Member and Director of Technology Christopher Schweitzer, PhD; and Member Peter Marincovich, PhD, paused for a moment during the AAA AudiologyNOW! Convention held in April.

“We are unlike buying groups, networks, or associations whose goals are to attract more customers to sell their product and increase their revenues, their brand recognition, and create profit for their organization to invest in areas that directly benefit them,” says Dawson. “AG is focused on taking the profit and resources we create as a group and then reinvesting it to achieve each business owner’s individual goals. We have approximately one employee for every three member practices, and those employees focus 100% of their attention on the details of the members’ businesses.”

AG has already made sizable gains. Fiscal year 2006 saw AG achieve financial growth of more than 400% over the previous year while maintaining a 25% pre-tax profit margin, and group members tallied $120 million in combined revenue, according to the company. Several prominent, multioffice practice owners have joined AG, with some offering proof of achieving 35% to 55% revenue growth along with up to 80% growth in net earnings. In 2008, Dawson believes the Group will triple its revenues and boost its pre-tax profits to about 30%.

“Fundamentally, Audigy Group is a virtual corporation,” explains Dawson. “We really don’t have anything except for our relationships with our owners. The intrinsic value of the total organization is each owner, and that’s an intentional, unique position we’ve taken to make sure that there are multiple audiences [patients, dispensers, and suppliers] that are being served.”

AG is strategically selecting elite practitioners in each market who exemplify and embrace the core values of Audigy’s mission in the delivery of hearing care services; likewise, the organization is actively partnering with suppliers to cultivate win-win situations for all parties. “Essentially, the ownership structure is turned on its head relative to other networks,” says Dawson. “Our shareholders are our owners. There is no capital [from hearing aid companies]. In fact, I’m the only one to have put money into the company, and [AG] has already been able to pay me back.”

The organization is owned 55% by a management/leadership team, and 45% by a group of owners eventually projected to total 250. A total of 50 of these people, most of whom are experienced multi-office practice owners, are called “Founders” and have a 25% stake in AG, while another 200 owners, called “Members,” have the remaining 20% share. Currently, there are 38 Founders, with a list of about 40 owners being considered for Founder/Member positions.

No Pain, No Gain

In some ways, AG resembles one of the in-vogue, high-test, executive management training programs offered by today’s Fortune 500 companies. Or, to hear some of its members describe their commitment to the principles of AG, a cult of high achievers.

The group is made up of clinician-entrepreneurs who believe that change is a good thing; in fact, they say change is a necessary component for attaining higher levels of business success among members. Although they retain full ownership of their practices, they all rely on each other for revenue sharing and business acumen, so cohesiveness, cooperation, and commitment are important qualities.

Among several key strategies, AG espouses the principle of working smarter not harder, and growing the organization through savvy corporate development skills—one practice at a time. AG’s “Ownership Maturity Model,” adapted from Robert Kiyosaki’s Cashflow Quadrant framework, requires its members to evolve from owner-doers, or owners who have solid professional and business track records but who rely primarily on themselves to generate their revenue, into owner-managers and then owner-investors—practitioners generating cash flow and creating equity by using all their intellectual, relationship, and financial assets rather than simply relying on their professional and managerial talents.

But that doesn’t come easy or without a toll on one’s ego. It takes commitment and venturing into business unknowns that can make even the most successful dispensing professionals feel—well—inadequate and insecure. And that’s the intent. In fact, to become a member involves something akin to an intricate dance of trust between the Associates, the AG Leadership Team, and the entire membership. People who want to join AG are required to fill out an extensive Member Candidate Profile that surveys their aspirations, their business’ fundamentals, and their perceptions of supplier relationships. This forms the basis of a fact-based discussion on what they can bring to the Group in terms of their business assets and management skills, and what the Group can bring to them in terms of business and marketing support, growth opportunities, revenue sharing, and exit strategies.

“In most cases,” says Dawson, “to become an AG member, one of our members has to recommend you. We go through an extensive interview process that takes 3 to 9 months. What we’re looking for are a few people who self-identify with the Group’s goals. First, they have to understand the principles of best practices and the idea that thriving businesses of like sizes share common traits and processes. Second, they have to realize that, over time, their behavior will have to change in order for them to fully achieve the goals that they have set for themselves. That’s a concession that many—or maybe most—owners struggle with.

“If they don’t have this realization, we’re all wasting our time. But if they can perceive the behavioral changes necessary to bring their business to another level, then it benefits everyone. This self-identifying with the Group goals is crucial to the entire process…Obviously, we’re not [a good fit] for everyone, and that’s OK.”

Getting with the Program

Audigy U was conceived as the “Harvard Business School of the hearing industry,” taught by elite practice owners. The program, run by Director Eric Hecker, PhD, regularly draws on the clinical and management talents of such people as Izzy Kirsh, PhD, Linda Burba, AuD, Peter Marincovich, PhD, Larry Hutto, AuD, and Richard Gans, PhD.

In most hearing industry courses and workshops, says Audigy President and Member Brendan Ford, few of the instructors actually run dispensing practices or implement what they’re teaching on a daily basis. Even if the principles taught are good ones, participants generally go home and file the information on a shelf.

“It isn’t the idea ; it’s the implementation of the idea,” says Ford. “That’s what Audigy’s viewpoint is. After spending 3 to 5 days in one of our owner’s offices reviewing all facets of the business—from operations to finance to referral sources, and conducting in-depth interviews with each employee—we have a very clear picture of where the business is at. We then use this information as the basis for 200 hours of analysis, peer-to-peer comparison, and strategic planning to create a fully integrated operations and business plan. Each plan is tailored to the individual needs of the practice and implements numerous best practices refined from some of our most successful owners. This comprehensive strategic business plan functions as the roadmap our management team uses to guide the practice to the level of performance the owner self-identified at the outset of our process.”

For more information on Audigy Group, contact Mason Walker at (866) 711-2026 or .