Developing good financial habits is the first step to establishing and maintaining financial security. Here are six actionable habits to help you be more professionally and financially focused.
1. Increase your fees consistently and appropriately (or don’t).
The cost of providing quality dentistry increases annually — that includes supplies, your salary and employee salaries. Before you make any salary-based decisions, consider that many businesses increase their prices regularly, typically to meet a specific profit margin. As a dentist/business owner, you have the option of meeting your own profit margin, or maintaining the current year’s fees and accepting that year’s profitability.
2. Collect 100% net to net.Many teams settle for collecting 97 percent or 98 percent of net. One hundred percent net to net should be your expectation, and that of your team. Many financially successful practices collect 100 percent of their net production. Example: if you produce $100,000 a month gross, it results in $92,000 net when you include insurance write-offs, professional courtesies and other adjustments. You should collect no less than the $92,000 net.
3. Plan for consistent growth.
From fees and collections to overhead, all aspects of your practice impact your professional progress. Planning should be a regular staff meeting topic, followed by key growth indicators and relevant system and process adjustments to maintain a strong practice. Numbers also play a significant part, specifically your gross production, net production, collections, net collections and new patients. Encourage your employees during staff meetings to be invested in the practice’s growth so everyone can focus on providing the best patient care possible. Offer continuing employee education and individual recognition as well.
4. If everything is possible, do everything possible.Successful practices know it’s their responsibility to provide their patients with comprehensive, complete plans. When you and your team are genuinely knowledgeable about the values of the dentistry, your patients can feel more at ease. As you increase your patients’ trust levels by explaining all available options, you can work together to make more informed, confident decisions.
5. View overhead in terms of revenue.When most practices look at “managing” overhead, they move to cut costs. Not so: practice growth is the #1 way to reduce your overhead. Focus more of your energy on growth, even as you look regularly to ensure you’re being smart with your money.
6. Know the difference between good and bad debt.Successful practices know debt is not necessarily bad, but “bad practice debt” is any debt you cannot afford to pay. Financially overextending yourself or your practice all but ensures you won’t have the financial freedom and independence you’ve envisioned. Consider purchasing technology that provides incremental value and enables better patient care. This “good debt” can help you to accelerate business growth and profitability without “bad debt” worry.
These healthy financial habits can help to guide you to financial freedom. From there, you can perform dentistry because you want to, not because you have to.
This material is drawn conceptually from original work by Ken Runkle, president of Paragon Management, Inc.