Written by: Scott J. Manning, MBA
As an ambitious, independent-minded dentist who is entrepreneurial in nature, you want to be in control, paid what you’re worth, and fully utilize your skills. You are proud to have a practice where you don’t cut corners or take shortcuts when it comes to your patients’ health.
But your practice is eating your profits.
If you make a lot of money but don’t have a lot to show for it, this is one of the biggest issues I see in the world of dentistry. To avoid this, I’m going to review some of the new goals and income expectations you must have in place.
Avoid Sabotaging Your Practice Profitability
Grasp the fact that your practice is a business asset.
It’s an investment and a vehicle for you to become wealthy and prosper in life. Any dentist can learn certain skills and make money as a dentist. You can work for the government, become an associate, teach, train, lecture, and participate in various business opportunities. Because you have invested in your education, you will generate a return on that investment in the form of your paycheck on your production.
However, once you start practicing as a dentist, it doesn’t end there.
You have invested in yourself, but you’ve also created a business around your skills. And that is now another asset that is supposed to be giving you a return. I say, “the practice will eat the profits” because, usually, the dentist doesn’t expect there to be any profits. Instead, they just expect to earn their money as a dentist and then feed the business everything that is left over. They have no deliberate, structured plan or expectation for pulling money out of the practice and putting it into other things.
Remember that the practice is your wealth vehicle.
That’s what you signed up for. That’s the point. If you leave money in it, it will be gone, and it will never go to work for you. You can and should invest in building a bigger building, producing more dentistry, or growing your team. However, your ultimate return on your practice is limited. It would be completely foolish to reinvest that money into the practice endlessly.
The point of wealth is to take money off the table.
Some doctors are so stingy that they never achieve any growth because they never reinvest in the practice. They squander all the profits. In contrast, others keep the money in the practice. Then, they have nothing to show for their business investment except the value of the practice and a typical professional’s retirement savings — which you will most certainly outlive.
A business is supposed to spin off profits so that you can diversify into other investments and multiply your income streams.
If you aren’t doing that, you are earning your money as a dentist but not as a business owner. You are getting paid to do dentistry but not for the sacrifice of owning the practice and developing your business asset.
So, how do you make positive changes happen?
Know your overhead and your potential.
In dentistry, your potential is nearly unlimited because you can have a $3,000, $7,000, $15,000, $30,000, or $70,000 day in your practice. It has absolutely nothing to do with your production but rather the dentistry you sell. You can also grow income streams inside your practice — even if (perhaps especially if) you are not doing big full-mouth cases. You can develop niches (sleep, TMJ, Invisalign, laser, smile makeovers, Botox, and many more) that can serve you as small businesses inside your practice. Plus, you can have associates, grow hygiene services, and provide other health services inside your practice or building.
The point is that your potential is not just what your hands can do but what your practice can do.
You establish your salary as if you were paid to be the dentist doing the dentistry. Then you need to organize your life around that salary — save money, fill up your retirement, and live whatever lifestyle you want within that amount of money. That will free you up to take the profits of the practice and start using those to grow your wealth and your investments.
Additionally, you want to allocate a portion of your “overhead” for developing your team, replacing equipment, pursuing continuing education, or conducting practice improvements. Then, when you have excess (and the point of the business is to grow the excess profit every single month of your life), you take that out as fast as you can and move it away from the practice so it doesn’t get eaten up — forcing you to start all over again.
The biggest “eating up” of the profits is the dentist-owner not knowing how to be an owner and not treating the business like an investment. Yes, it’s an investment that is supposed to pay out dividends to the shareholders (even if there is only one) and, of course, pay out some to the team who helped make it all possible.
Now, this gives you a lot to think about and assess. Where are you sabotaging your practice profits?
ABOUT THE AUTHOR
Recognized by thousands of dentists across North America, Scott Manning is an accomplished author (“The Dental Practice Shift” is the #1 most requested book in dentistry) and a highly sought-after public speaker. For almost two decades, he has dedicated his life to inspiring and motivating dentists worldwide to create wealth and lifestyle-based practices. Today, when he is not sharing his positive messages worldwide, he loves to travel and spend time with his beloved wife, Kristen, and daughter, Saylor. To learn more, visit https://dentalsuccesstoday.com/.
