Dentists, as independent small-business people, tend to regard whatever is left in the bank at the end of the month as 'profit'. This is after paying the rent, the staff wages, the lab bills, the associates and so on... there's often not much left in the pot.
However, making small changes to your practice and the way in which you set your fees and view your worth can have a huge impact on your business; ensuring your practice is successful and actually increasing profitability in the long run. The following information includes some practice-proven methods, designed to give you some ideas on how to do just that.
Wages
In my opinion, the fact that most practice owners simply view whatever is left at the end of each month as their profit is potentially risky. It means that during difficult financial times or even on a 'slow month' there isn't actually anything there to pay themselves, and the overdraft grows. Many business owners may simply conclude that 'such is life' in business and they must take the rough with the smooth. However, this is not the way most larger businesses operate and, by making very small changes, principals can ensure they make profits and get paid.
It's important that every dental practice owner should pay themselves a 'wage'. This should be based on your worth, including clinical time and any additional time spent on non-clinical work (evenings and weekends). This should then be transferred out of the practice accounts. Only then should you view what's left as profit. This view is shared with many dental professionals as well as experts in the accountancy world.
At the end of the year, this profit should equate to at least 10 per cent of the embedded value of the practice. So if a practice has a turnover of £300k; that would give a goodwill valuation of about £280k plus fixed assets like equipment and so on. The profit should, therefore, equate to something like £30k+ each year, after paying the owner. This value should then be incorporated by your accountant in the net worth figure of the business on the balance sheet.
If your sums are not adding up quite so tidily after the first few months, it's probably time to make some changes and there are plenty of things you can do with little investment to achieve profitability.
Setting your fees
Setting appropriate fees is key in this process. It's no good looking at all your outgoings then charging patients enough to cover them. This may work for a while, but with the current economic climate anything but stable, patients are sure to be shopping around. Therefore, it's a good idea to investigate competitor prices in your local area – including supermarket and pharmacy prices for sundries. That way you will have a firm knowledge of pricing and where you stand, so you know what to say when someone says: 'They're cheaper in the supermarket.'
Some payment plan specialists can give you a comprehensive overview of your practice's outgoings, including⇐ ⇔salaries and overheads, to advise you how much you should be charging for check-ups and various treatments. It's also worth bearing in mind that private fee-per-item patients are more likely to cancel or delay a check-up, than those patients with a monthly payment-plan. Thirty-one per cent of people said that they would reconsider cancelling a dental appointment if they had a dental payment plan.
Selling
Selling is not designed to push something on someone or to trick them into buying something they don't need. It is also not about trying to make as much money as you can out of your customer base. Ethical selling is about offering patients products and services you genuinely think they can benefit from and you don't have to be a pushy sales person to make it happen.
Do you know what patients you have in your practice, where they live, how many you have lost or gained, how many are paying privately or on a payment plan? Knowing this information is important for all team members, so they're able to correlate their activities to the results you want to achieve. Simply handing someone a leaflet isn't going to help you to sell, it's up to you and your team to open your mouths and let the patient know what you feel are the best options for them.
Research shows that when patients were asked the question: 'If we were able to save you money or provide you with a better service, would you want us to let you know?' – 91 per cent of people said 'yes'. This is not forcing your products and services down people's throats, but giving the patients what they've asked for.
To get an idea of what your patients really want, why not consider using a quick survey to ascertain your patients' attitudes. This can be completed in the waiting room and can give you an invaluable insight into where to take your practice to achieve the most profitable future.
Know your products
Your products are your practice but without product knowledge, selling is almost impossible.
Therefore it's worth sitting down with your team and thinking about what things you could sell more of and the benefits of them to your customers. You could then develop a kind of 'practice menu' to show patients what you offer. This is different from a price list in that it sells the products to the patient based on the benefits of the product, rather than just an explanation of what it is.
You could also offer some kind of tangible incentive to encourage your patients to refer you to a friend. Many practices fail to ask for referrals because they feel it makes them look 'desperate' for patients, but the trick is in the way you ask. Why not say, 'We're currently in a position to accept new patients...'?
It's clear that making a few subtle changes to the way in which you view your business and how you sell yourself can have real benefits for the profitability of your practice, letting you get back to the patient-focussed care that you trained for. The information above is just some ideas to get you started, but it's important to remember that help is out there for anyone worried about that increasing overdraft. Making the most of the opportunity, I will leave in your very capable hands.