As humans, we tend to believe things that are not necessarily true because they fit our view of the world. Even one dental lie or innocent self-deceptions may seem harmless but can be very costly to professional practice in time, money, and satisfaction. As advisors to dentists, we have found the following to be the most common “lies” dentists tell themselves:
Dental Lie #1. “I am a doctor, not a business owner. Success is guaranteed.”
Many dentists struggle with the challenges of owning a business. Some will proudly tell you that they didn’t become a dentist to profit, but rather to help people treat dental diseases. Being a financially successful dentist and being a good doctor is not mutually exclusive. To be there to treat your patients, you or your employer must make a profit. In today’s world, you must devote time to the business side of your practice.
Dental Lie #2. “Budgets are a waste of time. I check whether I’m doing better than last year.”
Just the sound of the word “budget” sounds confining and restrictive. We all want the freedom to spend as we please. Ironically, when budgeting is proactive, the process “frees
up” money that tends to get wasted. Budgets provide the dentist with three significant benefits:
- Budgets set revenue and expense goals. Studies have shown that people are more likely to accomplish written goals than those that are not.
- Budgets ensure the efficient use of resources. Setting and reaching revenue goals ensures that cash is available to meet all obligations. Expenditure goals ensure that resources are directed toward those activities that will move the practice forward toward a well-defined goal. Finally, a dentist is less likely to impulse buy because expenditures have already been budgeted.
- The budgeting process helps the dentist internalize the practice goals, resulting in better practice management decisions.
Depending upon last year’s numbers, managing one’s practice is like driving a car by looking in the rearview mirror. Start budgeting and experience freedom.
Dental Lie #3. Scheduling for production is all about money.
One of the most dramatic improvements you can bring to your practice is to learn to schedule for productivity. Often, practices confuse being busy with being productive. Scheduling for productivity is about time management. A sound scheduling system maximizes the efficient use of both doctor and staff time. Done well, scheduling can reduce patient’s and staff’s stress, improve patient satisfaction, and reduce the time a patient will need to spend in your chair. A few dollars spent with a qualified consultant can pay big dividends.
“One of the important lessons doctors must learn is that each and every one of their staff contributes to their success or failure. […] Being appreciated is one of the top reasons employees continue to work for a particular employer.”
Dental Lie #4. “I have more important things to do than plan my equipment purchases. I can wait until it wears out and then buy what’s currently “hot” at the dental convention.”
Planning equipment purchases seems like a mundane task. However, the money saved by doing this planning can be pretty exciting. Most practitioners finance the purchase of dental equipment if the amounts are significant. However, by planning and saving rather than borrowing, the results are positive and dramatic. If a dentist expects to acquire $50,000 of dental equipment in three years, merely setting aside the funds in an equipment reserve account can save $8,200 (assumptions are 5% rate of return, 40% tax bracket, 7.5% interest rate, 60-month repayment term for equipment loan). Money-saving ideas occur when the dentist develops and works a good business plan in partnership with an accountant that understands the dental industry.
Dental Lie #5. “Staff is all overpaid and don’t appreciate their job – or me.”
One of the most critical lessons doctors must learn is that every one of their staff contributes to their success or failure. Studies have shown that 68% of patients that leave your practice do so because of something your team has done. It would help if you created a culture where everyone works towards practice success. Being appreciated is one of the top reasons employees continue to work for a particular employer.
Dental Lie #6. “Leadership training doesn’t apply to our practice. We’re all professionals and know what we’re doing.”
How would you feel if you were boarding a flight to London and overheard the pilot say, “We don’t need a flight plan today; we can just ‘wing’ it?” Most people would feel nervous and uncomfortable because they want the pilot to know the best course, be aware of bad weather, and anticipate air traffic conflicts, so they arrive at their destination safely and on time. Likewise, patients and staff want the dentist to have a clear idea of where the practice is going and assume a leadership role. When everyone is pulling in the same direction, astounding results occur. If each person on your dental team cannot be articulate and enthusiastically support the practice goals, the practice has a leadership vacuum. You are the person responsible for filling that vacuum. Improve your leadership skills, and your practice performance will soar.
“Waiting even five years [to plan for your retirement] can cost you a large amount of money, and putting off funding retirement indefinitely will most assuredly put your ability to retire at all in jeopardy.”
Dental Lie #7. “Staff meetings are a waste of time and money.”
One of the symptoms we see when a practice is struggling is the lack of communication between doctors and staff. Well-run practices understand the value of staff meetings. Staff meetings take several forms. Each day should start with a morning huddle to review the day about to take place. At least monthly, the practice should set aside a couple of hours for a full staff meeting. The staff meeting is an excellent opportunity for training, problem-solving, reviewing systems, and holding team members accountable.
Dental Lie #8. “Our practice is not experiencing any problems. We can afford to coast.”
After working hard to build a practice, a dentist must guard against complacency. Little thoughts creep into one’s mind, “Everything is going well. I think I’ll coast for a while. I deserve it.” In times past, people manufactured horse-drawn carriages, steam locomotives, slide rules, and typewriters. Today all of those once-useful products are obsolete. We sometimes forget that the world is continuously changing, and if we are not constantly changing, our dental practices become outdated. If your practice looks the same as it did three years ago, it is likely a red flag warning you to innovate, upgrade, and improve. A dynamic business plan will include innovation and improvements. Create or update your project, and use it as a daily guide.
Dental Lie #9. “My bookkeeper will never embezzle my company.”
Of course, we trust our employees; we would never hire a person we don’t trust. Trust is crucial to running a successful business. As prudent business owners, we always insist on honesty and ethical behavior. Despite the best intentions, a substantial number of dental practices (15% to 20% by most estimates) unfortunately experience fraud or embezzlement. To protect business assets while simultaneously maintaining high employee morale through mutual trust and support, a dentist must implement and maintain “internal controls.” Internal controls are self-checking systems that frequently alert the owner whether business assets are handled responsibly. Internal controls can include a record like a day sheet, a procedure such as checking daily production totals against the schedule, or a policy such as “the dentist must always sign checks.” If you are unsure whether your internal controls are protecting you, contact your dental CPA.
Dental Lie #10. “I can wait until later to start funding my retirement.”
We believe the first day a dentist should begin planning for their retirement is the first day of practice. Developing the discipline to save for retirement early is the best way to meet your retirement goals. Consider five different dentists who contribute $25,000 per year towards retirement but started at different ages (35, 40, 45, 50, and 55) and earn a rate of return of 6%. The dentist who begins at age 35 contributes a total of $750,000 and accumulates $1,976,455. The dentist who waits until age 40 only earns $1,371,613. Waiting to start at age 45 only allows the dentist to collect $919,640. Only waiting until age 50 results in only $581,899, and $329,520 if you wait until age 55. Waiting even five years can cost you a large amount of money, and putting off funding retirement will most assuredly put your ability to retire at all in jeopardy. There are many qualified plan choices for dentists today that provide flexibility and tax advantages. Your dental CPA can help you choose the best plan for you to meet your retirement planning goals.