Cost management
Sanjay Shah looks at ways of improving profitability.
There are three certain things in life: death, taxes and rising costs. The first is a certainty in which no-one escapes. If you have a clever accountant then taxes can be reduced but a rise in rates can have a damaging impact on your business. Not many organisations address the third certainty of rising costs.
The most important financial indicators for dental companies are turnover and net profit margin. When turnover increases year after year then a company can boast that it has achieved a certain percentage of growth. Sometimes, an increase in turnover is underpinned purely by an increase in unit selling price or a more expensive service rather than selling more numbers or seeing more clients.
Many businesses concentrate on headline turnover. Directors, principals and managers set out their vision, their strategies and their targets in the hope that turnover increases yearly. However, in the process of trying to do so the cost of doing business also increases (stealthily too) and you find that whatever improvement in turnover has been achieved has also been eroded by the increase in cost. This leaves a rather flat or sometimes deflated profit margin.
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