Dental Coaching

Are You Tired of Feeling Financially Stuck in Your Dental Practice?

Published on

September 30, 2024

Author

No items found.

All posts

Building a Strong Financial Foundation: It’s All About Vision and Goals

The first step to financial success is having a clear vision for your practice. What kind of dentistry do you want to practice? What kind of team do you dream of? What type of patient experience do you want to provide? What kind of facility will best serve your vision? This is your philosophical vision.

Beyond the “big picture,” you need a structural vision. What does the year ahead look like for your practice? How much do you want to earn? How many days will you work?

To achieve your financial goals, we guide our clients through an annual business planning process. Together, we define your daily, monthly, and annual goals for each provider in the practice. This isn't just about numbers; it's about aligning your financial goals with your overall vision.

We also develop a comprehensive plan that covers:

Marketing: How will you attract new patients and retain existing ones?
Technology: What tools and systems will streamline your operations and improve efficiency?
People: How will you build a team that shares your vision and contributes to your success?
Systems: What processes and procedures will ensure smooth operations and optimal productivity?

By taking a holistic approach to business planning, we help you build a robust strategy for achieving your financial objectives.

The Power of Measurement: What Gets Measured Gets Improved

We firmly believe that "what gets measured gets improved." To track progress and identify areas for improvement, you need the right metrics in place. One key area to focus on is overhead costs, which can significantly impact practice profitability.

Understanding Overhead Costs:

Revenue is Key: Often, the best way to control expenses is to increase revenue. Think about a $1 million practice with $300,000 in payroll costs (30%). Increasing collections to $1.2 million with the same payroll brings that expense down to 25%.
Variable Costs: Variable costs should be measured, such as payroll, lab costs, disposable dental supplies, marketing and advertising costs and facility costs.
Assign Responsibility: Assign specific team members to be responsible for managing each expense category, encouraging accountability and helping you stay within budget.

Beyond the Profit and Loss Statement: Cash Flow is King

While your profit and loss statement reveals the profitability of your business, it doesn't tell the whole story about your financial health. Cash flow is king, and you need to understand it to avoid financial pitfalls.

Why Cash Flow Matters:

The Biggest Killer of Small Businesses: Lack of cash flow can be fatal for dental practices.
Net Income vs. Cash Flow: Net income doesn’t always reflect your true cash position.
Signs of Cash Flow Issues: If you're frequently dipping into lines of credit to cover payroll, your cash flow is likely strained.

Managing Cash Flow:

Track Your Checking Account: A regular review of your checking account balance provides a clear picture of your cash flow.
Accounts Receivable Management: A key to good cash flow is efficient accounts receivable management. We recommend aiming for accounts receivable total (including all patient and insurance balances) to be under one month of average collections.

Analyzing Trends for Sustainable Growth

Don't just look at the numbers in isolation. Understanding trends over time can reveal valuable insights. We recommend tracking:

Production Trends: Are your production numbers trending up or down?
Collection Trends: Are your collections consistent or experiencing fluctuations?

Aim for a steady upward trend in both production and collections for sustainable practice growth.

Unlocking Your Practice's Potential: The Power of Coaching

Many dentists ask us, "How do I take my practice to the next level?" Our answer: Invest in coaching.

The Benefits of Coaching:

See Your True Potential: A good coach helps you identify and overcome obstacles, pushing you beyond your perceived limitations.
Achieve New Heights: Coaching can help you reach levels of success you wouldn't normally achieve on your own.

Our Coaching Approach:

Breakthrough on Every Call: We expect our clients to have a breakthrough on every coaching session, whether it's a major insight or a smaller step forward.
Continuous Improvement: Just like Serena Williams doesn't stop training and coaching when she's at the top of her game, we believe in continuous improvement for our clients.

Culture Eats Strategy for Breakfast: Building a Winning Team

At Fortune Management, we are passionate about personal development and believe in growing people. We understand that a strong culture is the cornerstone of financial success.

Why Culture Matters:

The Foundation for Growth: When you nurture a positive, supportive, and values-driven culture, it becomes the catalyst for practice growth.

Investing in Your Team:

Empowerment and Growth: Invest in your team's development. Empowering your team members will lead to greater productivity, engagement, and ultimately, practice profitability.

