As we turn the page on another year, most of us have already made our personal goals or resolutions, but what about your professional resolutions that are vital to the success of your practice?
Evaluating just 5 different aspects of your practice’s financial life will put you on the path to growing your practice in the year ahead. Here are some considerations that impact financials in different ways and can help you formulate your vision:
Understanding the right metrics can make an immediate impact on how you approach the year. For example, looking at new patient numbers and where they came from over the years provides meaningful insight into how your marketing plan is working. If you are spending a lot on marketing, but new patient numbers are low and coming only from referrals, it may be time to reevaluate your marketing efforts. Another metric of revenue growth to measure is treatment plan conversion––are you converting a high percentage of your treatment plans to maximize revenue opportunities? If not, it may be time to look at your treatment presentation and planning.
There are two ways to increase profits. Top line revenue growth or cutting overhead in the practice. Have you analyzed your line item expenses compared to industry averages? There is a good possibility that you are overpaying for at least one service or product. According to the ADA, the median overhead for all practices is 74.62%. If you’re thinking that’s an extremely high number, then you’re right, it is. Levin Group recommends that general dental practices operate at 59% overhead––that’s over a 15 point difference! So, whether it’s a supply expense or potential lease renegotiation, all line items impact the overall success of the practice.
Are you ready to expand your practice? If you’ve maximized your current space, then you have two options––look for a larger space or start up an additional location. Expanding your operations can be one of the most exciting things you do over the lifetime of your practice. Get in touch with your team of advisors to determine the right steps to take to grow your footprint, but be cautious not to do it before you’re ready! Planning and patience are essential when expanding.
Have you looked at your current debt window? Is your monthly cash flow where it needs to be to accomplish your overall goals? If you’re unsure, there are practice finance banks and financial institutions that would love to review your situation. Consolidating or refinancing your debt might still be a viable option. The right banking solutions can also help save you time and money.
The dental industry is unique in that you have industry-specific resources that not all sectors have. Some of the available resources include dental practice consultants who can assist in understanding business operations and metrics for any of the considerations mentioned above. Good dental accountants can help you take full advantage of tax benefits that come with owning a practice, as well as understand the latest tax reform. There are expansion resources such as dental practice brokers, attorneys, contractors, equipment reps, and real estate brokers who all will help to maximize the value of your business. Utilize these people as much as possible and make sure they earn your trust.
Taking the time to review and understand your revenue, expenses, bandwith, debt, and resources will help you find where you want to go. Once you’ve studied your business and established your professional resolutions, don’t forget to write them down, so you have a reference point as the year goes on. Here’s hoping it’s your best year yet!
“Always bear in mind that your own resolution to succeed is more important than any other.” – Abraham Lincoln
Paul Motter is Vice President of Healthcare Business Banking for Bank of the West, the fastest growing small business bank in the country. Paul has helped over 1,000 dentists with all practice capital needs ranging from practice purchases and start-ups to real estate needs and refinances. Paul started his career in the dental market with Bank of America working solely on dental practice transactions for 10+ years. Before getting back into banking, he spent two years in business development on the private equity/corporate side of dentistry. Paul understands the needs of a dental business and has a passion for helping dentists achieve their practice ownership goals. He lives in Naperville, IL with his wife, son, and 2 dogs.