Essential Financial Reports for Every Dentist

There are three key financial reports that every dentist should review regularly to gain a clear understanding of their practice's financial health:

Profit and Loss Statement: Reveals whether your business is profitable or operating at a loss.some text
- Profit and Loss Formula: Collections (revenue) - Expenses = Profit or Loss
Balance Sheet: Provides a snapshot of what you own (assets) and what you owe (liabilities).
Statement of Cash Flows: Tracks the flow of cash into and out of your practice. This report is crucial for identifying potential cash flow issues.

Regular Review: Review these reports at least quarterly, ideally monthly, to stay informed about your financial performance.

Leveraging Technology for Financial Efficiency: The Tools of the Trade

Technology is a powerful tool that can streamline your practice operations and boost your bottom line. Consider these key areas for technological investment:

Practice Management Software: Invest in a robust system that integrates clinical and accounting functions for easy access to the information you need.
Accounting Software: Reliable accounting software like QuickBooks online gives you full control over your financial reporting.
Clinical Software: Advancements in clinical software, like Pearl AI, provide innovative solutions for improving patient care and practice efficiency.
Intraoral Scanners and Milling Machines: CEREC technology, with its intraoral scanners and milling machines, allows you to offer same-day crowns, increasing revenue and patient satisfaction.

Debunking Common Misconceptions About Practice Finances

Let's clear up some common misunderstandings about dental practice finances:

Myth #1: Increasing Patient Volume is the Only Way to Increase Profitability

Wrong! There's often untapped potential within your existing patient base. Focus on increasing hygiene effectiveness, which measures the percentage of patients in your practice who are also in your hygiene program. The average is around 30%. Aim for 50% or even 80% to boost your bottom line.

Myth #2: Once You Get Patients, They’ll Just Show Up and You’re Set

Scheduling matters! Maximize the value of your time by optimizing schedules and maximizing revenue per patient.

Myth #3: All Financial Advisors Are the Same

Not true! Look for advisors who specialize in dentistry, who understand the nuances of the industry and can offer tailored guidance.

Myth #4: All Production is Collected

Be realistic. Implement strong financial policies and robust collection procedures to keep accounts receivable under control.

The Evolving Dental Landscape: Navigating the Challenges

The dental industry is evolving, presenting both opportunities and challenges:

Corporate Competition: More corporate entities are entering the dental space, increasing competition.
Bank Lending: Financial institutions are becoming more involved in dental lending, offering both opportunities and potential pitfalls.
Talent Acquisition and Retention: The competition for skilled dental professionals is fierce.
Insurance Reimbursements: Insurance reimbursements can be unpredictable, creating financial uncertainty for practices.

Return on Investment (ROI): The Key to Smart Decisions

Before investing in new equipment or technology, calculate the expected ROI to ensure it aligns with your financial goals.

ROI Formula: Expected Return on Investment / Cost of Investment

Example: Let's say you're considering investing in a CEREC machine with an intraoral scanner for $40,000. If the scanner allows you to do 25% more same-day crowns (at $2,000 each), that's an additional $50,000 per year. You'll also save on lab costs and potentially increase patient referrals.

Let's say in the first year you have the CEREC machine, you conservatively generate an additional $20,000 in revenue. Your ROI is $20,000 / $40,000 = 50%.

Investments beyond technology can also leverage the same formula. Investing in coaching, for example, can directly result in practice growth that can deliver an ROI of over 100% annually, far exceeding returns typically seen in the stock market.

The Top Three Golden Rules for Financial Success

Remember these three golden rules for financial management in your dental practice:

What gets measured gets improved: Track and review your financial reports regularly to stay informed about your performance.
Invest in patient retention and practice growth: Focus on increasing your patient base and revenue per patient.
Seek professional guidance: Work with dental-specific financial advisors, accountants, and coaches to optimize your financial performance.

Fortune Management Group: Your Partner in Practice Growth

At Fortune Management, we provide comprehensive practice analysis and opportunity assessments. Think of it as a new patient exam for your practice. We analyze over 20 key metrics and identify areas for improvement.

Here’s what we do:

Practice Analysis and Opportunity Assessment: We provide a thorough evaluation of your practice, identifying strengths and weaknesses.
Tailored Strategies: We work with you to develop customized financial management strategies.
Proven Results: We’ve helped countless dental practices achieve their financial goals and achieve their full potential.

Get Started By Requesting a FREE Practice Analysis Today!

Your Journey to Financial Success Starts Now

By implementing the strategies outlined in this comprehensive guide, you can take control of your practice's financial future. Remember, it's not about cutting corners; it's about making smart investments, building a strong team, and nurturing a culture of growth.

At Fortune Management, we're here to support you every step of the way. Let us help you build a thriving, financially secure dental practice.